As and attorney who has assisted thousands of people with LLC and other business entity formations, I have had numerous conversations regarding asset protection. Unfortunately, many people call me too late for me to help them.

Those bad conversations usually start something like this, “I’m going through bankruptcy and I need to set up an LLC or corporation to own my sports car so I won’t lose it.” Another bad opening is, “I’m being sued and I don’t want them to know about my cabin by the lake, so I want to set up an LLC or corporation to transfer the deed to the business entity.”

These conversations are bad because I cannot help them at this point. You must not wait until you are a defendant in a lawsuit, beginning bankruptcy, or under investigation by the IRS to consider protecting assets. If a creditor has a legitimate claim against an identifiable asset, if may be against the law to transfer or sell that asset. That means you can’t sell it to a friend or relative for a dollar and you can’t transfer it to an LLC or Corporation to “hide” it.

Most states follow the Uniform Fraudulent Conveyance act that prohibits debtors from transferring assets with the intent to hinder, delay, or defraud a known creditor. So if things are already in motion, or you are transferring assets with the intent to hinder, delay or defraud a known creditor, it is too late. Don’t call me, because I am not going to help you.

When you are considering asset protection strategies, timing is everything. You must protect yourself before the storm approaches, not in the middle of it. Not even when the storm in just beginning.

There are a variety of asset protection strategies. These can benefit a lot of people, as long as they are thought of and performed before areas of your wealth are threatened. There are legitimate reasons to have business entities own assets. Asset protection is legal. You may also want to call it financial planning. However, timing is everything.