But the sad fact is that more than that number will agree only after hearing this. If you are in any way concerned about whether or not you will have to forfeit some of your hard-earned assets, talk to a lawyer to help you assess your situation. If you don’t have a lawyer, then consider meeting with an attorney to make sure you’re doing everything by the book. Here are a few common questions that you may have regarding asset protection planning.
What is it?
Protecting your assets or protecting someone else’s assets are commonly referred to as an asset protection plan. It’s a widely used term in the business and financial worlds. For the layperson, asset protection might be more commonly referred to as “asset protection” or “investment protection” or just “asset protection”. The aspects of an asset protection plan are many and vary from one case to another. For example, a married couple might separate assets and split up the wealth among them. Unless planned otherwise, their assets and property will eventually be unavailable to satisfy claims by creditors or to meet the liquid needs of litigation proceedings.
Protection of assets involves many different elements. You might consider adopting a more complicated asset protection plan in case you have many assets at stake. In many cases, the transfer of property to a trust is the most effective form of asset protection. A properly drafted asset protection trust makes assets from which you protect your own easily accessible and immediately usable to meet the immediate claims of your creditors. The trust is usually prepared in a jurisdiction with stable structures for establishing trusts for individuals. It’s less likely that the trust will be contested in court, and the trust’s terms will almost certainly be spelled out in an easy to understand manner. Here’s how the process works.
Protection of Assets Through Trust Planning
Setting up an asset protection trust is the first step in protecting your assets. Setting up a trust protects the trust assets from potential creditors that might otherwise be owed from your personal or business creditors. The trust gives you and your beneficiaries both privacy and asset protection. The privacy of the trust’s assets protects the assets. By establishing an asset protection trust, the identities, and the means of access to the trust’s assets are kept confidential. In addition to protecting your own privacy, trust planning also protects the beneficiaries of the trust. The creditors may not even be aware of the trust until after it is set up because trust assets are usually kept in the trust account until needed. Once trust assets are required for litigation or to satisfy due expenses, and no suitable action has been taken to protect trust assets during that period of protected asset protection, the trust assets are released to the beneficiaries.
In more complex situations, shifting assets to a trust may avoid incurring a large negative net worth drop. Assets in a self-directed trust have income and expenses which may be offset by the income and expenses of the trust property. Again, using a trust to protect your assets may be viewed as unfair by others, but trust planning is a matter of good financial and legal strategy.
What’s the difference between asset protection trusts and offshore trusts?
Be aware of the various types of asset protection trusts out there. There are both Chapter 7 (imony) and Chapter 11 (bankruptcy). Depending upon the trust and the jurisdiction, certain trust assets may be protected, and others not. The most important thing to note is that criminals use asset protection trusts to hide the ownership of assets they’ve obtained through illegal means, comparable to a tax evasion scheme. For others-the elite accountant, the trustee, and the beneficiary the asset protection trusts are simply tools to protect lifetime income and assets that might be difficult or impossible to reach or lien under a Chapter 7 or Chapter 11 bankruptcy, respectively.
Who should use offshore asset protection trust?
Privacy, anonymity, and asset protection should be a major consideration when discussing any offshore or international asset protection planning. Using asset protection trusts can achieve the goals of privacy, anonymity, and protection of assets. Privacy is achieved when assets are held and administered in an entity or names an entity that is difficult or impossible to identify. Confidentiality is achieved when the grantor of an international asset protection trust is not questioned at trial, much less amounted or conditioned with fines and lawsuits. Further, taxpayers using a trust will be able to hold assets in a foreign country so long as the foreign country has friendly laws allowing disclosure or an exemption.
Of course, the answer to the question should not be limited to asset protection trusts. Other uses of trusts, particularly in business, employment, or project finance deals, are often as powerful or potentially more powerful with trusts.