Living in an age of litigation where lawsuits and cases where you can lose a lot of money are commonplace, you need to take steps to protect yourself before you become a target for the unscrupulous lawyers who instigate these claims.
A good asset protection plan is an essential requirement for anybody who feels they may fall victim to cash hungry lawyers or litigious individuals. And unfortunately, as cases have shown, the more asset rich you are, the more vulnerable you become to attacks of this nature.
Your most obvious step is to make yourself less vulnerable to these people. Ironically this is one of those situations where not having, or not appearing to have, wealth works in your favor.
Divest yourself of some assets and entrust them to proven legal tools, take out a mortgage on the equity in your home, operate your businesses in corporations, hold your investments in LLCs, set up an asset protection trust for your liquid assets but ensure you have planned before the vultures strike.
And even then there are practical measures to take. Because, in the scheme of things, vicious lawsuits strike when they feel they have something to gain from their actions. Have you noticed it is the wealthiest and most successful people who attract the most attention from unscrupulous lawyers and their clients?
After all who would engage in action when the financial pickings were literally not worth their efforts?
And your task? To hidden from prying eyes while you observe their maneuverings from a distance.
Asset Protection Tip #1 – Lock It Up In the Right Legal Tools
Here is the first tip on how to protect your assets. Operate your businesses in corporations and LLCs. For heaven’s sake, don’t run your business as a partnership or sole proprietorship. It’s like using tissue paper to defend yourself in a knife fight. Operate using a corporation or LLC. Your corporation or LLC acts as a brick wall. When your company is sued, your personal assets are in the other side of that wall and can be safeguarded from business liability.
Your company needs to be established properly. That, is the proper wording needs to be in the articles of formation. You need to choose the right state or country, regardless of where you actually reside. The bylaws or operating agreement need to be drafted properly. The initial and annual minutes need to be done properly for corporation. Stock co membership certificates need to be completed. The company kits that are provided when this team establishes a company for you come with easy to fill out documents that even a sixth-grader can understand. Plus, you get all the support and help you need.
Divide and Conquer
If you have several businesses, have several companies. Don’t let a lawsuit against one business drag the rest of them down. Corporations and LLCs are cheap. Lawsuits are expensive.
Hold investments in one or more LLCs. When someone sues you, there are provisions in standard LLC law such that the company and the assets inside are protected from seizure. In most states the LLC needs more than one owner to enjoy this protection. As of this writing, only a few states, such as Nevada, Wyoming and Delaware statutorily provides asset protection for the membership in a single-member LLC and its holdings.
Offshore Corporations and LLCs
The US has 4.25% of the world’s population, 80% of the world’s lawyers and 96% of the world’s lawsuits. Most business people are just standing out there in the rain thinking there is nothing they can do about it. Why not operate your business as an offshore company? The LLC in the Caribbean island of Nevis offers some of the strongest LLC asset protection laws in the world.
If you want to sue a Nevis LLC member for his interest in the company in Nevis, they first have to post a $100,000 bond with the courts. In the unlikely event they get a charging order against your interest in the LLC, they cannot take the LLC away from you, nor can they touch the assets inside. A judgment in the US can follow you around for 20 years. In Nevis the charging order against your LLC vanishes in only three years. This protection works even for a one-owner LLC.
Even a US person can use a Nevis LLC to operate his or her US business. It is just a matter of foreign-qualifying the company to do business in the state where the business operates. That works in about any country. If you operate a business in the UK, Ireland, Australia, Brazil, India, you can use a Nevis LLC to operate it.
The most common use of the Nevis LLC is to hold investment assets offshore. Want an offshore bank to keep assets out of harm’s way? Set up a Nevis LLC and offshore bank account and keep your funds away from greedy local lawyers. All you have to do is push the right combination of buttons on your cellular to the number above.
The 800-Pound Gorilla: The Cook Islands Trust
The strongest asset protection tool on the planet is the Cook Islands asset protection trust. The trust must be drafted properly. It must have a trustee in the Cook Islands. It needs to be established by an organization with knowledge and experience. As of this date, this company has established over 1,400 trusts. Not one person who has established such a trust with our guidance has ever lost money placed into one. The best protection for which this offshore trust structure provides are for liquid assets held in a country that does not recognize foreign judgments against the trust. So, we establish accounts in the Cook Islands, Switzerland, Nevis, Belize and other debtor-friendly jurisdictions.
What about safety? How do I know the banks are safe? How do I know the trustee won’t run off with my funds?
Offshore bank safety. Regularly, Global Finance ranks the world’s 50 safest banks. Many people in the US are deluded into thinking that the only safe banks in the world are within its borders. Not true. As of this writing there are only four US banks on the list. Yes, only four. They rank number 34, 45, 47 and 48 on the list. Which banks? Well, most people haven’t heard of any of them as all four of them are tiny farming banks.
Offshore trustees. Imagine you live on an island full of good, honest people. Problem is, you do not have an abundance of natural resources to sell. You don’t have booming manufacturing sector. You don’t have many tourists. What do you do? Well, you invent the best laws in the world to protect wealth people’s assets from lawsuits, of course.
And if that is a major source of wealth to the country, how important do you think maintaining a stellar reputation would be? Your people would starve without it. So, you create a regulatory board that hovers over the trustees like bees on a hive and you make sure to defend your turf with your life. Cook Islands trustees go under intensive background checks to obtain their licenses. They must be bonded by insurance companies.
[Asset Protection Tips Part 2] [Asset Protection Tips Part 3]
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[17 Monitoring] [18 Pitfalls] [19 Private] [20 Tips P1 – P2 – P3]