Liquid assets can be protected easily due to their transferability. This type of strategy requires that a safe, secure and well-protected accounts be established and the assets properly transferred to them.
One must determine the amount of availability and access they require to their cash. For those who are comfortable with longer term protection vehicles for smaller amounts, individual retirement account contributions and term life insurance are options that can be implemented that come with state and federal protection.
For protecting larger sums of money, and/or for hand’s on control and availability of funds, the use of legal structures and a business entity should be chosen.
Liquid assets can be placed into a self-settled spendthrift trust which is the strongest personal asset protection device available. These are special legal tools designed to protect the assets of an individual. This strategy can be enhanced through the use of a business entity as a control instrument and afford a trust settlor day-to-day control over the assets with maximum protection.
Protected funds are deposited in a secure account in the name of a company that is owned by an asset protection trust. This strategy offers the most protection and asset control over any other.
The trust sets aside assets for the benefit of trust beneficiaries according to the trust deed. The business entity, 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 who cannot be compelled 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 cannot be 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.