Your Asset Protection Plan
Have A Lawsuit?
It's never too late to implement an Asset Protection plan
Even when acreditor is about to seize your property, an asset protection plan can protect selected assets. Rather than allow acreditor to pick and
choose which of your assets to seize, your plan can determine which assets to protect and which assets to leave exposed. It is NEVER TO LATE to implement your Asset Protection plan.
In the US, 12 states have enacted trust laws to create Asset Protection Trusts. There is agreat deal of difference in the amount of asset protection provided between these 12 states.
All states have a“statute of limitation” that determines how far back in time acreditor can go to void atransfer and clawback the asset or their cash value if atransfer occurred at less than its value. Most states have astatute of limitations on asset transfers of between 4and 5years. That means that creditors have up to 5years to claw back assets if transferred at less than their value.
The 15 states that have passed statutes that allow Asset Protection Trusts have reduced their statute of limitations to between 2and 3years. The State of Nevada is the exception in that Nevada has reduced its statute of limitations on transfers for less than value to as short as 6 months if the asset protection trust is properly drafted. The 6month statute of limitations only applies to assets that are transferred into aNevada Asset Protection Trust. This 6month limitation has resulted in Nevada being the leading state for Asset Protection Trusts.
Asset protection can insulate assets and keep them free of claims without hiding assets or misrepresenting facts. Agood plan will avoid fraudulent transfers and concealment. An effective protection tool is ajointly-held asset, called “tenants by entirely” where a creditor is prevented from infringing on the property rights of athird party.
Fifteen states have enacted asset protection trust statutes. Aperson can choose any of the 12 states that have asset protection statutes without needing to reside in the state selected. There are 36 countries around the world that have passed asset protection statutes. None of these countries require the trust contributor or beneficiaries to reside in their country.
When an asset is transferred to an Asset Protection Trust, the title or ownership of the asset is transferred. Both the title of an asset and the asset itself can be transferred to aTrust. There is no requirement to transfer the asset itself. If aRolls Royce, located in California, was transferred to aNew York Asset Protection Trust, there is no need to move the car to New York.
An asset protection trust established under Deleware law can own real estate and other assets in several states. Just as aDeleware corporation can own real estate and other assets several states. An asset protection trust established under Cayman Islands law can own real estate and other assets in any state or country in the world, without having to transfer any assets to their island.
Many people rule out using an offshore trust because they would not send their assets to some island in the Caribbean for safekeeping. Add to this misconception is that few US lawyers have ever established an offshore trust. This is because US citizens pay taxes on their worldwide income and an offshore trust is no benefit to their clients.
Understanding that titles and ownership are transferred and not the underlying asset, allows a greater choice in selecting ajurisdiction for their Trust.
The reason for selecting one state over another or one country over another is to select a jurisdiction with THE MOST ADVANTAGES LAWS available to protect the title of assets. There is no “one won best jurisdiction” to select because it depends upon the types of assets being protected, existing or pending litigation, the aggressiveness of claimants.
In order to form an Asset Protection Trust, ajurisdiction must be selected. The laws and regulations of the jurisdiction selected will govern the trust. In addition to asset protection regulations, the debtor-creditor laws of ajurisdiction play alarge part in selecting where to establish atrust.
Choose an Onshore Trust if you are not in litigation and believe that aclaim or lawsuit will not be filed or made against you in the next 6months. Establish your trust in Nevada because of its 6month statute of limitations on fraudulent transfers. Once 6months have passed since you transferred your assets into your trust and no litigation or claims brought it will be very difficult for acreditor to reach any asset in transferred into your trust.
Choose an Offshore Trust if you are in litigation now or believe aclaim or lawsuit will be filed against you within 6to 9months. Even if you face litigation ayear away you should choose offshore. If you choose aNevada trust and passed the 6month statute you may spend substantial legal fees fighting to preserve the statute. If creditors are expected to be aggressive you can select an offshore jurisdiction that has never allowed one of their trusts to be penetrated.
Before making any decisions relative to your assets you should seek advice from an expert on asset protection. You should find out if any of your assets are held in an exposed position and if they are, what are your options or steps you can take to protect them. After you have this information you can weigh your options and decide on acourse of action.
The simple conversion from acorporation into an LLC could prevent acreditor from seizing assets or foreclosure. The LLC can be further protected by establishing the LLC in adifferent legal jurisdiction. This requires acreditor to engage alawyer licensed in the state where the new LLC has been establ ished.
Forming atrust may displease creditors but they have no say in the matter. Without a Trust, creditors can pursue whatever asset they desire. Creditor targets are ofter real estate like ahouse or company office, that can’t be moved. Property owned by a Trust is untouchable. Nobody needs asset protection for gold coins or bars. So put your real estate into the trust and keep your gold to pass the test of having sufficient assets.