Vehicles to Protect Your Assets (pay, real estate, financial, company)

[thrillobyte]

With lawsuit-happy people running around looking for other people with assets to sue, I was wondering about the various vehicles out there to protect your personal assets. There are irrevocable trusts, ERISA retirement accounts, LLC's, Nevada Corporations, Family Limited Partnerships. The best is a ERISA retirement account, the one that OJ had that protected his football earnings from the Goldman's civil lawsuit. Is it possible to get a large sum transferred into such an account all at once? What about putting your assets into a LLC or FLP? Do these protect assets from lawsuits? know such entities protect personal assets when your business is being sued but what about you being sued as an individual?

[pghquest]

I put most of my properties in "land trusts".. It allows me to maintain control as the trustee, allows me to transfer them to other "trustees" without paying taxes, it keeps them out of my name so any lawsuits cant attach them etc.

My sports franchise is a corporation so in the event a player gets harmed, none of my other assets can be attached, (and the arena requires one to protect the county from lawsuits)

It really depends on what type of assets we're speaking of and where one lives. OJ's protection I believe was afforded to him due to a state law, but any other state they would not have been protected from a judgment. (I could be wrong on this but I'm pretty sure thats the case)

[bale002]

The first thing you need to do is speak to an asset protection attorney, and one specialized not only in your state, but also in international asset protection law.

All the tools you mentioned are part of it, plus limited partnerships and offshore LLCs, trusts, and annuities.

Which tool or set of tools you need depends on your situation.

Generally speaking, the deeper the layers of the protection, the more costly the structure is. Also, depending at what stage the attack against you is, you may need deeper protection faster: one thing to be aware of is fraudulent conveyance/transfer. Best is to have an asset protection structure in place well before an attack, like the above poster seems to have.

Perhaps do a Google search on asset protection, combined with such key words/ expressions as LLC, corporation, LP, trusts, offshore, retirement accounts, homestead, insurance, annuities, equity stripping, etc.

After you educate yourself to the point that you can via the internet, by all means talk to an asset protection attorney for your state, but one also with offshore experience to have a comprehensive view of all the tools available for your particular situation.

Good Luck!

[bustaduke]

Originally Posted by thrillobyte

With lawsuit-happy people running around looking for other people with assets to sue, I was wondering about the various vehicles out there to protect your personal assets. There are irrevocable trusts, ERISA retirement accounts, LLC's, Nevada Corporations, Family Limited Partnerships. The best is a ERISA retirement account, the one that OJ had that protected his football earnings from the Goldman's civil lawsuit. Is it possible to get a large sum transferred into such an account all at once? What about putting your assets into a LLC or FLP? Do these protect assets from lawsuits? know such entities protect personal assets when your business is being sued but what about you being sued as an individual?

I have most of my stuff in a living irrevocable trusts fund. Each person is different and what works for me may not work for you, other posters are also giving you good advice.

On a side note, I had a snotty little punk sue me a few years back. He wanted $5K for something I didn't do and tried to bully me. So I beat the crap out of him and paid him $10K for his troubles, it was well worth it.

If you have enough assets to protect, find a professional that can help you, they are worth there weight in gold if they know what they are doing.


busta

[golfgal]

If you are talking about the average Joe assets, house, retirement account, etc. your best first step would be to get an umbrella policy with your insurance company worth 2x's your net worth. For not a lot of money each month it is a great first step. I think our umbrella costs $25-30/month maybe?

If you have major assets, several million dollars or more an LLC isn't really going to offer you any real protection in a lawsuit. A new law school grad can see through that shield in about 5 minutes. You need to see a good lawyer that specializes in these cases and figure out what the best is in your situation.

[thrillobyte]

I put most of my properties in "land trusts"

I'll have to read up on that, pgh. That one fell right off my radar.

Perhaps do a Google search on asset protection, combined with such key words/ expressions as LLC, corporation, LP, trusts, offshore, retirement accounts, homestead, insurance, annuities, equity stripping, etc.

