Asset Planning Tips
1. Make a basic list of assets.
2. Make a basic list of people that could
control assets if you were unable to.
3. Make a list of people that you want to
benefit when you are ready to distribute assets.
4. Realize that anyone can get into a lawsuit,
especially if they have assets.
5. Asset protection requires you to take
action BEFORE problems arise, before health problems, before legal attacks,
before there are threats to assets, before making other decisions. You can even
use it as a private prenuptial plan.
TIMING - Wealth may be threatened at any time
and without adequate warning.
LEGAL PROTECTION - Asset protection is legal
as a planning tool, NOT as a tool to avoid existing problems.
BENEFICIARIES - Anyone can be a Beneficiary,
even a child or person with problems.
TRUSTEES – Anyone can be a Trustee, even a
RULES – The maker of the trust makes the
rules, so long as they do not violate laws regarding religion, or ethnicity, or
promote criminal acts.
DISCLOSURE - Asset protection does not require that
you notify beneficiaries or most outsiders.
You can keep a low profile, reduce exposure
from computer records, reduce credit information and risks, eliminate publicity,
have private investing. You can maintain separation of assets,
investors, current, former, and future family members, associates, risks, and
FLEXABILITY – Asset protection can be used to
avoid business disagreements, pre-nuptial agreements, divorce problems,
partnership negotiations, buy-out agreements, reduce
insurance costs, provide for incompetent persons, plan for medical costs and conditions, plan
for retirement, plan for taxes, plan for kids or seniors, and much more.
PROTECT ALL ASSETS. Check to make sure that
you have protected all of your assets, not just the major ones.
USE PROFESSIONALS. To design the most effective
plan possible you need to include all of your financial professionals including
your tax advisor, financial planner, and an attorney who specializes in the
It is not necessary to use offshore trusts or
do offshore investing. If you must go
offshore, ensure that you are in compliance with all laws and reporting
Uniform Fraudulent Transfer Act
Uniform Fraudulent Transfer Act was adopted for all transfers and obligations
that prevent placing
assets beyond the reach of existing creditors.
The court will use all relevant evidence to determine if there has been
a fraudulent transfer including:
"the debtor had removed or concealed
"the transfer was to an insider"
"the debtor had retained possession or control of
the property transferred,"
"the transfer or obligation was disclosed or
"the debtor was sued or threatened with suit
before the transfer was made or the obligation incurred,"
"the transfer was of substantially all the
"the debtor has absconded,"
"the value of consideration received by the
debtor was reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred,"
"the debtor was insolvent or became insolvent
shortly after the transfer was made or the obligation incurred,"
"the transfer had occurred shortly before or
shortly after a substantial debt was incurred," or
"the debtor had transferred the essential assets
of the business to a lien or who had transferred the assets to an insider of
NOTE: There are both civil and criminal
penalties against a debtor who fraudulently moves property with the intent to
defraud and can be considered a crime and a felony.
Advantages of a Revocable Trust
Avoids probate for your assets validly placed therein.
Upon death, allows quick distribution of trust assets to your beneficiaries.
Keeps the assets transferred through your trust private and confidential.
Probate Court has no control over trust assets.
Avoids Conservatorship if you become incompetent, or
help to reduce emotional stress on your family.
Completely flexible because you can change it at any time.
Durable Powers of Attorney
Durable Powers of Attorney are legal documents
authorizing a qualified person of your choosing to make health and financial
decisions for you, or take action on your behalf, in the event that you become
incapacitated or declared incompetent.
Avoids Conservatorship – court appointed guardian.
Provides flexibility to the named spouse if incapacitation occurs.
Designates a successor should both spouses become unable to act.
Also called a
"Advance Health Care Directive." This document is used to instruct
health care providers of the principal’s wishes concerning medical treatment,
life saving and life sustaining procedures. A Living Will provides an
individual an advance opportunity to direct how certain medical and life saving
issues are to be handled. Living Wills are frequently used to avoid
artificially prolonged life in accordance with the desires expressed by the
maker of the Living Will.
