Asset Protection for Liquid Assets
It is easer to provide asset protection for liquid assets due to to its transferability. This type of strategy requires that a safe, secure and well-protected legal tools, such as LLCs and asset protection trusts. In turn, accounts are established for these entities and the assets are subsequently transferred to them. The legal structures provide for a safe haven from lawsuits, judgments and creditors.
One must determine how accessible the they want their cash. Retirement accounts lock up funds until a certain age. Insurance vehicles are typically expensive and built-in boost the profits of the insurance company, not the policyholder. So, that is why LLCs and asset protection trusts are often used. These vehicles typically allow for easy access to the liquid assets. Plus there are provisions in the law that keep legal predators out of these types of structures.
For protecting larger sums of money, and/or for hands-on control and availability of funds, legal structures such as trusts and LLCs are typically utilized.
Asset Protection Trust + LLC
Liquid assets can be placed into a self-settled spendthrift trust. The asset protection trust is one of the strongest devices available to keep wealth away from judgment creditors. These are special legal tools designed to protect the assets of individuals. This strategy can be enhanced through the use of a business entity as a remote control, so to speak. It affords a trust settlor (you) day-to-day control over the assets with maximum protection.
Here is How it Works
Protected funds are deposited in a secure account in the name of an LLC. The asset protection trust owns the company. This strategy offers a balance of asset protection and control. During times of legal duress, the trustee can step in as manager of the LLC.
The most effective self-settled spendthrift trusts are located offshore. The reason is that the trustees reside abroad, and are not subject to your local court orders. Plus, the trust funds can be held in strong, safe offshore bank where local courts cannot issue freezing orders on the account.
The trust provides benefit to trust beneficiaries according to the terms of the trust deed. Again, the business entity (LLC), that is managed by either the trust settlor or trustee, owns the bank account. When times are good the trust settlor is the company manager who has control over the bank account. In times of legal duress the company management is transferred to the trustee. The trustee cannot be compelled by a foreign judge to distribute assets outside of what is established in the trust deed. The assets in the trust are set aside for the benefit of trust beneficiaries and legal provisions protect funds from being seized by a judgment creditor.
With properly established legal vehicles this is the most protection and control one can expect from a liquid asset protection strategy.
This type of implementation involves custom asset protection provisions to be included in the establishment of the trust as well as special provisions in the company operating agreement for management protocol. This can be accomplished using domestic or offshore estate planning tools and business entities depending on the risk, needs and comfort level of the individual seeking protection.