ASSET PROTECTION PLANNING
The goal of an asset protection plan is to protect an individual’s assets from future creditors. The most common type of creditor who poses financial risks comes from a lawsuit or inner-family dispute.
A complete asset protection plan considers a client’s entire wealth structure then identifies and resolves potential weaknesses. The solutions can range from the simple re-titling of assets into a form of joint ownership to a sophisticate offshore asset protection plan.
BENEFITS OF AN ASSET PROTECTION PLAN
In today’s word, lawsuits may arise from an individual’s business activities, property ownership, or through the operation of a motor vehicle. Most people carry insurance coverage to protect them in these situations; however, insurance alone is not always adequate. Most people have taken the time and to set up an estate plan that transfers their wealth upon their death. However, very few have given consideration to how they protect these same assets during their lifetime. A complicated asset protection plan does not make sense for everyone. Often assets can be adequately protected using a few simple and inexpensive techniques.
DOMESTIC ASSET PROTECTION TRUSTS
Most business owners and property owners are familiar with the various types of business entities that provide the protections of limited liability. However, certain clients can benefit greatly from a more sophisticated asset protection structure which generally involves an asset protection trust. Several states have enacted laws that allow an individual to create a trust that protects their assets from future creditors while still allowing them to be named as a beneficiary to the trust. These trusts are a relatively new development in domestic law; however, they can provide a cost-effective level of asset protection if structured properly.
OFFSHORE ASSET PROTECTION TRUSTS
The most complex and most effective asset protection structure is the offshore asset protection trust. Certain offshore jurisdictions allow the creator of the trust more access to the trust assets than is possible under a domestically-based asset protection plan. Most importantly, these same jurisdictions do not recognize foreign judgments, which makes it extremely expensive and time-consuming for a creditor to attempt to collect a judgment from an offshore trust. The result is that creditors often settle their claims for pennies on the dollar.
A complicated asset protection plan is not necessary or appropriate for everyone. However, everyone can benefit from having their asset structure reviewed to see what can be done to address potential weaknesses. Please contact Hays Firm LLC to set up a meeting to discuss your situation. You may contact the Hays Firm LLC at (312) 626-2537 or via e-mail.