Asset Protection Planning
Asset protection is the proactive planning to protect your assets from future creditors or judgments. This involves a series of legal measures that can deter a lawsuit or help prevent the seizure of your assets after a judgment. Having a solid plan in place forces legal opponents to quickly recognize the difficulty in pursuing a claim. That alone can cause them to settle for a very small percentage. Essentially, you have the option of employing a variety of legal techniques that are implemented to deter creditors from pursuing you, and to aggravate them if they attempt to do so. These concepts are designed to make it complicated, if not impossible, for your assets to be taken or a judgment collected.
One of our clients, for example, is a plastic surgeon. He is good, hard-working well-liked and well-respected physician who worked for years to build his squeaky clean reputation. However, he was in the midst of eight breast implant lawsuits. It was not his fault they leaked; it was the manufacturers'. But after the manufacturers filed bankruptcy, guess who the lawyers targeted next? Correct. The Doctors. We established a Cook Islands trust. We also established two Nevis Limited Liability Companies that were both owned by the trust. Then we established bank accounts offshore in the company names. Toward the end of the fight our plastic surgeon friend filed for bankruptcy. He revealed the existence of the trust and companies to the bankruptcy court. However, when the trustee in the Cook Islands heard that the client was under legal duress, the trustee, who is outside of the US court jurisdiction, refused to release the funds to the courts. After bankruptcy was finished and the legal storms had passed, the trustee restored the good doctor's millions for which he had worked so hard.
Asset protection also planning keeps your wealth out from under prying eyes. Protecting your assets also means that they are out of reach of a U.S. court judgment. If your assets are awarded to a creditor, in the event of a judgment, your protection plan can keep your assets in tact and typically keep you in control of your property. In the case of the Cook Islands trust, you stay in control until you reach a point where your money would be taken. Then, at your request, the very reputable, licensed, bonded trustee can step and keep your money away from the courts.
Asset protections plans work, but generally, are much more effective for debtors who have the foresight to set them up in advance of a lawsuit. In situations where there is a variety of assets involved, your plan may consist of several legal structures, both in your home country and offshore. It is crucial that you proceed with an experienced and qualified professional, such as Asset Protection Planners, Inc.
We have trustees that we have used for years who are licensed, bonded and experienced. Therefore, we insist that every potential client make themselves aware of the many pitfalls of bundled services and unlicensed foreign trustees that can leave you with little or no protection, in serious legal jeopardy, or in the worst cases, defrauded of the assets you were trying to protect. So, we take you by the hand and lead you on the right path where your money can be safe and secure. We recommend an asset protection plan that is developed specifically for your needs, value of assets and your comfort level. Your options are plentiful and the desired level of protection can be attained within your realm of comfort.
Starting an Asset Protection Plan
Working in concert with a professional or attorney, we can help perform a risk analysis for your assets. We analyze your current holdings as well as your liability and likelihood of future exposure, accounting for your existing business ventures, occupation, and additional liability. Your exposure is analyzed along with the nature of your assets and overall size of your estate. We also consider your family situation and your estate planning needs in an asset protection plan.
In many cases, incorporating a business or placing real estate and liquid assets inside of separate limited liability companies will increase the level of protection to add comfort. This is because there are provisions in the law such that when you, as an LLC member are sued, assets inside of the LLC can be protected from being taken away from you. One set of clients of ours was in an automobile accident. The California husband and wife had invested in stock and mutual funds. We had established a Nevada limited liability company with a Nevada office program and nominee privacy service. When the husband, who was driving the car, was ordered to pay several hundred thousand dollars to the plaintiff, the money was safe, and secure, in the Nevada LLC. The plaintiff settled for pennies on the dollar.
In other cases, an offshore company, such as a Nevis LLC, a bank account and offshore trust are needed. In each situation, we will work with you to evaluate all of your exposure and risk then conduct a phase that will help us understand to what extent you are willing to go to protect your assets. Experienced professionals create your plan based on your entire financial, family and risk scenario. If you are presented with packaged solutions that are created before your situation was known, it is a sign that your provider is not offering the personalized service asset protection planning requires. We urge all of our clients to ensure that they pursue qualified and helpful professionals who will educate them on all of their options, regardless of what the provider is selling.
Importance of Asset Protection Plans
An asset protection plan is stronger the longer it has been in place. Creating a plan after you need it is a trickier process; however, it can still be accomplished. Having an asset protection plan usually allows you the same or similar control over your assets, capital, real estate, etc - while removing the risk that it can all be taken away in the event of a lawsuit.
One of our clients, let's call him Chuck, had 11 rental properties and a personal residence. He was concerned about litigation and losing his real estate portfolio. For privacy of ownership, we established a land trust for each property. For asset protection purposes, we established LLCs to own the land trusts. We then established a Nevada LLC to place 2nd mortgages against each property. When Chuck was sued for a tenant injury on one of his properties, the real estate was protected and the opposing attorney saw little chance of payoff. The lawsuit was eventually dropped.
Nearly 70,000 civil lawsuits a day are filed in the United States. The highest number of suits filed, target middle to upper class Americans with less than one million dollars of net worth. Asset Protection is not just for the "rich", as a matter of fact, it is all the more important for those who have less. Consider if a multi-millionaire is served with a $500,000 judgment. That person could pay the penalty and, perhaps, not have a substantial effect on his or her lifestyle. Most individuals are not as fortunate. Therefore, a half million-dollar judgment could be most of the wealth one has grown, thus, a considerable impact on one's lifestyle.
By exploring some of the solid legal structures available, you can quickly place your assets into a financial fortress that is virtually judgment-proof. We analyze the types of assets that you need to protect. We also consider both exempt and non-exempt assets during planning. Your personal cash is a quick target as is your real estate. In most cases, a significant portion of one's stream of income is subject to seizure. Each state is different in determining which property is exempt. In most cases there are limits, depending on the type of property, to the amount that may be exempt. Some personal effects could be exempt up to a set dollar amount while 100% of the value of your pension is usually exempt. Check your state's law to discover with what you need to be concerned. When you call us, we also have state-by-state reference guides that may further assist you. In those cases your non-exempt property can be turned into exempt property. The reality is that relying on exemptions alone is not a sufficient way to protect your assets. If you are exposed to any reasonable level of risk to warrant this type of planning, more sophisticated methods should be explored such as corporations, LLC's, offshore companies and trusts.
In some situations your asset planning can blend with estate and tax planning. Family corporations, limited partnerships and well-thought-out gifting of property to children are all forms of modifying your estate, tax scenario and available assets. In many cases a comprehensive plan involves CPA's and financial planners, estate planners, attorneys and asset professionals.
Asset Protection Planners, Inc offers a personalized approach to your planning. We take our clients by the hand and guide them, informing and educating on all of the available options so that confident decisions are made throughout the process.