Asset ProtectionCreate a strategy to protect your assets
You invest your time and money getting a degree. You marry and start a family. You begin a career or you start your own business. You begin living the American Dream and expect fairness to grow your career or grow your business for you and your family.
Our society’s evolution has created a new realty. Philosophies run counter to the American Dream. We live in a hot bed of unfounded accusations, unscrupulous creditors and specious legal attacks. You don’t have to be negligent to be sued. How do you protect your family, your career, your business, your dream? Asset Protection Planning!
Asset Protection is not just for the rich – and it must be done now, not later. Call John K. Rice now and begin formulating your protection strategy with proper legal advice. Your plan may include any one or more of the following:
Reconsider Joint Ownership
Money you deposit into a joint account with your children, parents, friends, or business partner is at risk. Property you place in joint ownership with a spouse, parent, children or friends, is equally at risk. If the joint owner files for divorce, incurs a tax lien, or judgment, all you own can be wiped out. Protect your personal property with a revocable or irrevocable trust.
Keep assets separate
If you have children from a previous marriage, avoid commingling your money, property or inheritance with your new spouse. A separate trust for you and your wife may be better suited to protect your assets so that your children get what you expect them to get when you are gone. Separate trusts can provide protection in the event of divorce. It can also create a shield against potential liability by shifting assets from a spouse in a high risk profession to the spouse that is not.
Create Business Entities
- Rental Property? Shield yourself from disgruntled tenants. Create an LLC or corporation for your rental property business. If a renter sues for outrageous amounts, they can only collect from the assets owned by the limited liability company or corporation. Your personal assets are protected.
- Doing Business on your own or with a partner? Formalize it. If you operate your own business full or part time, your personal assets are at risk. Business judgment creditors can go after all you own, whether the claims are legitimate or not. Informal partnerships are also a bad idea. All you own is at risk for whatever your partner does on behalf of the partnership whether you know about it or not. Protect your personal assets by formalizing your business or partnership into a limited liability company or corporation.
- Choose and Use Business Entities Properly. Keep personal assets separate from business assets Keep personal expenses separate from business expenses. Keep personal bank accounts separate from business back accounts. Follow company or corporation formalities religiously.
- You need competent legal and tax advice before deciding between a Limited Liability Company, Sub-S Corporation, C Corporation, General Partnership, Limited Partnership, Family Limited Partnership, or Business Trust, (to name a few). Without the proper entity in place, one simple business lawsuit could put your home on the auction block. You can shield your personal assets with the proper business entity in place. Call John K. Rice, for help in deciding the appropriate business entity for you.
- Once you choose the right business entity, you have to use it or lose it. Too often, individuals make a tragic mistake. They form the right business entity but fail to follow business formalities. If you ignore business formalities, your creditors will be able to ignore the business and come after you personally. Business formalities include issuance of membership certificates or shares of stocks, creation of company operating agreements or corporate by-laws, holding regular company meetings or corporate shareholder and director meetings; maintaining minutes of company or corporate resolutions. Let us help you set up and use the corporate shield that will protect your personal assets.
Creditors can’t get what you don’t own – the Utah Asset Protection Trust
Ultimately, the best asset protection tool is to get rid of what you own. A creditor can’t get what you don’t own.
- Consider gifting children or grandchildren an early inheritance through the use of an Irrevocable Trust. You can transfer personal assets to an Irrevocable Trust. Transfers up to $14,000 per person are exempt from gift tax. You select the person or company to serve as Trustee who will invest and preserve the Trust property for the benefit of your children, grandchildren, or charity. However, you lose control over the asset transferred.
- A Utah Trust permitting you to legally transfer ownership of personal assets to an Irrevocable Trust but maintain control, is the Utah Asset Protection Trust, UCA §25-6-14. You, as Settlor of this Trust, transfer your personal property to the Asset Protection Trust which is irrevocable. However, you, as beneficiary, direct an independent Trustee’s management of the property transferred. Provided the legal requirements are met, you don’ own it, but you control it, and the creditors can’t get it.
Review and Increase your liability insurance.
The most common lawsuit is personal injury litigation stemming from an automobile collision. Most people opt for the state’s minimum required coverage. This is a mistake. Your automobile policy should cover at least your net worth in the event of a collision. This same rationale is true when considering insurance coverage on your home. Do you have rental properties or your own business? Make your personal umbrella liability coverage for an amount at least equal to your net-worth. Insurance can be your first line of defense if you let it. And it is relatively cheap.