Have you ever wondered what might happen if you were suddenly hit with a costly lawsuit? Most people might prefer not to think of that scenario. However, ignoring the possibility of a lawsuit won’t prevent one from happening.
Once you accept that there are threats to your wealth, the natural next step is finding a shield to defend against those dangers. That shield is called an asset protection strategy. In this article, we’ll provide you with an introduction to strategies to protect your assets so you can decide how best to safeguard your possessions:
- What Are Asset Protection Strategies?
- 3 Common Asset Protection Strategies
- How to Choose an Asset Protection Strategy
What Are Asset Protection Strategies?
Asset protection strategies are methods of keeping your money, property, and valuables safe from creditors, lawsuits, divorce, and other threats. A strategy typically uses multiple financial and legal structures to place barriers between your assets and your creditors.
To keep your wealth safe, an asset protection strategy will usually have three core objectives:
- Making your ownership of assets, real estate, and liquid currency private
- Placing your wealth beyond the reach of creditors
- Spreading liability across several structures
3 Common Asset Protection Strategies
t wouldn’t be a complete introduction to asset protection strategies if we didn’t describe some of the most commonly used wealth defense measures. Here are three critical strategies that you might consider using for yourself:
1. Offshore Asset Protection Trusts to Defend Against Lawsuits
Offshore trusts provide the highest level of asset protection available. These legal structures allow you to pass the ownership of your assets to another party, known as a trustee. By placing your assets in a trust, you technically no longer own those possessions. Since you are no longer the official owner of trust-held items, a creditor cannot lay claim to those assets, even if they win a lawsuit against you.
Now, you probably noticed the term “offshore” before “asset protection trust.” We specify offshore asset protection trusts because the trusts offered in certain jurisdictions, such as the Cook Islands, Nevis, and Belize, are far stronger than the ones offered in the United States. These locations have shorter statutes of limitation and require creditors to win a lawsuit in an offshore jurisdiction. That last part is especially important, as it means that even if you lose a lawsuit in the United States, the ruling has no bearing on your trustee in a foreign jurisdiction.
Lastly, the prospect of handing assets over to a foreign trustee does cause some people concern; however, there’s little reason to be worried. In an asset protection trust, whether domestic or offshore, the person who creates the trust (settlor) also serves as the beneficiary. While serving in that role, the settlor can receive distributions from trust-held accounts and even set up companies that let them control the accounts when no legal troubles are present.
Learn more about 5 Steps for Asset Protection from Lawsuits.
2. Corporate Structures to Distribute Liability
Corporate structures, specifically limited liability companies (LLCs) and corporations, are structured in a way that limits the liability of company members. In practice, this means that if a person sues an LLC member, the company’s assets aren’t up for grabs. The inverse can also hold true.
When crafting an asset protection strategy, LLCs are frequently used as a way to protect privately held assets from lawsuits against a person’s business. In some cases, asset protection professionals will even set up multiple unrelated LLCs. Doing this allows you to spread your assets between multiple entities, limiting the damage a single lawsuit can cause.
3. Land Trusts to Hide Real Estate Ownership
The two asset protection strategies we’ve already discussed primarily apply if you lose a lawsuit. Land trusts, however, actively work to prevent lawsuits from occurring. These trusts accomplish that task by hiding your name from real estate deeds, which can create the illusion that you have very few assets. But why does this prevent lawsuits? Because lawyers partially base the viability of a lawsuit on how much they and their client stand to gain. So, by creating the perception that you don’t own very much, you make yourself a less appealing target for contingency-fee lawyers in search of a quick, lucrative win.
How to Choose an Asset Protection Strategy
Choosing an asset protection strategy requires professional advice. Experts, like those at Asset Protection Planners, have spent decades setting up asset protection strategies to defend against countless threats. They know exactly which options to choose for your unique situation, and can even help you prepare for threats you may not know about.
In addition to working with an asset protection professional, you should set up your defense measures long before any threats emerge. The longer your asset protection strategy is in place, the less likely it is that a judge can deem it invalid. Plus, you can never know exactly when a lawsuit will happen. It’s always wise to have a strategy in place so you aren’t scrambling while the clock is ticking.
Offshore Protection
Offshore financial havens created legal statutes that protect the personal assets of foreign investors. This offers individuals the strongest personal financial privacy and protection in the world. It is also a strategy many people use to protect assets after a lawsuit is filed. An offshore asset protection strategy can implement the laws of multiple foreign jurisdictions combining the strongest corporate and financial privacy available.
To attract foreign funds, certain jurisdictions, such as the Cook Islands, Nevis and Belize, created some of the most advanced and case law backed trust laws in the world. Many savvy individuals seeking bulletproof wealth protection outside of their domestic legal system establish these tools. It is one of the strongest ways to protect assets from lawsuits. You can get more information on offshore asset protection and how it works on this website.
Set Up a Strategy with Help from Asset Protection Planners
If you want to stop worrying about the threats to your assets and start building a strategy that can defend against those threats, Asset Protection Planners can help. Our team has been setting up effective asset protection strategies for decades. In fact, in all our years in business, not a single one of our Cook Islands trusts has been breached by a creditor.
Don’t wait until you’re facing legal trouble to set up your plan. Fill out the form below to speak with one of our team members and find out which asset protection strategy is right for you!
