Real estate and other assets can be protected by owning it in a separate limited liability company, Tarshis says, "which puts up a firewall around that entity."
Giving away assets to a family member is another strategy, he says, "but that can mean losing control of the asset, and to many people that's almost worse than losing the asset."
Some people isolate assets in any of a variety of trusts in states with very generous creditor protection laws, says Armstrong; others move assets offshore. These options are not only more expensive and difficult, he adds, "but could get you on the wrong side of a federal judge."
"It's a continuum," Tarshis says. "It's like building a wall around you and your assets. You could have a very tall wall, which could be protective but expensive and very difficult to live with -- or, recognizing that the real threat may be fairly remote, you may sleep just fine with a shorter wall."