Asset Protection: Limited Partnership, Limited Liability Company, Corporations
There are many ways in protecting your wealth and all the things you value. One very useful way in protecting all that you have would be Asset Protection. The goals of Asset Protection is 1) Use of one or more entities to protect businesses and personal assets from creditors, judgments and seizures 2) Minimize federal and state taxes 3) Confidential ownership of business and personal assets. So how do we do all this? A few tools that we use in protecting our assets are through Limited Partnership, Limited Liability Companies, and/or Corporations.
Starting with Limited Partnerships, this tool is comprised of one General Partner and one or more Limited Partners. The General Partner is the only one who has control over the partnership, its assets and its wealth. Similar to a Living Trust, a Limited Partnership is nothing more than a document or an entity, which legally holds title to assets.
Besides the Limited Partnership approach, there is also a more sophisticated approach which is through Limited Liability Companies (LLC). Limited Liability Company is another way in protecting your assets. Limited Partnership and LLC are very alike but there are two distinct differences between them. In a Limited Partnership, the limited partners cannot participate in managing the business, in an LLC they can. Also, in a Limited Partnership, the general partners are personally liable for business debts, in an LLC, all owners get the benefit of limited liability protection from business debts and claims. This type of entity, LLC, helps eliminate the downside for a General Partner in a Limited Partnership entity, which are the liabilities for your partners’ acts. This entity has a manager(s), which would be you or whomever you wish and as many additional members as you wish. Each of these members can contribute assets to the LLC.
In addition to Limited Partnerships and LLC, Corporations can also help in protecting your assets, especially for business purposes. Your assets would be owned in the name of the corporation. Debts, credit cards, vehicle loans, mortgages, and the like would be in the corporate name. Through the corporation you have limited your liability and gained a great deal of privacy and protection. A corporation offers many tax benefits, unlike a sole proprietorship. By using a corporation, you can take advantage of the 15% tax bracket which is a lot lower than individual rates, which can go all the way up to 39%, and that doesn’t include the state’s share. If you haven’t started your corporation yet, or even if you have, you may want to convert the corporation to either an LLC or turn it into an S-Corporation. The Standard Corporation, within which you would have a corporate and individual tax liability, is called a “C” Corporation. In a C-Corporation, tax rates range from 15% up to $50,000 of profits, to 25% of the nest $25,000. After this, the rates begin to get closer to individual rates, which are quite high.
Asset Protection may be a complicated process but it’s always better to protect what you have than to lose it all. A few tools in protecting your wealth are through Limited Partnership, LLC, and Corporations but there are also other ways in doing so. Call us today for more information in protecting your assets at (949) 262-1100. Or visit us at: http://www.stevensearsattorney.com
(ArticlesBase SC #437255)
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