The main goal in asset protection is to protect assets from creditor claims, but in such a way that it does not involve tax evasion or hiding the assets. Asset protection is also often referred to as debtor-creditor law. Protecting assets should not be confused with limiting liability.
There are very few assets that may be shielded from creditors by law, but some of them include retirement plans, interests in limited partnerships and limited liability companies, and home equity. One method of protecting assets is to have legal titles rest in a trust, or with an agent, but yet still keep control of them. All states have laws exempting certain assets from creditors, and the exemptions vary. Those exemptions may include clothing, personal retirement accounts, and/or equity in a personal home.
Protecting assets is quite similar in nature to bankruptcy, and often asset protection and bankruptcy happen at the same time. In other words, if a debtor has minimal or no assets on hand, petitioning for bankruptcy is the preferred route. On the other hand, if a debtor has many assets, protecting them may be the only answer.
Asset protection is also available for limited liability companies, limited partnerships, and corporations. For instance, many of the states limit creditor remedies in the case of a limited partner or an individual involved in an LLC.