» Asset Protection
Asset protection is about making more barriers as possible in front
of creditors to make it more difficult for them to get to these personal
assets. Asset protection is not about hiding those assets.
Asset protection objective is to set up structures where assets will
be owned and make it more difficult for a creditor to reach those assets.
Asset protection plan allows the debtor to expose the structure of
the plan without losing its efficacy. Asset protection is more effective
when implemented in advance.Asset protection plan includes almost
every phase of your business. Therefore, consider the services of an asset
protection professional, such as an attorney in developing an asset
protection plan that works best for you
Basics of asset protection
Asset protection planning focus on removing the debtor from legal
ownership of assets, while retaining the debtor's control over and beneficial
enjoyment of the assets.
Asset protection structures are:
- Personal Residence asset protection
- Transfer the ownership to a personal residence trust which allows a great
deal of asset protection without any tax consequences.
- Rental of Real Estate and Other Non-Liquid Investments.
Liquid assets may also be protected with a special asset protection trust
based in a foreign jurisdiction.Asset protection is a simple and
effective means of changing the plaintiff's financial analysis and making
the debtor "judgment proof".
Asset protection planning considerations
- Who (or what) is the likely debtor?
- What is the nature of the claim against the debtor?
- Who is the likely creditor?
- Which of the debtor's assets need to be protected?
Any asset protection plan will change the ownership of assets. Asset
protection planners may disagree on many things, but they all agree that
timing is everything.
Steps to Asset Protection:
1. What are your financial goals?
2. Think about each of your personal/business assets that you need or wish
3. Will there be domestic and/or international platform(s)?
4. Select the legal entities
Asset protection trusts common goal is to limit the interests of
beneficiaries in such a way to prevent creditors from collecting against
Trusts are widely used in asset protection. Not all types of trusts
are effective asset protection devices, but a properly structured
trust may be an almost impregnable form of asset protection.
Asset protection common drafted trust is the living trusts. It has
limited asset protection also It protects non-settlor beneficiaries
from claims of creditors to the same extent as irrevocable trusts. Another
asset protection trust usedfrequently is the qualified personal residence.
It is used to transfer a settlor's residence out of the settlor's estate
at a low gift tax value.