A question that is raised on occasion is whether it is legal, ethical and moral to protect your assets. Asset protection is clearly legal and ethical. As to morality, perhaps asset protection planning is immoral if this planning is being initiated for a person who is wanting to hide ill-gotten wealth from others with sinister goals to “get away” with wrongly depriving others of amounts belonging to them. But for the individual who is simply wanting to plan in advance to not unnecessarily leave assets available for the legal system to hand over to others beyond his control, this kind of planning is not only moral, but highly recommended to meet the duty you owe to not just yourself, but your family’s financial well-being.
If you think there is an inherent unfairness in protecting your assets, consider a case where you (assume you were 10% “at fault” in hindsight on some issue) and someone else (who was 90% at fault) are jointly named and lose in a lawsuit. If the other joint defendant has no assets (or they were protected), the legal system and plaintiff would likely have no qualms in collecting the entire judgement from you as the joint defendant with the available assets. Does that sound moral? At the very least, protect your assets, and then if you end up on the wrong side of a lawsuit and feel a moral obligation to pay the plaintiff, then the protective structure you created can still pay the plaintiff if it is not being coerced. With the protective plan in place, the administrator (e.g., trustee) of the protective structure (as opposed to the plaintiff/creditor) can determine whether this is a case where the plaintiff should be compensated, or in contrast a situation where you have been unfairly targeted. This can lead to a better result than a court being in total control of making the decision.