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Before we can select the best strategy for you, we need to carefully review your individual situation. However, for those who are looking for general information on the subject, I recommend the following:
If you have no foreseeable claims against you at the current time – the best way to protect assets is to put them in a SPA Trust. See the information at this link- 10 Reasons SPA Trust Offers Better Asset Protection
If you have a current claim against you, it is too late to do any ethical asset protection planning.
If you have a potential claim coming your way, you need to be careful to protect your assets without committing a fraudulent transfer. The best option in this situation is to create a Joint Venture LLC as described below.
The Joint Venture LLC involves Four Simple Steps:
1. You create an LLC with a legitimate investment purpose (such as investing in real estate, energy, stocks or municipal bonds).
2. The Joint Venture LLC must have one or more legitimate partners who are not related to you (we can provide a partner for you if needed).
3. The partners will purchase ownership interests in the LLC by contributing cash or by making a promise to contribute a certain amount of cash over a certain period of time.
4. The LLC can put a lien on your home or other assets to secure your promise to make payments.
The Operating Agreement for the Joint Venture LLC should include the following provisions:
1. The operating agreement should provide that your ownership interests cannot be assigned or transferred without the consent of two or more partners.
2. The operating agreement should provide that no distributions can be made without the consent of two or more partners.
3. The operating agreement should include special tax allocation language so that each partner can have his own contributions and income allocated solely to himself.
4. If you fail to make additional contributions as promised, the Joint Venture LLC will have the power to secure your ownership interests and other collateralized assets before any outside creditor.
Your payments to the Joint Venture LLC are not a fraudulent transfer because:
1. You are not making a transfer for less than full and adequate consideration.
2. You are not making a transfer that renders you insolvent.
3. You are not making a transfer to an insider.
4. The transfer is not concealed or hidden.
5. You have a legitimate investment purpose for making the transfer.
The Joint Venture LLC is better than other options because:
1. The laws of every state prevent a creditor of one member from reaching the assets of a Joint Venture LLC if it is structured correctly.
2. If structured correctly, your Joint Venture LLC will have priority over other creditors in securing your assets.
3. The Joint Venture LLC can be set up quickly and easily, and for less money than other options.
4. You can receive distributions at any time without compromising your asset protection because it is expected that you will receive a return on your investment.
5. The Joint Venture LLC is better than a family limited partnership for the following reasons: (1) you don’t have to give k-1s to your children and get them involved in your financial affairs, (2) unlike a limited partnership, the Joint Venture LLC can effectively protect all kinds of assets, including homes, cars and personal use assets, (3) the Joint Venture LLC doesn't create problems if one of your children is sued, divorced, or bankrupt, and (4) the Joint Venture LLC is easy to unwind at any time without gift tax consequences.
6. The Joint Venture LLC is better than a Wyoming LLC because it works in every state. Recent case law shows that courts in other states can simply ignore Wyoming LLC law and use their own law to defeat a Wyoming LLC.
7. By including an offshore partner (which we can provide), the Joint Venture LLC can give you all the protection provided by an offshore trust or an offshore company without the outrageous cost, bad reputation, and tax complexities of an offshore entity.
Anyone can form an LLC, but designing an asset protection plan that will hold up under attack requires an experienced asset protection attorney. We have implemented many of these plans and had them tested in lawsuits, bankruptcy, and other collection activities. We are better qualified, more experienced, and more efficient at providing the very best in ethical and effective asset protection services.
If you would like to receive a detailed explanation of how a Joint Venture LLC could work in your situation, please call me for a free consultation at (801) 765-0279.
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