When you talk to an asset protection planner, they’ll all tell you how important it is to start safeguarding your wealth long before you face any threats. Unfortunately, many people only discover asset protection after a lawsuit is filed against them, leaving them to wonder if there’s a way to protect assets after getting sued.
Thankfully, there’s good news: You can keep your assets safe from creditors even if you’re actively going through a lawsuit. You’ll need to take careful steps and work closely with an asset protection planner to do so, but it is possible.
In this guide, we’ll explain how to protect your assets after being sued:
- Offshore Trusts Can Protect Assets After You Get Sued
- Do Domestic Trusts Offer Asset Protection After a Lawsuit Is Filed?
- Why Offshore Trusts Are Safe
- Where to Form a Trust That Protects Assets After You Get Sued
- Should I Be Concerned About Fraudulent Conveyance Claims?
- LLCs Make Your Asset Protection Tools More Flexible
Offshore Trusts Can Protect Assets After You Get Sued
The best way to get asset protection after being served with a lawsuit is to set up an offshore asset protection trust (OAPT). This potent financial tool puts your assets inside an overseas legal structure that is overseen by a trustee. When you get sued, your trustee won’t comply with a creditor’s demands, as a U.S. court ruling has no power in overseas jurisdictions. For your creditor to have a chance at getting your assets, they would have to try and file a fraudulent conveyance civil claim in the jurisdiction where your trust is based. This action is prohibitively expensive for most creditors. Those who do choose to file a claim overseas find that the trust-friendly laws of popular jurisdictions like Nevis and the Cook Islands make it nearly impossible to prove fraudulent conveyance.
Do Domestic Trusts Offer Asset Protection After a Lawsuit is Filed?
Domestic trusts are useful but not nearly as protective as offshore trusts. Because these trusts are based in the United States, your creditor can force the state where your trust is located to comply with a U.S. judge’s ruling. Even if the ruling goes against the laws of the state where you established your trust, it will be enforced. Additionally, filing a fraudulent conveyance claim is easier in the United States. So, if you set up a domestic trust in the middle of a lawsuit, there’s a strong chance it will be successfully challenged by your creditor.
Why Offshore Trusts Are Safe
If you have reservations about an offshore trust, that’s understandable. Most people, even those who are otherwise well-versed in financial tools, have little experience with offshore trusts. Fortunately, there’s no need to worry about either the efficacy or safety of an offshore trust established by a professional asset protection planner.
OAPTs that are set up in places like Nevis and the Cook Islands not only provide effective asset protection after a lawsuit is filed but also have robust safety features in place that hold trustees accountable. For example, both jurisdictions require trustees to be licensed and carry insurance that will reimburse the settlor for any fraudulent behavior by a trustee.
Finally, if you still have concerns, working with a group like Asset Protection Planners can help keep your money safe. Our team has decades of experience establishing offshore trusts and close relationships with reliable trustees who have capably guarded our clients’ assets. In fact, not a single one of the hundreds of Cook Islands trusts we’ve established has been breached by a creditor.
Where to Form a Trust That Protects Assets After You Get Sued
The best offshore asset protection trusts are in the Cook Islands. The Cook Islands do not recognize foreign judgments whatsoever and will force creditors to try any claims again in a Cook Islands court. If a foreign court requests access to your assets, the trustee will refuse to comply with their demands.
Cook Islands trusts have been around since 1989 and have been thoroughly tested in real court battles. Time and again, case law has shown that Cook Islands trusts fully protect your assets.
LLCs Make Your Asset Protection Tools More Flexible
A Nevis or Cook Islands LLC is an offshore company that goes inside of the trust you’ve established. Once there, it gives you the ability to manage your trust held assets, which is not normally possible within an irrevocable trust. Then, when you are sued, you hand the LLC to your trustee, who is immune to creditor demands.
It’s worth noting that LLCs aren’t ideal for protecting your assets during a lawsuit unless they are already in place. If you are actively being sued, you will have to wait to set up an LLC under the umbrella of your offshore asset protection trust. By adding an LLC to your OAPT, you gain additional control over your assets and greater protection from lawsuits, as the LLC can be passed to your trustee when legal troubles arise.
