Helping you understand asset protection.
Everyone wants to protect their home and property. We purchase safes, used security systems, and buy insurance to make sure that we do not lose the property that we’ve worked so hard for. Asset protection planning is another form of safeguard to make sure that you can keep your property for as long as you wish.
Asset protection is an estate planning method that applies to a number of different techniques that are designed to keep your hard earned property out of the hands of any future creditors. These techniques deter and prohibit potential creditors from suing you to try to take what you own.
FAQ's about asset Protection
Is Asset Protection Legal?
Absolutely. Asset protection in Nevada has been legal for individuals and businesses for years. There are so many different opportunities to legally protect your assets in Nevada that individuals and businesses from around the United States look to our law firm for advice on how to best protect themselves. There are illegal means of asset protection but there is a very well defined line between legal and illegal asset protection. If you need to protect your assets and want to do it without getting into legal trouble, it will be important that you speak with experienced advisors.
Who Needs Asset Protection?
We live in a very litigious society and anyone that is potentially the subject of a lawsuit should consider steps to protect their assets. Certainly, individuals who work in high-risk professions such as doctors, paramedics, architects, contractors and pilots are strongly encouraged to protect their hard earned property. However, anyone can be sued just for making the wrong maneuver in your car.
When Should I Begin an Asset Protection Plan?
If you have property to lose, you should at least speak with someone as soon as possible about what kind of asset protection plan would work best for you. The best planning begins well before any lawsuits are files or before it is determined that you owe someone money. It is important to note that the obligation to pay money that might be owed to someone else begins when the underlying circumstance of the lawsuit occurs. If you have already been sued, it is probably too late.
Should I Worry if My Spouse can be Sued?
Unfortunately, yes. In Nevada, all earnings while married are considered to be community property by default. This means that everything that you earned during your marriage is also your spouse’s property. Likewise, all debt that is incurred during your marriage is considered community debt. Therefore, if your spouse is a risk for being sued, then all of your property that you earned while you were married are at risk.
Can I Just Give my Property to my Kids Now?
Giving your property to your kids now is not a recommended strategy. One primary reason this would be a bad idea is that you lose control of all of those assets. Second, there is currently a tax consequence for transfers of more than $14,000 per child (in 2015) and if you transfer any more than that amount, you could be liable for a huge tax bill. Third, your kids would then be put into a very high tax bracket and would owe significant amounts of income tax. So, transferring your property to your kids would mean that you will have paid the government significant amounts of money to lose control of all of your property.
Does my Living Trust Protect my Assets?
Almost every Living Trust that is created and managed while you are alive is considered a revocable trust. Meaning, you have complete control over the Trust and all of the assets within that Trust. Since you have full control over the assets, it is very easy for a creditor to request all of your Living Trust assets as payment for your debt. However, there are many Irrevocable Trusts (which are very different than Revocable Trusts) that are available which take the property out of the immediate control and therefore out of the reach of creditors.
What Happens to my Kid’s Inheritance if He/She Gets Divorced? Can the Ex get the Money?
If you plan properly, you are able to make sure that a kid’s ex-spouse is not able to get his or her hands on your child’s inheritance. Actually, the protections that you are able to establish through a Trust are even more powerful than any protection than he or she can create. You can create a Trust that can be managed by your child and that will give him/her access to the Trust fund for expenses related to health, support, maintenance and education. When these trusts are properly drafted, your child’s inheritance will be completely protected from all creditors, including any ex-spouses.
What is an Off-Shore Trust?
An Off-shore Trust is a type of Trust that is created in a foreign country. The most common off-shore locations include the Cook Islands, the Channel Islands and the Bahamans because of their bank secrecy laws and not income, estate or gift taxes. These Trusts can be self-settled, which means that you can be the creator of the Trust as well as the beneficiary of the trust (which is illegal in most States). These types of Trusts are also allowed to exist without end, and taxes are not paid until the money is transferred back into the United States. It is fairly expensive to establish and operate these types of trusts. Additionally, the economic and political stability of these countries is frequently in question.