What is Asset Protection?
There are people out there who cleverly use our legal system to devise ways to find and seize your money and property. They’re called professional takers. This is the reality: professional takers hunt down and corner people with unprotected assets. While some of the professional takers may be obvious such as creditors, the simple truth is most of them are a little closer to home. Families may not talk to each other for years over money. Business partners have completely bankrupted companies to stop one another from getting at assets. Opportunistic employees have sued companies over small, insignificant things only to come up with a big pay day. Even if you have the best intentions you are bound to meet professional takers and frivolous lawsuits in your lifetime.
Simply stated, Asset Protection keeps your valuable assets (business, savings, house, cars, stocks, bonds, etc.) from creditors—legitimate or otherwise—that want to legally steal them from right under your nose. As you look through the world of Asset Protection, you may find a maze of related topics. Buyer beware, we have all heard this statement before, but it’s never been more appropriate in the world of asset protection. While it is true, there are many ways to set up asset protection plans, it is important to use extreme caution when navigating through the options and possibilities.
Protecting assets has always been thought of as something for the super rich. That was before contingent lawyers and their frivolous lawsuits. The same time-tested technology until recently, reserved for the super rich is now available to you at an affordable price. The task of figuring out which would be best for you can be somewhat daunting. The reality is that many techniques are incomplete, critically flawed, and just plain bad advice. You can sleep at night with the confidence that no. To gain a good footing on how the best process will work for you, you need a brief explanation of the rules of protecting your assets.
So how does asset protection work?
Rule 1: What you don’t own can’t be taken from you. If that sounds like a difficult subject, it is. To help explain, the wealthy control everything and own nothing. It’s the same way wealthy people and movie stars have been doing it for years. Only use time-tested, entity formations, like Limited Partnerships and Trusts to protect your assets.
What are Limited Partnerships and Trusts?
Very simply they are artificial persons that are separate from you. Since they are separate from you, then you do not own what is in them, but you do control what is in them. But that’s not the whole story. Picking the right jurisdiction, knowing how to formulate a plan that’s best for you and to apply the technology to make it all work together may take multiple entity structuring.
Rule 2: No country in the world automatically recognizes US judgments. You are probably thinking you have to move your assets offshore. 95% of the time your assets will remain in the US or your place of domicile.
Remember, whatever money you have is all you have and all you’ve worked for. We believe that anyone with any assets has a clear and present danger. Protecting your nest egg is not to be taken lightly. You need a very specialized company with a world-renowned reputation whose credibility cannot be compromised. A company that’s not on a commission hunt for your assets. Many companies offer corporations, limited liability companies, and trusts, etc The procedures used are quite complex while the rules remain simple. This is not something you can or should do on the cheap. This is also not something for a general practitioner. This is truly a specialized service brought to you out of the same technology that the super rich pay $30,000.00 plus for.
“What is asset protection? If you want the technical answer, it’s the practice of taking very specialized steps to minimize or eliminate the risk of creditors or other claimants from being able to find and take your assets. Plain and simple: it’s keeping others from taking your stuff…ANY of it!”
With a properly constructed and implemented Asset Protection Plan, you can normally prevent:
Creditors from reaching your assets or the assets of the trust.
You’re soon to be ex-spouse from taking you to the financial cleaners.
Your business partner’s mistakes from ruining your nest egg.
A disgruntled customer or employee from putting you out of business.
The government from seizing and keeping your money.
You’ll also be secure in knowing that you’ll normally have enough assets after a suit to:
Survive with the lifestyle that you are accustomed to.
Spend your money where you want and on whom.
Keep your business on track.
Transfer wealth to those you love without the government or creditors touching it.
Retain complete control over the protected assets.
Asset protection and estate planning are extremely important life events. While both go together hand and hand they are separate from each other. They share a common thread of life that says anything can happen at any time. We have all heard, treat each day as a gift because you never know what’s going to happen. Asset protection and Estate planning scream out at you and say: You have got to act this moment, not this day or month, but this moment. By implementing a properly crafted asset protection plan, you can legitimately put a significant portion of your assets out of the reach of judgment creditors and still retain complete control over these protected assets.
No two clients are the same and no two situations are identical. Wealth Preservation boils down to options; the options to preserve your legacy, your assets and your prosperity. Taxation, inheritance and liability are based on flow-through philosophies of responsibility. Just as your estate passes on, so does liability flow through endangering what you possess.
Charitable Planning There are a number of charitable planning tools that can be used to help clients with their goals. The are a handful of main tools.
Family Limited Partnerships – “Freeze Partnerships”
So where is the next generation of Family Limited Partnership (FLP) planning headed? While not new, the concept of using a derivation of the traditional FLP appears to be making a comeback. The concept of a “freeze partnership” is again receiving attention as an alternative to the traditional FLP structure.
This information is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an attorney or independent professional advisor.