Asset protection planning involves figuring out and applying a lawful series of techniques that protect your assets from claims of future creditors. The techniques are designed to deter potential creditors from going after you, and frustrate them if they do, generally by making it difficult or impossible for future creditors to grab hold of your assets or collect judgments against you.

Asset protection planning enables you to employ legal techniques to prevent anyone from taking your assets. However, there are limitations as to what you can and cannot do.

Your degree of exposure to risk of liability, the type of assets you own, and your total net worth are essential factors to consider when you and your lawyer develop a strategy for asset protection. Your occupation can be one indicator of the risk of liability -- for example, a pyrotechnics engineer has tremendous occupational exposure. Statistics can help you decide your risk factor, and help you to assess what kind of asset protection you need.

Depending on your state of residence, the "homestead" exemption may protect some or all of your interest in the house and the adjoining land that you occupy as a home. Creditors may not be able to force the sale of homestead property. The amount of the homestead exemption that is available is set by state statute.

If the equity in your residence exceeds the exemption allowed, one way to decrease it is to borrow against the property. You can use the proceeds of the loan to acquire additional exempt property. This strategy enables you to maximize the exemption available for a dwelling or a declared homestead.