General Asset Protection
Asset protection is becoming an important part of middle income Americans’ lives. Small business owners are scared to death of the wacko lawsuit. Government regulators, the IRS, and half the entitlement Joes are waiting to take away everything they have. Attorneys don’t do much asset protection planning for clients, because they make their money cleaning up the mess, not preventing it. We all face disasters, such as death, divorce, lawsuits, taxes, catastrophic illness or accidents, and identity theft. Any one of these common disasters is a major asset protection threat to your financial security. Doing some asset protection planning today will make a big difference when you get hit by one of life’s disasters.
Ownership is the key element in all asset protection plans. The asset protection concept of "ownership" is simple. Planning for asset protection almost always involves moving ownership of assets away from you and spreading that ownership across your family members. The object is to give up ownership and not give up control, so that you can still enjoy the benefits of the asset.
Most of the houses around mine have businessmen or professionals living in them. A quick search of the county records will show that various trusts or people unknown to me "own" the houses my neighbors live in. Each one of my neighbors has done asset protection planning, and the "ownership" of their house isn’t in their name. Often the spouse, not the professional, owns the house. If the asset protection plan is set up so the non-professional spouse owns the house, then when the professional is sued, the attacker probably can’t get the house. Actually, if the spouse is going to "own" the house, you should make sure to use a living trust so that you don’t have to probate the house if he or she dies.There are a limited number of these asset protection tools available to an attorney. Please note that living trusts are not good asset protection tools. When your spouse "owns" the asset in his or her living trust, it is protected from attacks that may come against you, but it isn’t giving the asset any asset protection from acts he or she may commit. Corporations are good asset protection tools. Yes, a corporation is used to structure businesses, but a corporation can also be sued in a family’s asset protection plan. Limited partnerships are held out as a great asset protection device. If a limited partnership is used in a family’s asset protection structure, it is called a Family Limited Partnership (FLP). The most flexible tool an attorney has for asset protection is undoubtedly a limited liability company (LLC).
The core of your asset protection plan should be a living trust. It needs to "own" the stock in your corporation, membership interests in the LLC, and the partnership interests in your FLP, so that there won’t be any probate when you die, estate taxes can be avoided, and management of the entities can continue uninterrupted.
Order my new book, Guaranteed Millionaire, and learn how to structure your asset protection plan with the living trust at the core. Ask for the FREE 90 minute asset protection DVD, Using the Law to Make Money and Protect Your Assets. Yes, the DVD, which is normally $19.99, is yours FREE. It is a great overview of the asset protection tools available to you.