Are Certain Assets Already Protected?
Certain assets are already protected. For example, retirement plan assets in a 401(k) or an IRA, with very limited exceptions, are absolutely protected, even if someone were to file Chapter 7 Bankruptcy. Likewise, in some states, a person’s primary residence is also protected by law. In Florida, 100% of the equity in a person’s primary residence is exempt from creditors. A good example of this is when O. J. Simpson placed all of his money into his home in Florida. This allowed him to avoid paying the judgment against him.
Is There a Legal Process For Assets That Are Not Already Protected?
Using structures that the law provides for, there is a legal process in place to protect assets. The process may involve forming legal entities such as limited liability companies, limited partnerships or asset protection trusts to protect assets from judgments or other potential hazards.
This is not just a process for the super wealthy. Many of the people we talk to are not among the super-rich. They are people who have accumulated assets through a lot of hard work and have put aside a nice nest egg for their lifetime security. Even though these people aren’t wealthy, they still harbor major concerns regarding the possibility of a catastrophic event such as a large judgment being brought against them. Asset protection planning protects their financial security and prevents the loss of everything they built and worked for in their lives.
Can Someone Set Up An Asset Protection Trust In A State Or Country Where They Do Not Reside?
People often set up asset protection trusts in other states or countries from where they live. When they set up the trust, it will be organized and specifically made subject to the laws of the other state or country. Here in Missouri, we may want to create a domestic asset protection trust for a client that would be governed by the laws of Nevada; a state with a very strong domestic asset protection trust law.
In that case, we would select a Nevada trustee and make the trust subject to that state’s laws. Likewise, if someone wanted to go offshore with their planning; we could actually help them create a trust under Cook Islands law, which would govern that trust. In this case, they would appoint a trustee who was physically located and authorized to act as a trustee in the Cook Islands.
For more information on Which Assets Can Be Protected, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (314) 542-2210 today.
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