Asset protection (sometimes also referred to as debtor-creditor law) is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. The goal of all asset protection planning is to insulate assets from claims of creditors without concealment or tax evasion.
Asset protection consists of methods available to protect assets from liabilities arising elsewhere. It should not be confused with limiting liability, which concerns the ability to stop or constrain liability to the asset or activity from which it arises. Assets that are shielded from creditors by law are few (common examples include some home equity, certain retirement plans and interests in LLCs and limited partnerships (and even these are not always unreachable)). Assets that are almost always unreachable are those to which one does not hold legal title. In many cases it is possible to vest legal title to personal assets in a trust, an agent or a nominee, while retaining all the control of the assets. The goal of asset protection is similar to bankruptcy, and the two practice areas go hand-in-hand. When a debtor has none to few assets, the bankruptcy route is preferable. When the debtor has significant assets, asset protection may be the solution.
The four threshold factors that are either expressly or implicitly analyzed in each asset protection case are:
1) The identity of the person engaging in asset protection planning
2) The nature of the claim
3) The identity of the creditor
4) The nature of the assets
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A properly drafted offshore asset protection trust constitutes an entirely legal and highly effective means of sheltering one’s assets from wrongful seizure or attachment. In addition, asset protection trusts also offer the only truly legal method of deferring income tax on passive income.
Offshore asset protection trusts operate by transferring or assigning either individual or corporate assets to an offshore trustee that is not subject to the general jurisdiction of U.S. courts, while at the same time providing ready access to those same assets. Generally, individuals create offshore asset protection trusts in conjunction with previously established estate plans.
How Offshore Trusts Shield Assets
An expertly crafted offshore asset protection trust devised by a lawyer who is highly experienced in the field can create a virtually impenetrable shield around one’s assets. The offshore asset protection trust also allows the settlor (or grantor) of the trust to serve as one of the lifetime income and principal beneficiaries. The trust settlor also may name additional lifetime income and principal beneficiaries such as their spouse or children. Upon the settlor’s death, the specific terms of the trust dictate to whom and when the remaining income and principal of the trust are paid out.
Under the Internal Revenue Code, an offshore asset protection trust is a "grantor trust," which simply means that all income, deductions and credits received by the trust in any given tax year effectively "flow through" to the settlor of the trust. The trust itself is responsible for filing an informational tax return each year, but the trust settlor has sole liability for any tax due.
In addition, an offshore asset protection trust can be completely domesticated, i.e. converted into a domestic trust based in the U.S., at any time except when the settlor is operating under an "event of duress", such as being the subject of litigation, bankruptcy or divorce proceedings.
Where Can Offshore Trusts Be Established?
A highly effective offshore asset protection trust can be established in any number of offshore jurisdictions, including the Bahamas, Cayman Islands, or St. Kitts and Nevis. The initial cost of setting up such a trust ranges from $5,000 to $25,000 depending on its complexity, with yearly trustee and management fees ranging from $5,000 to $10,000. Perhaps most appealing of all is the fact that an offshore asset protection trust can be coupled with an offshore corporation or limited liability company to facilitate the continued operation of the settlor’s business concerns with extremely limited fear of creditor attack on the assets of the business entity.
Asset protection legal services for clients in Miami, Ft. Lauderdale, Boca Raton, Palm Beach, Jupiter, Naples, Fort Myers, Sarasota and cities throughout Florida.
Asset protection consists of methods available to protect assets from liabilities arising elsewhere. It should not be confused with limiting liability, which concerns the ability to stop or constrain liability to the asset or activity from which it arises. Assets that are shielded from creditors by law are few (common examples include some home equity, certain retirement plans and interests in LLCs and limited partnerships (and even these are not always unreachable)). Assets that are almost always unreachable are those to which one does not hold legal title. In many cases it is possible to vest legal title to personal assets in a trust, an agent or a nominee, while retaining all the control of the assets. The goal of asset protection is similar to bankruptcy, and the two practice areas go hand-in-hand. When a debtor has none to few assets, the bankruptcy route is preferable. When the debtor has significant assets, asset protection may be the solution.
The four threshold factors that are either expressly or implicitly analyzed in each asset protection case are:
1) The identity of the person engaging in asset protection planning
2) The nature of the claim
3) The identity of the creditor
4) The nature of the assets
==
A properly drafted offshore asset protection trust constitutes an entirely legal and highly effective means of sheltering one’s assets from wrongful seizure or attachment. In addition, asset protection trusts also offer the only truly legal method of deferring income tax on passive income.
Offshore asset protection trusts operate by transferring or assigning either individual or corporate assets to an offshore trustee that is not subject to the general jurisdiction of U.S. courts, while at the same time providing ready access to those same assets. Generally, individuals create offshore asset protection trusts in conjunction with previously established estate plans.
How Offshore Trusts Shield Assets
An expertly crafted offshore asset protection trust devised by a lawyer who is highly experienced in the field can create a virtually impenetrable shield around one’s assets. The offshore asset protection trust also allows the settlor (or grantor) of the trust to serve as one of the lifetime income and principal beneficiaries. The trust settlor also may name additional lifetime income and principal beneficiaries such as their spouse or children. Upon the settlor’s death, the specific terms of the trust dictate to whom and when the remaining income and principal of the trust are paid out.
Under the Internal Revenue Code, an offshore asset protection trust is a "grantor trust," which simply means that all income, deductions and credits received by the trust in any given tax year effectively "flow through" to the settlor of the trust. The trust itself is responsible for filing an informational tax return each year, but the trust settlor has sole liability for any tax due.
In addition, an offshore asset protection trust can be completely domesticated, i.e. converted into a domestic trust based in the U.S., at any time except when the settlor is operating under an "event of duress", such as being the subject of litigation, bankruptcy or divorce proceedings.
Where Can Offshore Trusts Be Established?
A highly effective offshore asset protection trust can be established in any number of offshore jurisdictions, including the Bahamas, Cayman Islands, or St. Kitts and Nevis. The initial cost of setting up such a trust ranges from $5,000 to $25,000 depending on its complexity, with yearly trustee and management fees ranging from $5,000 to $10,000. Perhaps most appealing of all is the fact that an offshore asset protection trust can be coupled with an offshore corporation or limited liability company to facilitate the continued operation of the settlor’s business concerns with extremely limited fear of creditor attack on the assets of the business entity.
Asset protection legal services for clients in Miami, Ft. Lauderdale, Boca Raton, Palm Beach, Jupiter, Naples, Fort Myers, Sarasota and cities throughout Florida.