Yes, I've researched those extensively. Here's what the experts say:

There are two camps:
1. You can totally protect your assets using all these vehicles, but which one is the most effective depends on which one the company is selling. Know what I'm saying?
2. None of these work. A good charging order can pass right through the general partner and get to the limited partners who hold the bulk of the ownership just like that (snaps fingers)! Same for FLP's. Nevada Corp? Forget it! No court in the land would honor your corporation status if it could be proved the corp was set up specifically to shield assets and not to do business. Irrevocable trusts? Fine, if you want to give up all ownership of your assets, specifically not naming yourself as a beneficiary or trustee and all assets are to pass to your heirs. Who would be crazy enough to give up control of their assets by naming as trustee of their trust a "most trusted friend" (who's likely secretly sleeping with your wife anyway )?

The bottom line I've found is that no assets held in the USA, especially real estate, is safe unless you homestead a 10-million dollar mansion in Florida or Texas, but who wants to put all their eggs in a sinking basket like a mansion in Florida?

your best first step would be to get an umbrella policy with your insurance company

A lot of people suggest insurance, golfgal, but I just can't trust an insurance co.---maybe it's just all the bad press health ins co's are getting lately.

[golfgod]

With lawsuit-happy people running around looking for other people with assets to sue

You're starting with an incorrect premise. Despite what some panic inducers in the media and politics would have you believe, there is no mass of people running around looking to sue you. I'm not some Pollyanna, just someone who is familiar with the facts.

That said, golfgal (great name BTW) has it right. The most cost effective way is with insurance, and an umbrella for 2X your net worth sounds about right as for the amount. I think we pay about $250/year for $2MM coverage.

If you are involved in (moderately) risky activity; driving a car, operating a business where customers come onto your premises, anything that brings you in contact with the public, that business's assets should be in a separate company. Whether it's a corp, LLC or other is a matter to discuss with your attorney and accountant.

If you are engaged in somewhat more risky activity, auto racing, piloting a small plane, OWNING RENTAL REAL ESTATE, then your risk increases. I used to own a couple of dozen rentals but don't any more. If I did they would be "bundled" into separate (probably) LLCs, maybe 3 per LLC.

golfgod

[thrillobyte]

I used to own a couple of dozen rentals but don't any more. If I did they would be "bundled" into separate (probably) LLCs, maybe 3 per LLC

And the state of Cali charges $800 per year corporation fee for each!

[bale002]

Originally Posted by thrillobyte

The bottom line I've found is that no assets held in the USA ... are safe ... real estate ... unless you homestead a 10-million dollar mansion in Florida or Texas ... but who wants to put all their eggs in a sinking basket

For a long time, the US has been considered the safest place to invest, for legal, social, political and economic reasons, but its legal system has also always been complex and somewhat unpredictable.

Now that the US is becoming mediocre socially, politically and economically, the complexity and unpredictability of its legal system can no longer be overlooked.

As with investing, diversification (of jurisdiction) is key also when it comes to holding assets. If cost effective, as mentioned, you should consider holding some portion of your assets overseas, whether in an LLC, partnership or trust.

Life itself is risky business and, in the long run, untenable.

[thrillobyte]

Originally Posted by bale002

For a long time, the US has been considered the safest place to invest, for legal, social, political and economic reasons, but its legal system has also always been complex and somewhat unpredictable.

Now that the US is becoming mediocre socially, politically and economically, the complexity and unpredictability of its legal system can no longer be overlooked.

As with investing, diversification (of jurisdiction) is key also when it comes to holding assets. If cost effective, as mentioned, you should consider holding some portion of your assets overseas, whether in an LLC, partnership or trust.

Life itself is risky business and, in the long run, untenable.

What you say about America becoming a third-rate country in terms of social and political developments is true. Unfortunately, America will be known for some time as the lesser of a lot of evils. With tin-cup and tin-foil dictators a dime a bushel out there putting your liquid assets in foreign countries is often playing financial Russian roulette, especially with the Justice Dept and the IRS starting to investigate these off-shore deposits of the small and middle size investors. Europe and the Euro are having their own problems and its a tossup which one of us will go down first. Zimbabwe anyone?