In the Asset Protection Arena, what is a creditor? This would be any opposing party in a legal struggle. This could be anyone from your business partner, your spouse, an individual, large financial institution, a contractual plaintiff, a bankruptcy trust protector (trustee) or a government agency. This could be any legal person or entity that finds grounds to legally pursue you.
Creating a well defined and defended asset protection plan is critical, there are areas where an LLC or domestic trust would protect components of your wealth, where other times could be disregarded, depending on the nature of the event, jurisdiction and court. A professional asset protection service will be part financial planning, asset protection and estate planning which encompasses the skills of legal counsel, accounting and estate and asset protection. The result is an integrated plan that has layers of defense for any type of creditor.
Results of Asset Protection
Example 1: Marc owned a successful international motor manufacturing business and at one point owned 70% of the business interest world-wide as well as the warranty side. Marc eventually sold his UK business and received a healthy sum of money. Years later he sold the rest of his international businesses and maintained the U.S. based corporation and warranty company. Nearing retirement, Marc split the business with a partner and received another payout, leaving him with half of the domestic motor business and the warranty branch. Finally the rest was sold and Marc was free and clear of the businesses. Marc funded a very well structured asset protection plan and opened some foundations. Years later the business owners were in a legal battle which finally found its way to Marc where they claimed he had liability as the issue was the result of his period of ownership, according to the opposing party. Once his opposing legal team discovered the asset protection structure that had been in place for years, the claim was settled quickly for pennies on the dollar.
Example 2: Michael and Koreen were both professionals in real estate and had done well for several years. Having children that they wanted to plan for, they created an integrated asset protection and estate planning structure. Owning their home outright and had equity in several other investment properties, they created a skilled asset protection plan. When one of their children was 17, he was involved in an automobile accident with gross negligence. The result was the insurance company paying out the maximum amount the policy covered, which was a fraction of the accident liability and they were up against a major insurance provider in court. Michael and Koreen had to activate their asset protection, which placed their assets into their trust and with nothing in their name to satisfy a huge settlement. Michael and Koreen were involved in legal tides for years, however they did not lose their home or other properties.
Example 3: Ben was a successful entrepreneur that rarely let a deal slip by. Making excellent decisions, Ben quickly came into returns on his endeavors. Using this money to seed future deals where he was a capital partner, he managed to put himself into an excellent position at a young age. Several deals later, as a general partner on another business transaction, Ben found himself in hot legal water with his partners. This ultimately stripped him of his entire life’s earnings. Ben had no choice but to roll up everything and start over. Start over with little or no motivation to try as hard as he did. His next move was to start an asset protection plan with nothing, and his next business deal’s proceeds funded into the legal structure. Having filed bankruptcy and having judgements, Ben was able to utilize his business proceeds within his asset protection plan and continue to strike deals.
Asset protection plays many roles and any time a client has had to use it, their outcome was far more favorable than if they didn’t have a defensive structure around their assets. With millions, a valuable home or even nothing, asset protection planning is a legal toolbox that can help you keep what you work so hard to have.