Asset protection is a form of protecting individuals or companies assets from external threats of unfair legislation in their country of domicile. There are a number of primary areas in which asset protection is mostly sought which will be looked at below. The area of asset protection is vast and can be a complex to understand so it is advised you consult with a professional consultancy for advice on what asset protection techniques are available to you.
Popular forms of asset protection
There are many uses forms of asset protection which are adopted by individuals and companies alike and so it is paramount that you adopt the most beneficial and suitable option in order to get the most out of your assets.
The following are the most popular asset protection techniques adopted:
Estate Planning can be used for the purpose of planning ahead for future generations and to manage your estate as you see fit. This means you have the right to distribute your wealth to the selected beneficiaries you wish. Estate planning can be used for tax planning through: family corporations, credit trusts, Family Limited Partnerships, life insurance trusts and selling assets to family members, to name just a few.
Creditor Protection can be achieved by removing all legal ownership and titles from ones assets into the designated name of a beneficiary (usually the asset owner’s child). By doing so no creditor claims can be made against the initial owner’s property given to his/her beneficiary.
Trust or Foundation is highly useful to safeguard your assets in a stable country which may also benefit from avoidance of forced heirship rules. A trust also allows the trust owner to decide how his/her assets will be distributed to its beneficiaries. Deciding on the right type of trust id crucial as many are designed for a specific purpose, e.g Spenthrift trusts come into activation once the settlor dies and has a significantly high asset protection element.
LLC or LLP Formation is an excellent form of asset protection and tax planning as it eliminates all personal liability therefore increasing asset protection. The establishment of a family limited partnership (FLP) or an LLC can safeguard your assets against business risks to a certain reasonable extent.
It is important to choose the jurisdiction you wish to use asset protection in very carefully as each jurisdiction may carry different requirements, advantages and disadvantages for asset protection.