Whenever I talk about asset protection, most people have visions of Learjet rides to Barbados with a suitcase full of cash and exotic trust documents. But asset protection can be as simple as having a comprehensive estate plan, for instances just like Conan’s accident. How can an estate plan serve an asset protection role?

Let’s assume for a moment that after Conan hit his head, he wasn’t fine. In fact, let’s assume that he hurt himself to the extent that he became permanently impaired for the rest of his life…unable to walk, talk, eat or competently make his own decisions. This is bad enough of course, but in the days and weeks following the shock of the accident, Conan’s family and advisors would very likely need to be able to deal with his property…this could be something as complex as executing a major media business deal (perhaps the use of his likeness for a new toy doll to be marketed throughout the United States) or something as simple as selling his house.

Either way…Conan needs to sign. Problem is (at least in our example) he can’t sign…he can barely say his name. Without an estate plan in place, Conan’s wife will have to go to court and obtain a guardianship over him. This will give her the power to deal for him. In addition, she’ll need to get a “bond” in the amount of his total assets…this process can be very, very expensive, time-consuming and emotionally trying.

With a comprehensive estate plan, Conan’s wife would have the power as successor trustee of Conan’s trust and as Conan’s agent under power of attorney for property to deal with his property without the delay and cost of obtaining a guardianship. No business deals lost, no additional emotional strain. Pretty good.

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1. Piss and Moan Stage: Litigation is begun far before any court filing. Your business receives a nasty letter from someone (or their attorney if they’re really serious) outlining some wrong and demanding some action…and we’re off to the races. Such a letter could begin a several month-long process during which the two sides threaten each other like the Jets and the Sharks …maybe things get resolved at this stage, maybe they don’t.

2. I’m Really Serious Stage: If the problem isn’t solved at the Piss and Moan Stage, then one of the parties files a Complaint and serves it on the other party. I’ll dispell a myth right here: you’re not going to dodge service. Yes, it’s true that if the parties aren’t served with the Complaint, they can’t be dragged into court. Guess what…you’re not the first person to think of this. There are Private Investigators out there who specialize in tracking people down and putting a Complaint in their hands…you can’t avoid it. The Complaint will state some basic facts and legal theories. Note: Anyone can file a complaint and sue another for any reason…whether the suit will be upheld or not is another story, but the mere filing of a complaint really means nothing and does not speak to the merits of the case.

3. Nitpick Stage: After the filing of the complaint, the lawyers metaphorically chase after each other like drugged monkeys with axes. Generally, the fights during this stage are procedural: “You didn’t use 10 point font / You didn’t reply by Monday / etc.” If the complaint has any merit, it will move forward. If not, case closed.

4. I’m for Real Stage: Once it has been determined what meritorious claims the parties have, each side gets into the nitty gritty. The facts underlying each claim are determined. At this stage, just about everything is “find-out-able” (or “discoverable” in legalese). This doesn’t mean that everything that can be found out can be used in court. At this stage, the parties are trying to size up each other’s cases and figure out if they should proceed. The parties may settle here, or they may proceed.

5. Choking Stage: If the parties don’t choose to settle (which occurs about 95% of the time) then it’s full steam ahead to trial. Don’t get me wrong…sometimes proceeding to trial is a smoke and mirrors game in which the parties fake willingness to go to trial but don’t really have the heart for it. But, other times, both sides are pig-headed enough to go for the gusto. This is the point at which each case is laid out…prior to trial. There are no surprises. Each side knows what the other side will do and how they will do it…the wildcard here is the jury and the bet that one side will be victorious. The parties here basically try to choke each other to see who is left standing at the end.

6. Show me the Money Stage: Somebody wins at trial, and the judge orders a money judgment against the losing party (or, for you new-agers “the party that was not victorious”). At this point, the winning party has to try to get money out of the losing party. This is where asset protection planning can really be helpful. The loser can either pony up the dough (or make arrangements for payment) willingly, or he/she/it can try to avoid making payment. If the avoidance route is taken, a whole new set of court procedures begins.

7. I’m Really Tired of this Game Stage: The winner now has to go back to court and have the judge approve orders for the loser’s assets to be discovered…this results in the issuance of a “Citation to Discover” which requires third parties to show the winner what the loser has in terms of assets. The winner would serve these on the bank, stock broker, wife, brother, business partner, etc. of the loser until its clear what the loser has. This can be a never-ending process that can take as long as the litigation itself.

8. Finally…Collection Stage: The winner brings information about the loser’s assets back to court, and the court decides if those assets are subject to “garnishment” (this has nothing to do with sprigs of parsley or tomato rosettes). If assets are subject to garnishment, the court will order the assets seized by the Sheriff or otherwise and sold at public auction or possibly delivered to the winner in satisfaction of the judgment. This process continues until the judgment is paid in full, or the winner gives up trying.

So there you go…litigation in 800 words. Best course of action usually: settle.

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