Reasons to have Durable Powers of Attorney
person of your own choosing will handle your health and financial affairs if
This is usually your spouse or one of your
children, but it can be any qualified person.
enables you to keep your affairs in the family and out of public records of the
avoids costs of guardianship (attorney fees, court costs, bonds).
In recent years more than 50% of all
corporations have been incorporated in Delaware. The state of Delaware is well equipped for corporations because it has a
separate court for the adjudication of corporate litigation resulting in
extensive case law for corporate matters. Delaware provides many tax benefits including: no state
corporate tax on interest or other investment income, no state sales tax, no
ad-valorem or value added tax, and no taxes on
business transactions. A single person can hold all offices including Director,
Shareholder, President, Secretary, and Treasurer. The corporate headquarters of
Delaware corporations can be located anywhere in the world.
Delaware corporation benefits include:
Established case law
Stockholders do not have to be U.S. Citizens
single person can hold all offices
Directors can change the corporate bylaws
Shareholder liability is limited to the value of stock owned in the company
Potential limited director liability for breach of fiduciary duty
Incorporating a business in California offers a number of advantages that aid in the
protection of both assets and privacy.
A California Corporation will protect the individual from personal liability. A
single individual can hold all offices including: Director, Shareholder,
President, Secretary, and Treasurer. Incorporating in California can allow you to take advantage of tax deductible
benefits such as health, accident, disability insurance, life insurance, and
medical reimbursement plans. Corporations that have fewer than 75 shareholders
can elect S corporation status which allows for the profits to flow through the
company and directly to the shareholders of the corporation without being
benefits of a California corporation include:
Personal liability protection
Stockholders names are not public
Availability of corporate retirement plans
Corporate fringe benefits
Unending corporation existence
Possible S corporation status
single person can hold all offices
Available to professionals: Doctors, Dentists, Nurses, Attorneys, Pharmacists,
combination of Nevada’s thriving business climate combined with their
extremely low state and local taxes have made it a desirable location for
business incorporation. In Nevada
the names of stockholders are not made public and there is no information
exchange program with the Internal Revenue Service. This offers greater
protection of your privacy. The Nevada legislature is committed to making Nevada corporate law attractive and flexible. A few of the
many tax benefits include no state personal income tax, and no state corporate
tax on profits or major annual fees.
Nevada corporation benefits include:
Stockholders do not have to be U.S. Citizens
single person can change the corporate bylaws
Relaxed annual corporate reporting requirements
Increased privacy for stockholders
information exchange with the Internal Revenue Service
Limited Liability Companies (LLC)
Limited Liability Companies are a preferred
asset protection vehicle of many business owners as well as real estate owners.
The LLC is a non-corporate business entity that is taxed as a partnership
rather than a corporation. As a result of being taxed as a partnership, an LLC
is not subject to corporate income tax. Income is only taxed as personal income
when you receive income or assets from the LLC. The LLC also protects the
personal assets of the members and the officers of the LLC from creditors. The
transfer of shares of an LLC can be greatly restricted by the operating
agreement of that company. Even if a creditor obtained a membership interest in
the LLC, they would only be entitled to their share of profits and would not
become a voting member of the LLC unless the board voted unanimously. This
provides the members greater control over both the present and future
management of the LLC. The benefits of forming an LLC begin immediately upon
formation and registration with the Secretary of State.
of an LLC include:
Avoidance of double taxation
Limited liability of officers’ personal assets
Reduced paperwork – no requirement to prepare annual company minutes
Benefits begin immediately
Continuity of Life
A limited partnership is an effective asset
protection vehicle that allows you to retain control of your property while
granting the direct ownership to the partnership. Often you or your spouse, or
a company owned by you will be the general partners, allowing you complete
control and management of the partnership. Children or other trusted designees
can also be brought in as limited partners in order to transfer property to
them. The partnership is an effective tool because under partnership statutes,
a creditor who has obtained a judgment against you has no right to take any
property from the partnership. The creditor would only be able to attach any
payments made to you on behalf of the partnership.
of owning a limited partnership include:
or your spouse, or a corporation (owned by you), may become general partners,
retaining complete control of the partnership
or your spouse, or your Living Trust may become limited partners, sharing in
the profits and losses but having no decision making power
Children can be named as limited partners
property is transferred into the partnership