This is typically the second question I get, after a client decides they want to protect their assets. This one is a bit tougher to answer, as there are quite a few places to begin. To start with look at your time horizon. How quickly do you need to protect what you have? I’ve had clients that are in such a hurry they need a 24-48 hour turn around, which is typical of people who have a potential lawsuit coming against them, those who are under collections, or have a levy against their assets. I also have clients (smarter ones) who decided to protect themselves prior to any of the situations above. That way should such an unfortunate event ever occur, there’s no need to worry and rush to get your assets safe.
Below I will outline typical steps for someone who is NOT under pressure to protect themselves. This will apply to the vast majority of you, who simply desire more privacy, more protection, and a better return on your assets.
Note: Don’t talk/mention/brag about your financial situation or asset protection strategies to ANYONE. You never know who is listening, or what their feelings are. If you want to discuss with a friend for his benefit thats another story, but don’t go around tooting your own horn about how bullet proof you are. Even if that is the case, there’s no need to attract unnecessary attention to yourself.
#1 – What do you need to protect most? Houses? Collector Cars? Boats? Gold Bullion? IRA? Savings Account? College Fund for your children? Make a list of your high priority items and accounts, those that you value most. Also make a list of low priority, or low value accounts and possessions, those that can wait a little longer.
#2 – Separate your financial accounts by frequency of use. Day to day checking accounts are needed almost every day. The college fund for the kids gets maybe one deposit a month and thats it. The IRA gets maybe one deposit a year right? How active is your brokerage account? Do you have any 3, 6, or 12 month CD’s? Separate out your financial accounts according to the following.
- Day to Day – These are your daily accounts. You buy food, gas, pay bills, etc… with these
- 1-2 transactions per month (college accounts, savings, brokerage)
- 1-2 transactions per year (CD, annuity, IRA)
- Long term Assets (3+ year CD’s, cash in a safe deposit box)
This should give you an idea of what you have, what you want to protect, when you want to protect it. The frequency of use will tell us what type of structure will best meet your needs. In addition list out your account balances for each item. My feeling is that anything over $10k goes offshore. I realize most other financial planners will tell you offshore isn’t worth it unless you have $1 million or more, but I simply disagree. You can earn a very safe 9% APY in an offshore account which is better than any US bank. In addition the funds here are protected and your relationship with the institution is 100% private; Your contact info, balance, interest, it’s not shared with anyone. This alone ads protection to a degree that you will never find in a US bank.
So you’ve got your accounts separated appropriately. Make sure you have physical possessions here as well. Cars, boat, homes need to be protected too. In addition items like small businesses, independent contractors, sole proprietorships, partnerships, these should all be re-worked for protection from lawsuits, your partner, tax savings, and more. Be sure to add these businesses/income streams to your list. Finally you can list items like TV’s, computers, baseball card collections, and other high value items. These can all be protected with a basic entity as well.
The next entry will focus on specific structures, and the benefits of each.
For specific questions/inquiries please email me at [tomothy at hushmail dot com]
