In its most elemental form, asset protection is simply conducting your activities in such a way that it will be difficult for a litigant to reach your assets.
You may ask yourself: Who needs asset protection? I have insurance, isn't that enough?
Litigants and their attorneys, particularly in "nuisance value" litigation, can be discouraged in their efforts if your assets are properly protected. Think of asset protection as nothing more than a progressive layering of roadblocks between your adversaries and your assets.
There are several progressive steps we can assist you with.
- Adequate insurance - The members of Wyndelts & Co.’s firm carry maximum liability limits for automobiles and homes as well as public liability of an additional $1,000,000. The firm also carries professional liability insurance, which is primarily for the protection of our clients. The firm members have completed level three below.
- Wrap a limited liability entity around your assets. At Wyndelts & Co., we use Corporations, LLCs, FLPs, LLLPs, LLPs, Trusts and Pension Plans. It may seem simple, but anyone with more than $1,000,000 or someone who is expecting substantial increases in wealth should consider this a basic minimum step. If you are already in trouble, however, this step may be too late. Transfers to avoid liability can be considered "fraudulent conveyances" and can be set aside by the court. So it becomes important to effect this transfer as a basic planning device.
- Plan for adverse events. Of course you hope that they won’t occur, but it’s prudent to pay some legal and accounting fees to reduce the impact of potentially adverse events. It helps to consider it in insurance terms: for instance, would you consider not carrying liability insurance on your auto?
- Use additional limited liability entities (such as trusts) to serve as owners of the limited liability entity that was already set up in two above. These trusts fit nicely into a sophisticated estate plan. Some Wyndelts & Co. firm members use this plan.
- Off-shore trusts. The firm doesn’t have any clients with a need for this level of protection. Off-shore trusts are somewhat expensive to set up (about $20,000 to $30,000) and can be useful to clients who enter into contracts that they must personally guarantee and that are of a size that could eliminate their net worth if the guarantee were called upon. Off-shore trusts do not help reduce U. S. income or transfer taxes.
At Wyndelts & Co., we stay reasonably current in this area, and have established relationships with attorneys that focus on off-shore trusts in their practice.
If you are interested in sleeping a little better at night give us a call. We can reduce your exposure to litigation risks and, at the same time, reduce uncertainty about the welfare of your family in the event of your timely or untimely incapacity or demise.
Give us a call or contact us via email.