Our asset protection planning can reduce or eliminate threats from creditors, plaintiffs, unhappy business partners, state and federal agencies who threaten your assets. Learn what you should consider protecting here.
For our clients, their home is the most important asset to protect. The home represents a significant portion of their wealth, has sentimental value and is not as easily moveable as other assets. Imagine having to move – packing all your belongings, finding a new place to live, moving, unpacking, etc. All of these are true whether the home is worth $300,000 or $30 million.
Your personal residence, like any other real property, is one of the most difficult assets to protect. Ownership of real property is public information, your name is already part of and will always in the chain of title, and anything you do with the property is easy to discover. More importantly, regardless of what clever planning structures we can develop, a local judge would always retain jurisdiction over real estate and can choose to ignore the asset protection planning that was implemented.
You need to realize and accept that there is no structure that can protect your home 100%. It simply does not exist and if someone promises you bulletproof protection for real estate – run! When we are charged to protect a client’s home, our goal is to make it difficult and expensive to reach, changing the economics of the case. This will often cause plaintiffs and creditors to either walk away or to negotiate on better terms.
Protecting a personal residence is commonly accomplished by transferring title of the property out of your name (see Personal Residence Trusts and LLCs) or by eliminating the equity in the real estate (see Equity Strips). We find these structures to be effective in 70-90% of cases, depending on your circumstances.
If you do want to shield the equity in your real estate 100%, you would need to sell the real estate (thereby converting your assets from real property to cash) and protect the cash. Cash we can often make unreachable with an offshore structure (see Foreign Trusts). You can also consider moving to a state that has an unlimited or a large homestead exemption (Florida, Texas, Kansas and Nevada).
We also have several structures that we use to protect a personal residence that are not disclosed on this website. Contact us today at (818) 935-6057.
An interest in a business is personal property, and similar strategies are utilized to protect business interests as other personal assets like cash and investments. Our inventory of strategies to protect your business include incorporation, limited liability company, limited partnership, UCC-1 liens in favor of friendly lenders, parallel conversions, sale of assets to friendly third parties, various estate planning structures and trusts (including domestic self-settled trusts, foreign trusts and private retirement trusts). With our broad experience, we custom-design the asset protection strategy that fits your business and circumstance best.
Your business may also be a significant source of liability exposure, and just as it is important to protect the business from your own liabilities, it is important to protect your personal assets from business liabilities. Here the analysis focuses on selecting the correct type of legal entity and structuring the entity and the business operations in such a way so as to avoid the piercing of the corporate veil. A creditor may be able to pierce the corporate veil of your business if the business is undercapitalized on formation, the business does not correctly observe the required corporate formalities (meetings of shareholders, minutes of meetings, corporate records, state filings, tax filings, etc.) or there is commingling – the income of the business is deposited into the personal bank account of the individual owner or the personal expenses of the owner are paid by the business directly.
Here are two examples of how we protect businesses and how we protect personal assets from business lawsuits.
Our client had a successful gold trading business. One night, either because he was tired or careless, he caused a multi vehicle accident. Our client was adamant that he will cover the medical costs of the other drivers involved in the accident but was scared that the plaintiff’s lawyers were out for blood and would take from him everything that they could.
The gold trading business was organized as a corporation, which is not the optimal business entity in most cases. Our client owned the shares of stock of the corporation – which like any other personal property a debtor owns can be attached by a creditor. We moved quickly to convert the corporation into a limited liability company and made the election to continue to tax the entity as a corporation. This way there were no tax consequences of the conversion. At the end of the day, our client owned a membership interest in an LLC – which is not attachable by a creditor.
In California and many other states, our business clients routinely face lawsuits from their employees for unpaid or underpaid wages, missed meal breaks and misclassification of employees as independent contractors. Just recently we represented a large janitorial company that used its own employees and also used the workers of its subcontractors. The subcontractors were classifying their workers as independent contractors. A plaintiff’s law firm organized a large class of these workers and filed a lawsuit against the subcontractors and against our client for misclassification under the Dynamex decision (a 2018 California Supreme Court decision on classification of workers as employees versus independent contractors). While these cases are filed against the corporate entities, plaintiffs frequently attempt to pierce the corporate veil of the entities (here, the janitorial company) and in some cases the owners of these corporate entities have personal liability under the applicable state law.
We implemented aggressive asset protection structures for our client’s personal assets and were able to persuade the plaintiff to seek their payday elsewhere.
We also often help clients restructure their existing business operations to separate the valuable assets of the business, like intellectual property, real estate or equipment, from the liabilities of the business. We recently had a client with a very successful business distributing flooring materials. The flooring materials were imported from China and sold throughout the United States. The bulk of the business was generated through the website, which had a very high traffic domain name. The client was worried about possible anti-dumping penalties (which can be imposed retroactively). If penalties were imposed by U.S. Customs, they would be imposed against the business entity, which owned the operating business and the domain name.
We advised the client to transfer the ownership of the domain name and several trademarks into a standalone entity. This way if there ever was a lawsuit by U.S. Customs, a vendor or an employee, the lawsuit would be against the operating entity which no longer owned the valuable intellectual property.
We also have several asset protection structures not disclosed on this website. Contact us at (818) 935-6057 to learn how we can help you protect your business assets.
Bank accounts, investment accounts and other liquid forms of wealth are usually the most desirable assets to pursue for any creditor. These assets are pursued with vigor, and private investigators are frequently used to locate these assets. To protect liquid assets look to the following structures: Limited Liability Companies, Foreign Entities and Foreign Trusts.
We also have a few tricks up our sleeve that are not disclosed on this website. Contact Maximum Asset Protection for help protecting what matters most to you.
Here are the most commonly used structures in asset protection. Click each to learn more.