Asset Protection

What is Asset Protection?

Asset protection in it's simplest terms can be thought of a set of legal procedures utilized to protect your assets from future creditors and baseless lawsuits. The procedures employed should be designed to deter creditors from wanting to pursue legal action against you because it will be too expensive or too difficult to gain an enforceable judgment against you.

There are many ways in which an asset protection plan can be implemented and these can be greatly affected by such factors as; your country of origin, your age, where you earned your money and reporting rules for offshore assets in your country of origin.

Just remember, there is a fine line between legal asset protection and defrauding creditors which is illegal. Your first line of defense is to employ the services of an asset protection attorney who can design an asset protection plan based on your personal needs and situation. When working with an attorney your communications are also covered by client - attorney privilege, an added bonus that ensures your communications stay private and out of a courtroom.

Asset Protection Planning

A mature asset protection plan should offer you advanced warning when a would be attacker is pursuing your assets while removing you from the actual ownership of the assets themselves.

For people with larger estates offshore trusts can be a great way to garner a high degree of asset protection. Popular jurisdictions for asset protection trusts include; Panama, Isle of man, Bahamas and the Cayman Islands.

When you create a foreign trust you are transferring ownership of your assets to the trust. In the event that a creditor discovers the foreign trust they will have to pursue legal action in the foreign jurisdiction since courts in your home country will not be able to offer creditors any relief. Crossing over multiple jurisdictions to attack asset protection structures can be a frustrating and expensive exercise and will eliminate most casual creditors.

Utilizing Multi Layered Approaches

In order to further insulate your assets the best approach is to form a limited partnership with multiple entities spread across as many different jurisdictions as possible using a layered ownership model. As the outer layers of your asset protection plan are penetrated you should receive advanced warning which will allow you some flexibility to move your assets prior to having the remaining layers of your plan penetrated.

A common would be to set up a trust in one jurisdiction, owning a corporation in a second jurisdiction with the corporation owning a bank account in a third jurisdiction. This model is extremely simplistic and is used for illustration only. If the trust was penetrated in the first jurisdiction you would have time to get your money out of the bank account long before the other two layers have been penetrated.