# How can a personal protect his assets through insurance? **URL:** \ **Category:** Factual Questions\ **Created:** [February 23, 2013, 6:29pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183 "2013-02-23T18:29:56Z")\ **Posts on this page:** 6\ **Page:** 2
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [February 24, 2013, 5:51pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/21 "2013-02-24T17:51:05Z")
> [@Tom\_Tildrum](#): > > The trust under discussion is called a “self-settled spendthrift trust,” where the creator is also a beneficiary and is seeking to protect assets from creditors. Almost all states will [disregard](http://en.wikipedia.org/wiki/Spendthrift_trust#Trusts_where_the_beneficiary_is_also_the_creator) that trust form and permit the creator’s creditors to reach the trust’s assets. I read your cite and that’s far from clear, especially in DAPT states, so like I said earlier, it is largely a matter for a trusts and estates specialist and down to their expertise and imagination. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [February 24, 2013, 5:55pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/22 "2013-02-24T17:55:34Z")
> [@Tom\_Tildrum](#): > > Lifetime medical costs for a child is probably one of the biggest judgments one might face, but note that the present value of $15 million paid over the next 50 years is arguably less than $2 million. That’s a great point that I never considered. Thanks. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [April 12, 2013, 4:04am UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/23 "2013-04-12T04:04:44Z")
Bumping this thread to mention that, due to some changes in our life circumstances, I just took out an umbrella liability policy. It offers additional coverage over and above our home and auto policies, and it also covers some situations that those policies do not, such as, of all things, defamation. Amusingly, as part of the application process, I was asked whether anyone in my household was of high social status. A million dollars of coverage only cost $150 per year. This suggests to me that their policyholders only very rarely find themselves in situations that bust the limits of their conventional policies. ---
**Author:** ![jbaker](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jbaker](https://boards.straightdope.com/u/jbaker)\ **Post date:** [April 12, 2013, 4:23pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/24 "2013-04-12T16:23:17Z")
Plaintiffs often choose to settle with defendants for the amount of the defendant’s insurance coverage. They are under no obligation to do so, however. If you have assets worth protecting, you should strongly consider getting an umbrella insurance policy. Some people go to further lengths and set up an asset protection trust, see [Asset-protection trust - Wikipedia](http://en.wikipedia.org/wiki/Asset-protection_trust). These can work, if you value your money more than your freedom, see [http://assetprotectionnc.com/?TypeContent=ARTICLES&Art\_Title=Offshore\_Trusts\_-\_Trading\_Jail\_for\_Protection\_&art\_id=849](http://assetprotectionnc.com/?TypeContent=ARTICLES&Art_Title=Offshore_Trusts_-_Trading_Jail_for_Protection_&art_id=849). ---
**Author:** ![Procrustus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/procrustus/32/2994_2.png) [@Procrustus](https://boards.straightdope.com/u/Procrustus)\ **Post date:** [April 12, 2013, 4:28pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/25 "2013-04-12T16:28:59Z")
> [@jbaker](#): > > Plaintiffs often choose to settle with defendants for the amount of the defendant’s insurance coverage. They are under no obligation to do so, however. If you have assets worth protecting, you should strongly consider getting an umbrella insurance policy. > > . Absolutely true. A plaintiff is much more willing to settle for an umbrella policy limit than a standard $100,000 (or less) limit. If you have anything to protect, an umbrella policy is cheap and important. Also, get as much UIM insurance as they will sell you. Most people who cause you harm has insufficient insurance. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [April 12, 2013, 4:37pm UTC](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183/26 "2013-04-12T16:37:19Z")
> [@jtgain](#): > > I would guess that the court would view it as a fraudulent conveyance and that the corporation is simply acting as my agent by holding it. No different than if you gave your antique gun collection to your brother the day before you declared bankruptcy. > > My brother would have legal title to my guns, but we all see that it is simply a ruse and he is just holding them for me so I don’t lose them to my creditors. In Canada, IIRC, there’s a provision that the judge may invalidate any transaction in the past 6 months during a bankruptcy proceeding, if the transaction is made with the intent to escape the consequences of bankruptcy. (Case I read in Canada - carpet store going down the tubes, having cash flow problems. One supplier comes in, says “since you can’t pay your bills, we’ll take back title to all the stock you have. You can the stock on demand if you pay us cash on delivery”. Of course, this pushed them over the edge, bankrupt in a month or two. Judge looks at the transaction, says “you did this in anticipation of bankruptcy, to avoid the same consequences as the other creditors”. he reversed the transaction and made the supplier get in the creditor line with everyone else. Note it does not have to be a dishonest transaction, or a trick initiated to the benefit of the party going bankrupt to hide assets…) I would suspect a transaction made to “hide assets” after the fact that incurred the debt (the accident? The lawsuit being filed?) would be a prime target for being invalidated. How would the trust being described be legally any ifferent than, say, a rich father making sure his unreliable son has a lawyer paying his normal bills and providing a living allowance - but not allwoing the guy to blow his inheritance in one wild month in vegas? [Previous page](https://boards.straightdope.com/t/how-can-a-personal-protect-his-assets-through-insurance/651183.md?page=1)