Imagine a creditor attempting to find out how much disposable money you have access to. Other assets such as copies of deeds, along with financial evidence such as taxes on real property paid are public records that anyone can look up at the county courthouse. Sometimes even appraisers keep records that include the layout of your house, as well as the value of certain aspects of your home. Many of these records are available on the internet. There are a number of ways to keep this information out of the public eye.
Land Trusts are devices that allow you to put your property in the name of another person, company, or bank, keeping your name out of the public records. No one looking at the records will know who actually owns the property, let alone how much it sold for or how often it was sold. In essence it shields your identity, and once the trust is closed the trustee has no duty to keep the records, so there may be no way to find the owner.
Living Trusts are another alternative, especially in states where Land Trusts may be difficult to utilize. Someone other than your self should be the trustee…to keep your name out of it, but understand that sometimes Living Trusts are recorded which makes them less private.
Corporations are entities wherein there is no personal ownership. Assets that have been moved into the corporation are protected by the corporate shield provided that the rules that pertain to corporations provided by the respective state, are followed appropriately. Typically, there are corporate officers and shares are sold in an offering. If you are purchasing real estate, you arrange for the seller to convey the property to the corporation, and then transfer the stock to you.
Limited Liability Companies(LLC) and Limited Partnerships(LP) are two of the best ways to hold real property because they have strong asset protection benefits. As the owner of an LLC, you are not liable for the debts of the business or the acts of employees. If you personally do something wrong, your LLC cannot be taken away from you as long as it is set up correctly.
If you own your property as a Limited Partnership, your property will be protected from the claims against one partner if the claim is unrelated to business. The underlying reason is that it would be unfair to the other partners to have the partnership dissolved or property seized for acts over which they had not control. When it is used for asset protection purposes, an LP is usually called a Family Limited Partnership (FLP). This type of partnership is an agreement between two or more persons in which at least one of them (the limited partner) has no right to control the business and no liability for the debts of the partnership. The general partner controls the business and is liable for all the debt. A creditor’s only recourse is to put a lien against any profit distribution after getting a “charging order”.
Foreign Trusts (Offshore Trusts) are entities set up outside the US and create excellent asset protection, due to the fact that when you have an Offshore Trust, the creditor who is attempting to collect on your assets must go to the country where the trust is located and pursue the case in that jurisdiction. It cannot be pursued from the US.
Regardless how you set up and protect your assets, it is very important that you retain the services of a qualified attorney who specializes in asset protection. If you have not set up the protection correctly, creditors can pierce corporate veils and attach your assets. Retaining the services of an qualified asset protection attorney is Empowering.
Elizabeth Zagajeski, attorney-at-law, a principal in the Law Offices of Gary Fales & Assoc., is an expert in all forms of asset protection. Feel free to contact me for a private and discreet introduction. Empower Your Assets!
The above information is not to be taken as legal advice. Rather it is meant as a tool to stimulate your thought processes and awareness within the realm of asset protection.