An important part of high end finances and investment is asset protection. An asset protection system is a system of legal practices that people use to protect their assets from legal judgments. In effect, a guaranteed asset protection system should make one’s assets judgment proof. There is personal asset protection and business asset protection, although it is often found in business, where more money is involved.
The basic principle of asset protection is based upon the fact that a person or business that has assets can potentially lose portions of those assets to creditors. When those people and businesses no longer own those assets, they cannot be reached by creditors. That is the goal of asset protection strategies. There are various asset protection strategies that are meant to remove the legal title to a person’s or business’ assets while still allowing all the benefits of those assets.
The best asset protection strategy should be enacted before there is really a need for it, but this is not how it usually plays out. After a lawsuit is filed by a creditor, many people can still engage in asset protection planning. Asset protection planning may be considered a fraudulent transfer at this point, but there is usually no downside to asset protection planning, as it can simply be set aside. A person or business in debt to a creditor may have nothing to lose by simple asset protection planning.
There are many asset protection strategies in the United States. The various asset protection plans are based on the needs of the person or business. The Asset protection system that is best for a specific party will depend on the nature of the asset that is being protected, such as rental real estate, personal residences, bank accounts and retirement plans. The timing of a claim or lawsuit will also decide the best asset protection strategy, as well as the risk adversity of the debtor and the aggressiveness of the creditor.
People seeking asset protection of their house, for example, have approximately seven different asset protection options according to some legal finance experts. They may transfer ownership to a living trust with a generic name, or transfer ownership to an irrevocable trust to ensure personal asset protection. They may also encumber the residence, record a naked deed of trust, sell the residence to a family member with an installment plan, or even sell the residence to a stranger for cash. These are all completely legal personal asset protection strategies.
Simply changing the legal title to a living trust with a generic name is an asset protection plan that may work for some creditors, but not most. Many legal finance experts insist that a better asset protection plan is an irrevocable trust or total sale of the residence. Another consideration is whether or not the asset protection will easily convert the asset to money. Offshore trusts and offshore bank accounts are options in this circumstance. Offshore asset protection is effective because the asset is outside the control of any local court, so the debtor can’t be ordered to bring the asset back to the United States.
For more resources about Nevada corporations or even about asset protection planning and especially about asset protection please review these links.
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