Put simply, asset protection planning is the process of removing your property from your individual ownership and placing it beyond the reach of potential claimants and creditors. The process involves changing legal ownership of your property from your individual name to a protective entity, such as a limited partnership or trust.
If that sounds like a terrible idea, hold on. A properly designed limited partnership or trust can give you all the benefits of ownership, such as control over an asset’s disposition and the right to its income. The difference is that since you no longer legally own the asset, it cannot be seized to satisfy a judgment against you. It is the savvy planner who realizes that in today’s world legal control over an asset is often more beneficial than directly owning it.