After acquiring wealth, you will need to protect yourself from family lawsuits, tenant lawsuits, and business lawsuits. Besides having a good attorney, the best way to protect yourself is either by having a trust, offshore account, or taking advantage of the legal protection given by the state you live in.
An offshore asset protection trust is the most powerful asset protection tool. If you do not feel comfortable with having a trust offshore then a revocable or irrevocable trust is the next best thing.
A living trust does not offer a strong asset protection its main purpose is to provide protection from probate and legal fees.
A Will goes through probate and at the time of death and your assets are determined by the court who oversees the process. This can take months if not years to clear all the assets. In the Living Trust, assets flow quickly and easily to the beneficiaries and do not go through probate. When there is a will and a living trust, the living trust takes precedence over all assets.
There are two types of trust revocable and irrevocable. A revocable trust can be changed or modified in the grantor lifetime, while an irrevocable trust cannot be changed. The most common trust is the revocable trust. Investopedia says that an irrevocable trust is a trust where its terms cannot be modified, amended, or terminated without permission of the grantor’s named beneficiary or beneficiaries.
The advantages of an irrevocable trust is that it can shield your assets from estate taxes and legal liability, and help you leave your assets in a clear and defined manner. The downside of irrevocable trust is that you no longer own the assets that you place in the trust. This is one of the reasons that most people prefer the revocable trust over the irrevocable trust.
As far as asset protection trust, the state of Nevada offers the best solution.
The strongest asset protection trust is an offshore Asset Protection Trust. Some offshore locations that offer these types of trust are Cook Island, Nevis, and Belize.
Other ways to protect your wealth legally is by placing your money in a retirement account. These accounts have a reasonable level of protection from keeping others from seizing the money you have placed inside the retirement account. The downfall is that you can only place a small amount and cannot liquidate until you retire without a penalty.
Other tax benefits and legal advantages, outside of a trust, depends on what state you live in. For Example, Florida has some legal protection by the bankruptcy law. Meaning if you lose everything from a bad decision or a lawsuit you are allowed to keep your home and car. Sometimes it is wise to put some of your money into a larger house for monetary protection even though it is not a true asset. And the last way to possibly protect or hide your wealth is through a land trust.
A land trust allows you to hold onto property anonymously without your name appearing on the title. A land trust is usually a tool that provides privacy for the owner but can possibly cause problems when getting out of the asset.
I hope these suggestions helped. Please notify an estate planning attorney to help with any of these suggestions.
For more information on how to protect your assets you can go to www.DiverseInvesting.com or purchase The Road Map to Investing on Amazon.
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