Asset Protection There are literally dozens of various asset protection structures in use today. Engaging in after-the-fact asset protection planning may be deemed to be a fraudulent transfer allowing the creditor to set aside the planning. The identity of the creditor refers to how aggressively the creditor will pursue the debtor's assets, and how knowledgeable the creditor is about debt collection laws. Practitioners must take into account both the substantive legal issues and the practical aspects of a plan. Income producing assets are best protected through LLCs and limited partnerships. While it does not afford the debtor a complete level of protection for the residence, it makes the residence sufficiently unattractive to a creditor so that in practice, creditors very rarely pursue residences in QPRTs. A creditor may petition the court for a turnover order, which would direct the debtor to withdraw the money from the foreign account and pay it over to the creditor. Planning is done within a statutory framework, but it is the practical implications of the planning that shape the exact nature of the structures and techniques. Asset protection (sometimes also referred to as debtor-creditor law) refers to a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. Liquid assets may be protected through many techniques, including LLCs, limited partnerships and irrevocable trusts. A properly structured asset protection plan allows the debtor to reveal the nature and the structure of the plan without sacrificing its efficacy. An alternative to an outright sale is the sale and leaseback of the residence to a friendly third-party on a deferred installment note. A creditor may be able to make a successful legal argument that a given structure should not stand, and thus be able to retrieve the debtor's assets. Depending on the creditor's intelligence and aggressiveness, timing, the debtor's risk-tolerance and other factors, the strategies discussed in this article may significantly tilt the economic equation in the debtor's favor. Hiding assets is an ineffective means of shielding them from creditors because a debtor would usually have to disclose his assets in a debtor exam, under penalty of perjury. It is preferrable to engage in asset protection planning before there is any need for it. The protection afforded by LLCs and limited partnerships is derived from the concept of the charging order limitation. Transferring ownership to a living trust with a generic name, transferring ownership to an irrevocable trust, encumber the residence by borrowing against it, recording a naked deed of trust, selling the residence on an installment basis to a family member, selling for cash to a third-party. From a creditor's perspective, a successful fraudulent transfer challenge gives the creditor the legal right to pursue the transferred assets. Creditors not motivated by personal animosity, but by financial incentive, will always take into account the economics of their collection actions. Some creditors will always dig deeper than others, and if the debtor cannot substantiate the transaction as an actual loan, the deed of trust will be set aside by a court as a sham. Some debtors may be willing to do nothing more than shuffle paper agreements, whereas others may be willing to go through a divorce, move assets offshore or sell their home. The nonrecognition of foreign judgments is the most important protective feature of these jurisdictions. Several different factors determine the nature and the type of planning that should be used for a given client.
Author:
To find out more about Asset Protection or Asset Management please visit http://www.asset-protection.onlineoffersforyou.com.com/ or http://www.asset-management.onlineoffersforyou.com.com/
Terms: Articles may be reprinted provided content is not edited and links are kept live
Source: www.articledepot.co.uk
