Tags: Asset | Protection | Moves | Investors

4 Key Asset Protection Moves for Investors

4 Key Asset Protection Moves for Investors


By    |   Monday, 06 February 2017 08:41 AM

Did you hear about the case where a Neverflat basketball slowly lost air over 12 months?

That resulted in a class action lawsuit for $5 million. It’s not likely that the plaintiff will receive much more than enough to get a new basketball but the lawyers could have a $3 million payday.

How about the case of a lady so engrossed in her cell phone she walked into a bright orange ladder on a truck that had warning cones on both sides?

Videotape captured the fact that she had walked by the ladder going to and from an ATM machine 3 times.

The jury found she was only 8% liable and awarded her $161,000.

Regularly over the years, people who have sold an asset, like a piece of real estate or a company, find that the buyers soon find a reason to sue to get some or all of their money back.

Or once someone got their hands on some real money for once, they get sued for divorce.

These cases only highlight that in today’s litigious environment the number of ways you can get sued, or the company you invested in can get sued, boggles the mind.

But what if the investor or company owner was protected against

While most news stories and advertising about wealth is industry promotion or sales pitches, the key to wealth is to always make sure that when you get ahead you stay ahead.

Protecting assets from the barbarians take planning and commitment.

There are four key strategies to wealth protection.

First, get your assets organized into protective ownership structures.

There should be no assets titled in your individual name. That’s what limited liability entities are there for. Every state has some form of limited partnership or limited liability company. Some even have limited liability limited partnerships where even a general partner has limited liability exposure.

If you have kids and they drive cars, then consider owning the cars in a limited liability entity. If you own real estate, then each piece of property should be held in a protective structure which cuts off personal risk exposures.

Each state provides various opportunities to protect wealth. Florida, for example, has a special form of land trust which effectively works as a limited liability company, and can still be structured to qualify for the all-important homestead exemption for creditor protection.

Second, use state law which provides for exemptions from creditors. The exemptions vary considerably from state to state. If someone lives in Florida where I do, then whatever amount of wages you earn can be protected. As a consequence, private company owners in Florida consider taking a protected salary rather than a distribution of profits as dividends.

Some investors may want to consider moving to a state which not only provides for a better tax position but also provides a wider array of asset exemptions from creditors.

Third, always minimize or legally avoid taxes. There is a big difference in wealth accumulation when you can re-invest a whole dollar versus having on 60 cents left after the government takes its part off the top.

Insurance and annuities are real wealth builders. Qualified retirement plans too. In Florida, these vehicles not only are tax benefitted they are also protected from creditors to boot.

Fourth, get your estate plan in place so your assets will go to the right beneficiaries, at the right time, and asset protected.

A growing list of states has enacted special asset protection trust legislation just for this purpose. Combining an asset protection trust with a family limited partnership or limited liability company has become a mainstay for estate planners.

This sort of legal structuring can integrate buy-sell arrangements—funded with life insurance---for those holding investment interests in privately held companies.

Keeping your precious capital safe and sound in critical.

Smart investors will take every legal advantage to make sure their future financial security is well protected from the ravages of the legal liability system.

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.  

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Smart investors will take every legal advantage to make sure their future financial security is well protected from the ravages of the legal liability system.
Asset, Protection, Moves, Investors
Monday, 06 February 2017 08:41 AM
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