It’s a good idea to consult a lawyer to determine what your best options are for asset protection. Often, a skilled attorney will be able to help you create a comprehensive plan that includes both offshore and domestic asset protection. This can be done in a variety of ways, including through an asset protection trust and by filing a home mortgage modification. But there are also a few things you can do on your own to protect your assets.
Early planning for asset protection
The best time to plan for asset protection is before any potential liability or litigation arises. For instance, if you are a doctor or accountant, you will need to implement asset protection measures before a professional malpractice suit is filed against you. Similarly, if you own a business, you will also need to plan for asset protection before a lawsuit is filed against you.
Although you may be tempted to wait until after a lawsuit is filed, this is often not a good idea. Your assets will be more easily targeted by legal opportunists.
A well-crafted asset protection plan is an excellent way to protect your personal and business assets from creditors. It can include setting up a trust, transferring assets into a retirement account, owning property through a LLC, or setting up a family limited partnership.
Asset protection is the process of building barriers around your assets. These strategies can include setting up corporate structures, a family limited partnership, captive insurance, or protecting your property from liens.
Offshore asset protection trusts
An offshore asset protection trust is a trust structure that involves an unrelated third party acting as a trustee. It is a good strategy to protect assets.
Offshore trusts are especially effective for small business stock, marketable securities, and limited partnership interests. In addition, they are a great way to protect heirs’ inheritance. But there are a few important things to keep in mind before you start.
You can set up an offshore trust in a number of jurisdictions. The most popular are the Cook Islands, Nevis, Belize, and St. Kitts and Nevis. These islands are well-known for their favorable self-settled trust laws.
When setting up an offshore trust, the grantor (trustmaker) must choose a foreign trust company as trustee. He or she must also work with a CPA who is experienced with foreign trusts.
Offshore trusts are not cheap. They can cost tens of thousands of dollars to set up and administer. If you fail to report an offshore trust to the IRS, you could face serious financial consequences.
Do-it-yourself (DIY) asset planning tools
If you own or plan to own real estate, you may want to consider asset protection. Not only can it keep you from being sued, but it can also prevent you from losing your hard-earned cash to a tenant or a tax man. You can find a number of reputable providers online, but you’ll still need to be choosy about your choices.
The first step is evaluating your creditor’s strengths and weaknesses. Once you have this under control, you can consider using the right types of asset protection tools to protect your investment. One such tool is the title holding trust. It is a privacy device, and it has proven to be a worthy investment in many cases.
Asset protection may not be a top priority for every individual, but it is a smart idea for everyone. After all, everyone is at risk for a civil suit of some sort. Even if you own a small business, you could get sued by a client or even by your employer.
Problems with asset protection in California
If you live in California, you should know that you can’t use an asset protection trust here. This means that you’ll have to set up a trust in a jurisdiction where they allow this type of trust. For example, you can create a DAPT in Nevada or Delaware. Then you can protect your assets by using it.
However, there are some serious problems with California asset protection laws. First, if you create an LLC here, you’ll have to let your creditors take the property. In addition, if you try to sell the assets of the LLC, you’ll have to go through the courts. Another problem is that you cannot use a self-settled trust in California. You’ll have to get the trustees to establish the trust in a location where they’re allowed to do so.
While the California asset protection laws are weak, you can still use a number of tools to protect your assets. These include self-settled trusts, domestic asset protection trusts, and third-party asset protection trusts.
