An Asset Protection Plan is not a tax savings plan, generally your Asset Protection vehicles will be tax neutral. There are some cases where your asset protection legal entities will offer some tax benefits, however these benefits are a byproduct of a properly structured legal protection strategy. If you are ever told that you will save money on taxes, eliminate your taxes or are told how to reduce your taxes when protecting your assets, be cautious.
In the shortest definition an asset protection element being tax neutral means that the legal entity is not going to be influenced by tax law. Your tax liability, or what you pay, will not be affected when you place your assets into a legally structured protection plan. You as an individual and U.S. citizen are legally obligated to report and file taxes on worldwide income. Regardless of where your money is, you should be reporting properly to the IRS. Failure to do so will result in fines and criminal charges.
Protecting your assets is an intricate balance of legal, financial and professional tactics that will put your wealth out of reach of a litigious legal system. Using Corporations, LLC’s and other legal entities for business and investments have advantages with tax deductible benefits, but for the most part asset protection and tax savings strategies are mutually exclusive.