Doing nothing provides one certainty, your assets won't be yours for long. Chances are you have fire insurance for your home, but when is the last time you had a fire? A credit event is more likely and could cost you much more than just your home. If you're serious about protecting your assets there is no reason to have fire insurance while failing to form an Asset Protection Trust.
If you are reading this and are already being pursued by creditors, then you have nothing to lose by fighting back. And if you are merely looking to the future, then you have everything to lose and no reason not to protect it.
Credit events to be cognizant of include taxes, divorce, bankruptcy and accidents, e.g. automobile accidents. Each of these events presents an opportunity for a third party to secure a charging order against your assets. Some of these events are foreseeable and others aren't, but most of us will experience at least one of them in our lifetime. Given such odds it makes little sense to roll the dice.
Whether you are currently being pursued by creditors, or want to protect yourself from future claims, a domestic trust can protect your assets more efficiently than an offshore trust or merely throwing in the towel and giving into creditor demands.
Don't hand over the keys to your kingdom without a fight. All the asset protection strategies herein are legal. Hiding money offshore is not, so instead hide your money in plain sight using your own domestic asset protection trust.
Note: We offer specialized Irrevocable Income Only Trusts (IIOT) designed specifically for protecting assets from Medicaid.
Domestic Asset Protection Trusts are designed to deter present and future creditors. This deterrence may lead a creditor to decide that either bringing a lawsuit will be too costly and time consuming or will force them into settling for much less than would otherwise have been possible.
Depending upon your situation, a DAPT, DAPT Double LLC, or Hybrid DAPT may be appropriate. Each of these has its merits. Each essentially structures your assets in a manner designed to simultaneously preclude seizure by third parties while still allowing you to benefit from said assets.
Trusts were historically designed to separate the ownership, control and beneficiaries of assets from each other. This means a trust owns the assets, while a trustee administers/controls them and a party of your choosing (you) benefits from them. Domestic asset protection trusts create a distance between you and your assets and any possible distributions.
This distance creates a barrier between your creditors and the assets in question. This barrier can create sufficient reasonable doubt to deter creditor claims altogether, will give you a stronger position to bargain from and will at the very least buy you precious time.
These trusts, given you form the trust and are its beneficiary, are called self-settled trusts:
Thus, you may form a trust in a state of your choosing and it cannot simply be invalidated because it doesn't conform to another state's laws, usually the state you or your creditor resides in.
The first DAPT statute was ratified by Alaska in 1997. This is why such trusts are still often referred to as Alaskan Trusts, regardless of where they're formed. To this date, no creditor has pursued a DAPT through the whole court system. This is, presumably, due to the fact creditors assumed the domestic trust would ultimately stand up to scrutiny.
There are two cases to consider. First, if you reside in one of the # states with DAPT laws (x,y,z) then a properly created and funded DAPT will work. Nonresidents, on the other hand, still face the uncertainty of what should happen should the plaintiff refuse to settle and pursue the matter all the way through the court system. This uncertainty, though, creates doubt in your creditors mind as to whether the possible eventual pay off is worth the intervening effort and cost.
An asset protection strategy should be considered successful should
Don't allow the perfect to be the enemy of the good, a little bit of uncertainty should not deter you. Often those disliking certainty engage in no asset protection at all, and then the only certainty is that you'll have no protection from creditors. No strategy provides a 100% guarantee of success. The goal is to use all available techniques to stack the odds in your favor.
We are passionate about what we do. Our family history includes a company which survived two world wars, the depression and a near fatal accident. None of these things kept us down. What did finally do the company in was an untimely divorce and estate taxes. We don't want this to happen to you.
Second, it's the prices. Our competitors offer the same structures and strategies for approximately twice our cost. We are cheaper partly because we have streamlined our operations to handle your requests. A majority of the work is taken care of online, from data entry to payment. We make up the rest through volume.
Plus, given our family history, we would rather help 200 average individuals a year than 10 high net-worth clients.
Asset protection describes a wide sphere of legal techniques and structures. These stuctures are generally constructed to provide legal protections against lawsuits, creditors, divorces, bankruptcy and taxes.
Domestic Asset Protection Trusts can be employed for individuals and corporations seeking protection from aggressive creditors, or as part of a comprehensive estate planning process. Asset protection, also known as debtor-creditor law, is a type of legal planning to protect against civil judgements.
A primary objective in asset protection planning is avoiding any strategy that is, or merely appears to be, a fraudulent transfer. To ensure the strategy withstands scrutiny, you must ensure all transfer are compliant with relevant fraudulent-transfer statutes. These is generally easiest when there are no existing or reasonably foreseeable liabilities.
A commonly and easily used DAPT strategy is the “exempt asset strategy”, which, as the name implies, involves assets which are considered exempt from claims due to state law. Such assets may include primary residences, retirement plans, annuities, life insurance and some business assets. Another simple DAPT strategy is to transfer assets to a 3rd party. Putting assets into trust for a loved one can help shield the transferred assets from liabilities. There are two common downsides to these strategies. They are the transferor loses control and economic benefit of the assets transferred and the assets are not protected from claims which are made against both transferor and transferee.
A common variation of the above asset-protection strategy is transferring to family partnerships and limited liability corporations. Having the asset owned by the entity provides charging order protection whereby claims can only be made against distributions. Before deciding on any of the Domestic Asset Protection Trust strategies an analysis of one’s finances and potential liabilities should be conducted with a professional.
View our articles to familiarize yourself with our trusts. You may view DAPT basics, drawbacks and benefits here.
Statutes determining creditor rights vary state-to-sate. Wyoming's legislature has enshrined a number of debtor friendly laws which make it one of the best states in the union for protecting assets. Only a handful of states have enacted legislation allowing for their use, some examples are Wyoming, Alaska, Deleware and Nevada. One should prefer an experienced attorney for matters concerning asset protection due to state-to-state differences
Businesses and individuals who are being unfairly pursued by creditors can benefit from these legal techniques. Fortunately, living in a state other than one of these in no way disqualifies an individual from enjoying the benefits of such an arrangement. As a member of the Wyoming Domestic Asset Protection Counsel we are familiar with assisting individual's and business' with setting up these structures and are happy to discuss them individually or as part of a comprehensive estate plan. Follow the link above for further information.
An interesting strategy that has recently begun emerging is the domestic asset-protection trust. Asset protection is a common part of the asset management, financial planning and estate planning parlance.
Individuals and corporations are increasingly seeking strategies to protect and preserve their wealth. This movement towards asset protection has been in part fueled by the realization certain litigations and hazards present to accumulated wealth. Examples of such hazards are worldwide economic problems, failed marriages and blended families. These all constitute exposure to undue financial risks.
Many will find they don’t need asset-protection planning, but there are groups with greater exposure and risk. Such groups are doctors, attorneys, accountants, directors and officers of public companies and real estate owners. Add to those groups anyone with significant means and there is a meaningful population that is or at the very least should be concerned with asset protection and risk management.