Asset Protection:

If you do not already have an asset protection plan, the best time to start is now.  The most important part of any asset protection plan is having it in place before you are at risk.  Operating without a safety net of entity structures can leave you vulnerable to creditors and potential litigants.  It becomes increasingly important, as wealth is acquired, to protect assets with entity structures.

A good preventative plan can limit serious risks.  Savings accounts, real property, businesses, and other assets should be titled to protective entities in order to shield them from lawsuits and creditors.  It is critical to have protective entity structures in place before the threat of creditors or legal risk occurs.  If entities were formed only for the purpose of protecting against a threat after a claim has been made or lawsuit has been filed, it is too late.

Reactive entity structuring can easily be overcome by creditors and potential litigants, as a fraudulent transfer.  When assets are safe-harbored in response to an imminent threat, courts will disregard the protections.  In the event of a potential threat there are still some actions you can take, but in many cases, protection will already have been lost.  Once a threat is imminent you will be left with few options, other than to implement a costly crisis plan that may still not work.  Protect yourself before you incur liability and have a good preventative plan in place.

Creating an asset protection plan:

The goal of an asset protection plan is to provide maximum protection while retaining as much management and control of assets as possible.  The first step is to choose the goals and objectives and identify potential risks.  Then decide which assets need protection.  It is critically important to consult with an accountant to understand the tax implications of each entity structure you choose.

There are many things that must be considered in choosing an asset protection strategy:

The value of the assets you want to protect

Potential risks

Financial and estate planning objectives

Tax implications

Costs versus benefits

Corporations, international trusts, family limited partnerships, and limited liability companies can all be effective for asset protection.  It will depend on the circumstances which is the best choice.  Each plan must be customized to a particular situation in order to maximize flexibility and protection.  The goal is to offer maximum protection in the most simple, flexible, and cost-effective way.