Overview. A central goal of asset protection planning is to position the client’s assets so they are generally available to the client but beyond the reach of his or her creditors. There are a number of techniques that an individual can use to pursue this goal, depending on the types of assets involved. For example, 401k and IRA funds are generally beyond the reach of the account holder’s creditors by virtue of federal and state statutes. State statutes, in most states (including Florida), protect a resident’s primary residence (up to a certain amount) from claims of creditors. State statutes, in many states (including Florida), also provide some protection for funds held in immediate annuities and cash value life insurance (even single premium life insurance).
Limitations. Of course, there are limits on how much an individual can contribute to a 401k and IRA. There are also limits on how much life insurance a person can qualify for, based on his or her health and medical history. And once an individual reaches a certain age it may not be practical to pursue life insurance. Your financial advisor can work with you to find the best cash value life insurance option for you.
The Family Business. Individuals with family business holdings can achieve a threshold layer of protection by using certain structures (corporations, LLCs and limited partnerships). An additional layer of protection can be achieved by adding an irrevocable trust to the protection plan.
Rental Property. Individuals who own residential real estate that they rent on a regular basis or on occasion face liability exposure to tenants and guests of the tenants. An LLC controlled by the current property owner offers double protection. First, an LLC protects the individual’s other assets from claims of tenants and from guests. Second, when rental real estate is owned by an LLC the real estate is protected from the LLC member’s outside creditors.
Irrevocable Trusts. Individuals who are looking for asset protection beyond what they can achieve via the exemptions noted above often look to self-settled domestic irrevocable trust or offshore asset protection trusts. Note that in some circumstances, depending on the individual’s goals, the trustee can have the discretion to distribute trust funds to the individual who sets up the trust.
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I offer a free initial consultation. We can meet at my office in The Brooks Executive Suites, 9990 Coconut Rd, Bonita Springs, FL, 34135. We can also meet online. If what I do sounds like something you’re looking for in an attorney I encourage you to contact me through the form below or call (239) 266-5671.