You never know when somebody is going to try and sue you. Accidents happen, and when they do, most people’s first move is to file for compensation. If you have spent your entire life working to save money for yourself and your family, then it isn’t right for somebody to try and take it because you made a mistake. However, the victims of accidents aren’t the only people that could try and take your money, creditors could too.
If you have a sizable amount of savings and want to keep them safe, then you need to look into asset protection. There are two types of asset protection, domestic and offshore. This post will explore both of them, so you can select the one that’s right for you.
What Is Asset Protection?
The term ‘asset protection refers to the strategies used to protect people’s money from taxation, lawsuits, and seizure. The most commonly employed form of asset protection is the creation of a trust. Another popular way of protecting one’s money is a Nevis LLC. It is a very popular type, chosen by many Americans. If you want to learn what a Nevis LLC is you can conduct thorough in-depth research, but in brief, it is an overseas limited liability company, formed on the Caribbean Island of Nevis. Nevis LLCs offer good financial protection.
Offshore Asset Protection
One of the greatest advantages of offshore asset protection is that your money will be safe from local courts, making it impossible for people to get a court order to access any funds or trusts that you have set up. In the United States, while it is very difficult, it is still possible for people to access your money through court orders. Domestic asset protection, therefore, leaves you vulnerable to having your funds seized. In order for an offshore trust to be accessed by the courts, the claimant would have to become a resident in the country where the trust is set up, and then make a claim that way. Most foreign courts will not consider such claims, anyway. There is really no chance of creditors being able to seize your money if you have stored it in a trust in another country. It is without a doubt the most effective way of protecting it.
It doesn’t take much online research to discover that offshore trusts have a long history of being highly effective. There is a strong case history for offshore trusts, proving that they work. Whenever you are making legal considerations of any kind, it’s always a good idea to check out case history in the area of law. There are almost no cases of people having money stored in offshore trusts being seized. The same is not true for domestic trusts, however. The only reason people are reluctant to use offshore trusts is that they can be a headache to set up. You can hire a lawyer to do it for you, though, which is worth doing if you want to set up an offshore trust.
As mentioned in the previous section, offshore trusts have been proven to be highly effective. If you have any queries about them or want to learn more, then consider reaching out to a lawyer that specializes in offshore trust formation. Make sure that the lawyer you choose has a lot of experience, good reviews, and a positive attitude. Ensure that they know what they are talking about, too. You can do this by checking out their educational history and the number of cases they have won for their clients.
Domestic Asset Protection
You can protect your funds to an extent domestically. One way of doing this is to create a trust that contains a restrictive language, called ‘spendthrift’ provisions. Spendthrift provisions will prevent creditors from being able to access your funds, because the provisions will make clear that you are not the owner of the assets in the trust, and that you do not have unlimited access to them, therefore meaning you cannot give money from the trust to creditors. However, international protection is much greater. In some cases, spendthrift provisions can be disregarded.
There are also some effective ways of getting federal estate tax exemptions when you set up domestic trusts, but again, you are at the mercy of the IRS, and these exemptions can be disregarded. When you store money offshore, there is really no way of people finding out about it, which makes it the most superior option. When you store it domestically, there will always be a paper trail of some kind, leading from you straight to the trust that you have set up. If the IRS picks up a paper trail, they could take action and seize the funds.
The best thing about domestic trusts is that they are much easier to set up. If you do not have a lot of knowledge about the formation of trusts and are not confident sending your money abroad, even under a lawyer’s supervision, it might just be a better idea to create a domestic trust. It’ll be much easier for you to communicate with your lawyer, and access your funds if they are stored in the United States. If you are working, then you will probably find it hard to find the time to manage your money if it is stored internationally. You will also have more financial protections.
Offshore or Domestic?
In terms of safety, offshore trusts do confer more. Your money is a lot safer when it’s stored in trust in another country, ideally in Nevis, or another part of the Caribbean. The Caribbean is well known for being a good place to hide one’s money. Domestic trusts are suited to individuals without any notable creditors, who just want to keep their funds safe. You should be aware though, if you store domestically, the IRS or another federal body could easily access your money and seize it if they decide that they want to. It is harder for them to do this when it is stored offshore.
Asset protection is essential. After all, why spend your life earning money for your family if you aren’t going to protect it? You never know when a creditor is going to emerge, and try and take everything you have earned for your future.