We Know: All About Asset Protection Services What Is Asset Protection? Asset protection is the use of legal methods to protect your assets from future creditor claims, including federal, state, and local tax. Careful planning can keep more of your assets in your hands. Is Asset Protection Legal? Asset protection is completely legal if done properly. The most common forms come in estate planning, when people with assets arrange financial affairs so that inheritance tax makes minimal or no impact on the estate and probate goes smoothly. All asset transfers must be completed before you have any claims made on the assets; otherwise, your transfer is fraudulent, which will not only invalidate the transfer but may make you liable for criminal prosecution. Be very careful about your timing. Laws controlling asset protection vary from country to country. This article is based around U.S. law, but if you live somewhere else, you may find very different rules governing your assets. Make sure you educate yourself on your special circumstances. Even in the United States, asset protection laws vary somewhat from state to state, so be certain you get the correct information for your part of the country. You should also be aware that with the recent revision of bankruptcy law in the 2005 Bankruptcy Reform Act, many laws have changed and are untested in a court of law. Several asset protection techniques are weakened or compromised as a result. How Can I Use Asset Protection? Look for a company that can do it for you. You can find them online and offline. If your assets are relatively small and you have simple needs (e.g., ensuring the surviving spouse gets the entire estate without going through probate or having crippling taxes force the sale of assets), you can buy a do-it-yourself kit from a number of companies. It might be wise to at least price an asset protection service before choosing this route. Small mistakes can cost you big later on. Talk to lawyers, CPAs, and asset protection specialists before you choose someone to do it for you; there are people in each of these groups who can help you. How Will My Assets Be Protected? Exemptions permissible by tax law will be maximized, allowing you to make full use of tax protections. Some companies will set up a living trust, with all assets being transferred to the control of the trust, leaving you or trustees in charge of it. Assets may be placed into joint ownership or special statuses like ownership by entireties. Assets may be converted into forms exempt from seizure (equity stripping, collateralization of accounts receivable, homestead exemptions.) Assets may be placed in an offshore asset protection trust (APT). Never believe anyone who tells you that this will keep you from paying income tax. All US citizens must pay income tax in the US, even if the income is earned out of the country.
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