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).

 

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.

 

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.