Should I Be Concerned About Fraudulent Conveyance Claims?
The main threat to an offshore asset protection trust is a fraudulent conveyance claim. Essentially, these claims assert that a debtor made a transfer with the express goal of defrauding their creditor. If someone is found to have committed a fraudulent transfer, the transfer is voided, and the creditor can lay claim to those assets.
Some people hear terms like “fraudulent conveyance” and start to get nervous about being taken to court. After all, no one wants to spend more time fighting legal battles than necessary. However, if your option is either to let someone take your assets or force them to prove you made a fraudulent transfer, the smart option is to make them prove it.
Fraudulent conveyance is a civil matter. If your legal opponent proves that you made a fraudulent transfer, you merely give them the assets that they were already going to take from you. By setting up an offshore asset protection trust after getting sued, there’s at least a decent chance that you’ll get the protection you’re seeking. After all, it’s extremely difficult to prove fraudulent conveyance in Nevis or the Cook Islands.
Ultimately, opening the door to a fraudulent conveyance claim is something you should avoid if at all possible. But if you have no asset protection and get sued, it’s better to try and keep your assets safe than to do nothing at all.
Call Us to Receive Asset Protection After Getting Served
If you’ve already been sued, you need to act quickly to safeguard your wealth. The longer you wait, the more likely it is that your offshore trust won’t be ready in time to keep your possessions far away from your creditors. Our team can help you set up an offshore trust fast and get you the protection you need.
Don’t give someone the chance to take everything you’ve worked so hard to earn. Contact us for a free consultation today.
Asset Protection Strategies for After You’ve Been Served FAQ
How can I protect my assets if I have already been sued?
You can still protect some assets after you have been sued, but you must move quickly, work with specialists, and accept that the strongest options usually involve going offshore rather than relying on domestic tools alone. The earlier you act in the lawsuit timeline, the more options and leverage you have.
If you have no asset protection strategy in place and are facing a lawsuit, your first action should be to consult with an asset protection planner. These professionals can set up a strategy that will get you the most protection possible, despite your current situation. A planner also knows how to quickly set up trusts, so you don’t have to worry as much about your case wrapping up before your protections are established.
Next, you need to determine which tool you plan to use. By the time you’re getting sued, your options are limited to either domestic or offshore trusts. Generally, it’s far better to opt for an offshore trust, as domestic trusts are susceptible to fraudulent conveyance claims, while offshore trusts offer stronger protection against them. Additionally, if you create an offshore trust, your creditor must invest significant time and money to prove fraudulent conveyance, something most creditors are unwilling to do.
Once you’ve set up an offshore trust, stay in close contact with your asset protection planner. If your creditor attempts to file a fraudulent conveyance claim, you’ll need your planner to guide you through the process of fighting that case.
To help you create a trust as quickly as possible, here’s a step-by-step guide detailing how to protect your assets after getting sued:
- Review the status of your lawsuit to see how much time you have. The more recently the claim was filed, the more time you usually have.
- Create a complete list of your assets and liabilities.
- Schedule a free consultation with an asset protection planner, and hire them if they are a fit.
- Provide your planner with as much detail as possible. The more they know about your risk profile, the more they can protect.
- Let your planner start setting up an offshore asset protection trust in the Cook Islands.
- Have your planner establish offshore bank accounts and LLCs, if needed.
- Transfer your assets into your newly formed Cook Islands trust. Be careful to follow any instructions provided by your planner to minimize the likelihood of a fraudulent transfer claim.
- Stay in close contact with your asset protection planner as your lawsuit progresses.
- Once the lawsuit concludes, be ready to have your lawyer defend against any fraudulent conveyance claims.
- If a fraudulent transfer claim is filed, confirm that your creditor is filing in the correct location. These claims need to be filed in the same jurisdiction where your trust is located.
- Once the claim is over, keep your trust up to date, and proactively plan for future legal battles to avoid rushing to protect your assets in the future.
