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Asset protection is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. The goal of all asset protection planning is to insulate assets from claims of creditors.
- The identity of the person engaging in asset protection planning
- If the debtor is an individual, does he or she have a spouse, and is the spouse also liable? If the spouse is not liable, is it possible to enter into a transmutation agreement? Are the spouses engaged in activities that are equally likely to result in lawsuits or is one spouse more likely to be sued than the other?
- If the debtor is an entity, did an individual guarantee the entity’s debt? How likely is it that the creditor will be able to pierce the corporate veil or otherwise get the assets of the individual owners? Is there a statute that renders the individual personally liable for the obligations of the entity?
- The nature of the claim
- Are there specific claims or the asset protection is taken as a result of a desire to insulate from lawsuits?
- If the claim has been reduced to a judgement, what assets does the judgement encumber?
- Is the claim dischargable?
- What is the statute of limitations for bringing the claim?
- The identity of the creditor
- How aggressive is the creditor?
- Is the creditor a government agency? Taxing authority? Some government agencies possess powers of seizure that other government agencies do not.
- The nature of the assets
- To what extent are the assets exempt from the claims of the creditors?
All fifty U.S. states also have laws that protect the owners of a corporation, limited partnership, or limited liability company from the liabilities of the entity. Many states limit the remedies of a creditor of a limited partner or a member in an LLC, thereby providing some protection for the assets of the entity from the creditors of a member.
There are also laws which allow a creditor to pierce the corporate veil of an entity and go after the owners for the debts of the entity. It may also be possible for a creditor of a member to reach the assets of an entity through a constructive trust claim, or a claim for a reverse piercing of a corporate veil.
The anti-alienation provision of the Employee Retirement Income Security Act of 1974 (ERISA) exempts from claims of creditors the assets of pension, profit-sharing, or 401(k)plans. Two exceptions are carved out for qualified domestic relations orders and claims under the Federal Debt Collection Procedure Act. Because the protection is set forth in a federal statute, it will trump any state fraudulent transfer law. Protection of ERISA is afforded to employees only and does not cover employers. The owner of a business is treated as an employer, even though he may also be the employee of the same business, as in a closely held corporation. Accordingly, ERISA protection does not apply to sole proprietors, to one owner business, whether incorporated or unincorporated, and to partnerships, unless the plan covers employees other than the owners, partners and their spouses.
Asset protection planning requires a working knowledge of federal and state exemption laws, federal and state bankruptcy laws, federal and state tax laws, the comparative laws of many jurisdictions (onshore and offshore), choice of law principles, in addition to the laws of trusts, estates, corporations and business entities. The process of asset protection planning involves assessing the facts, circumstances, and objectives of an individual, evaluating the pros and cons of the various options, designing a structure that is most likely to accomplish all the objectives of the individual (including asset protection objectives), preparing legal documents to carry out the plan, and ensuring that the various legal entities are operated properly in accordance with the laws and the objectives of the individual.
Let’s look at the LLC, IBC and Trust:
If you are an American and/or are resident within the USA, should seriously consider the following ASSET PROTECTION information.
In today’s “sue first and ask questions after-wards” society, everyone is under threat of having their assets wiped out for any reason whatsoever. The good news is, an Offshore Trust for Asset Protection has been designed to give you high quality, low cost ($895) asset protection. It’s called the Offshore Trust for Asset Protection (OTAP). Not only does it help to make you financially bullet proof, but it also places your funds into a healthy environment in which they can grow.
The first question one is likely to ask, when faced when considering this OTAP is, “What’s the catch? How can an offshore asset protection trust cost just $895? That’s less than $2.45 a day for the cost of a latte’ or munchie at your favorite cafe’.
It is in fact a simple agreement that, once activated, generates a sequence of events that are designed to give you certain levels of financial immunity from the many parties who would like to separate you from the product of your hard work and commitment: your assets.
A trust agreement is simply a document drawn up that insulates your assets from claims of creditors, governments, or lawsuit plaintiffs.
In the widely publicized 1996 case of O.J. Simpson, although a losing defendant in a lawsuit, he still got to keep $25,000 a month in spending money. Despite the fact that he lost all assets held in his own name, he was able to keep all income from money he had placed in trust years before the lawsuits were filed. Trusts work.
During the period between 1980 to 2012, thousands of wealthy people, on average, spent US$50,000 each on lawyer’s fees to accomplish the same results that you can have by taking out a $895 OTAP. Why is there such a vast price difference, or should we call it an apparent discrepancy? In most cases its a matter of perspective and what’s going on in your life.
A trust involves at least one person and at least some property or assets. Let’s say you have to deal with your irresponsible fourteen year-old kid, who even has trouble managing his lunch money. As a consequence, you decide that since your fourteen year-old is going to squander any money placed under his control. So you’ll place your million dollar gift to the Kid in trust. You open a bank account styled, “Father” In Trust For Kid.” You then hand the Kid a piece of paper that says you (Father) will invest and manage the trust assets, collect the interest and gains, pay the Kid’s school fees, and also give him a weekly allowance for the next 21 years.
When the Kid reaches maturity at a certain age, say 35, Dad, the Trustee, will turn everything in the trust over to him. Until he, the Kid, reaches the specified age of maturity, he is powerless to touch the principal, which is why this kind of trust is often referred to as a “spendthrift trust.”
For the next 21 years the money is also protected against any creditors who would like to deprive the Kid of his rightful finances to-be, which would also include Dad’s creditors. A trust agreement in fact can make provisions for all kinds of eventualities. For instance, if Dad dies before the Kid reaches 35, a successor trustee (a lawyer, a bank, or the Kid’s Mom) is appointed to take Dad’s place as trustee.
Due to the proliferation of lawsuits, government confiscations, and new laws enacted to “protect us” from ourselves, many if not all wealthy people, especially in the United States, have set up OTAPs. By having title to assets like stock or real property held by foreign corporations or trustees, these assets can be hidden and protected from creditors. At the same time ownership benefits (like income) can still be enjoyed as before.
American citizens are forbidden by law from investing their money in at least 99% of the opportunities of the world. That’s shocking! Before most securities can be purchased by a US citizen, they must be ”approved” by the Securities and Exchange Commission. Gaining such approval is an expensive bureaucratic procedure. It’s much like winning an okay from the Food and Drug Administration for a life-saving new drug. Most companies never bother. As a result, most of the world’s best performing mutual funds can’t be legally sold in the USA or to US citizens.
The way out of this dilemma is a comparatively simple one, which entails establishing an offshore trust to hold these forbidden investments. From this point of advantage you can often do considerably better than you can with the very limited, legally approved deals for US citizens. Succinctly put, with an OTAP you have the right to choose.
Become invisible. If you are in dispute with a Federal Regulatory Agency, it is very easy for a low grade bureaucrat to press a button on his PC. He enters your social security number, and is able to quickly identify your bank accounts, securities, and real estate. Another few buttons are pressed … just like that your property is “frozen,” and your bank and brokerage accounts are transferred to the government.
With your assets held abroad in an OTAP, it is not possible for a creditor to locate them with any precision. In fact it is virtually impossible to confiscate trust assets. Why? The lawyers of bureaucrats and plaintiffs don’t like difficult investigations and long, drawn out court procedures. Especially if lawsuits must be filed and pursued abroad. As a result, in most foreign jurisdictions (unless the local governments are collaborating), not even Big Brother or Big Sister can get at your assets.