Asset Protection Techniques
Most states prohibit so-called 'self-settled' asset protection trusts, or a trust you establish yourself for your benefit, yet which purports to protect the trust assets from creditors. However, there is a trend among the states to allow these types of trusts, and several states have recently changed their laws to permit them including Alaska, Delaware, Nevada, Rhode Island, South Dakota, and Utah and a few others.
Domestic Asset Protection Trusts
With a domestic self-settled asset protection trust, you irrevocably transfer assets to the trust and name yourself as a beneficiary to receive distributions within the discretion of an independent trustee. You may, however, retain certain rights, including the right to remove and replace the trustee as long as the replacement trustee is also independent and not a related or subordinate party as defined in the Internal Revenue Code. By retaining a limited power to appoint the trust assets to specific family members at your death, the transfer is incomplete for gift tax purposes and therefore you are not required to file a federal gift tax return. If the trust is designed as incomplete for gift tax purposes, the trust remains part of your estate but the assets should remain free from the claims of your creditors. If designed as a completed gift for tax purposes, others will be the primary beneficiaries but you might still entitled to receive discretionary needs benefits should you be without sufficient resources to maintain your lifestyle.
The self-settled asset protection trust laws vary from state to state and, therefore, there may be advantages to selecting one state's laws over another in your particular circumstances. Fortunately, you can elect to have your trust governed by a particular state's statute as long as you meet the requirements of that statute, which typically include that the trust assets be located within that state and managed by a local trustee. Note that self-settled asset protection trusts are only effective for future creditors, as the fraudulent transfer laws of all states prohibit transfers to avoid existing creditors. Also, the trust must be in existence for at least 10 years to protect you against creditors in bankruptcy.
The self-settled asset protection trust laws vary from state to state and, therefore, there may be advantages to selecting one state's laws over another in your particular circumstances. Fortunately, you can elect to have your trust governed by a particular state's statute as long as you meet the requirements of that statute, which typically include that the trust assets be located within that state and managed by a local trustee. Note that self-settled asset protection trusts are only effective for future creditors, as the fraudulent transfer laws of all states prohibit transfers to avoid existing creditors. Also, the trust must be in existence for at least 10 years to protect you against creditors in bankruptcy.
The Wyoming Close-LLC has rapidly become the "go-to" entity of choice for optimal asset protection and liability limitation.
Check this out and you'll see why:
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The Wyoming Close LLC gives maximum protection as it mandates by statute that a creditor of a member of an LLC has the sole right to request a charging order and that charging order is the exclusive remedy by which the creditor may satisfy a judgment.
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The Wyoming Close LLC statutes have very restrictive withdrawal requirements. These onerous default restrictions allow greater discounting or compression of value of the assets within the LLC. That means at least two things: greater tax savings and greater leverage to force a creditor to settle.
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The Wyoming LLC Act does not require the names of the managers or members or their addresses to be listed in any public document. Translation: privacy and anonymity!
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Simple and efficient: formerly, multiple entities had to be created to form a solid liability shield such as a Family Limited Partnership. The Wyoming Close LLC requires only one entity, checking account, TIN, and tax return to be filed. Yet, a members have creditor protection. Simplicity means substantial reduction in the possibility of error.
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Cost effective: low filing fees and annual statutory maintenance fees.
NOTE: Conflicts of law issues have not yet been fully settled and is a gray area in terms of creditor collection and which law applies, the state where the entity is formed or the state where an action is commenced. Still, creating another layer of complexity for a creditor to litigate in potentially multiple jurisdictions creates a great deal of leverage from which to force an advantageous settlement. Settlement becomes a very attractive alternative to the creditor!
Suitability is our overriding criterion. Contact WRNicholsLaw.com at 855-497-6529 or email us today to arrange a consultation and see what techniques are best suited for your particular situation. W.R. Nichols licensed to practice in Arizona, the District of Columbia and Georgia only. WRNicholsLaw affiliates with Wyoming counsel as appropriate to avoid the unauthorized practice of law in Wyoming.
