Finally, the IRS cannot seize any asset that has no equitable value out of spite. If a car or home, for instance, has no value and cannot be sold at auction, it must be left in your possession. Assets that do not have value that can be sold for cash must be excluded from being seized by the IRS.
If you already have some legal experience, you might see how an asset protection trust is excellent for protecting assets from litigation and creditors. By removing ownership of the valuable assets in question away from you and your immediate family members, you make those assets practically untouchable…
An asset protection trust (APT) is a complex financial planning tool designed to protect your assets from creditors. APTs offer the strongest protection you can find from creditors, lawsuits, or judgments against your estate. These vehicles are structured as either "domestic" or "foreign" asset protection trusts.
If you're an entrepreneur and considering forming a business, you may wonder “Does an LLC protect your personal assets?” The short answer is “yes, it does” in most cases. An LLC is a particular business structure that offers the liability protection of a corporation while giving you the flexibility of a partnership.
As a general rule, if the LLC can't pay its debts, the LLC's creditors can go after the LLC's bank account and other assets. The owners' personal assets, such as cars, homes, and bank accounts, are safe. An LLC owner only risks the amount of money he or she has invested in the business.
LLC formation protects any member's personal assets like personal bank accounts, personal property, or real property from seizure to satisfy the LLC's legal liabilities or other obligations. An LLC offers members personal asset protection from any creditor lawsuits that result in LLC liability.
How Much Does an Asset Protection Trust Cost? Asset Protection Trusts in Estate Plans are generally not cheap. For a simple domestic plan that's not complex, legal fees could range anywhere from $2000 to about $4000. More complicated Trusts could run up towards the $5000 range.
Alaska, Nevada, and Delaware are all top jurisdictions for self-settled trusts.
Also, an irrevocable trust's terms cannot be changed, and the trust cannot be canceled without the approval of the grantor and the beneficiaries, or a court order. Because the assets within the trust are no longer the property of the trustor, a creditor cannot come after them to satisfy debts of the trustor.
Invisible assets, commonly referred to as intangible assets, are resources that cannot be seen or touched but still provide value to the holder. Examples of invisible assets include brand recognition and intellectual property, such as trademarks, copyrights, or patents.
Secret trusts and LLCs are increasingly common ways wealthy people are shielding assets in divorce. Trusts and offshore accounts controlled by a shadowy company.
State, federal and territorial homestead exemption statutes vary. Some states, such as Florida, Iowa, Kansas, Oklahoma, South Dakota and Texas have provisions, if followed properly, allowing 100% of the equity to be protected. Other states, such as New Jersey and Pennsylvania do not offer any homestead protection.
Use of Forfeited Funds. All across the country, federal, state, local, and tribal forfeited funds and property are being used to help protect and serve our communities and support law enforcement. For example, in Kentucky, forfeited funds were used to refurbish a facility to shelter child abuse victims in the state.
Selecting an individual trustee
Choosing a friend or family member to administer your trust has one definite benefit: That person is likely to have immediate appreciation of your financial philosophies and wishes. They'll know you and your beneficiaries.
An irrevocable trust offers your assets the most protection from creditors and lawsuits. Assets in an irrevocable trust aren't considered personal property. This means they're not included when the IRS values your estate to determine if taxes are owed.
Additional extras such as amendments, trusteeships changes, or more complex tax planning work may also increase the overall cost, making certain trusts more expensive than others.
Establishing and maintaining a trust can be complex and expensive. Trusts require legal expertise to draft, and ongoing management by a trustee may involve administrative fees. Additionally, some trusts require regular tax filings, adding to the overall cost.
Once your home is in the trust, it's no longer considered part of your personal assets, thereby protecting it from being used to pay for nursing home care. However, this must be done in compliance with Medicaid's look-back period, typically 5 years before applying for Medicaid benefits.
Intentional acts: LLC protection does not shield owners from personal liability for illegal, reckless, or intentional acts. For example, if an owner knowingly violates laws or causes harm, personal assets can still be at risk.
The U.S. Chamber of Commerce recommends businesses keep at least three to six months' worth of cash on hand. “Cash 'on hand' refers to any accessible money, funds in bank accounts, or liquid assets that could be accessed within less than 90 days,” it says.