The Role of the Ohio Asset Protection Attorney
Asset Protection planning requires a global review and plan for risk. It should take into consideration protecting, to the extent possible, the type of an individual’s assets and choosing a type of ownership over the asset that will protect those assets from creditors. It should also consider claims on profits due to income tax or, in large estates, claims on the property on death due to estate tax.
Depending upon the type of asset, and type of creditor, plans for asset protection will use different types of tools to protect the client. Like estate planning, the goals of the individual should be taken into consideration when planning for asset protection. For example, often Trusts may be used for asset protection, and Trusts are also a common estate planning tool, but the wrong type of Trust will not provide protection from creditors. Failing to recognize what assets should be in a Trust will also not protect the asset. At Bale & Associates we can review your situation and advise and assist you in developing an effective estate and asset protection plan.
Here is a brief overview of some aspects of asset protection to take into consideration with our Free Initial Estate Planning Consultation:
Exemptions. There are assets a creditor cannot seize, including personal property, annuities, cash value of life insurance policies, traditional IRAs, 401(k)s and approximately $30,000 in home equity. These are exemptions under Ohio and federal law, assuming that the asset or retirement account qualifies for exemption under these laws. For example, a retirement account will qualify for exemption from creditors’ claims if the plan has a participant other than an employee that owns the business holding the retirement account.
Some of the rules providing for exemptions have changed in recent years, due to the dynamic changes in law following various financial challenges to U.S. financial institutions, and the use of bankruptcy procedures by individuals filing a bankruptcy.
Transfer of Property to Spouses. Where legally appropriate, it can be beneficial to transfer ownership of property to a spouse; however, there are rules against fraudulent transfers, meaning transfers occurring to ‘defraud’ a known or suspected creditor by making the transferor judgment proof will expose the asset, the planner and the client to claims.
Professionals at high risk of liability (lawyers or doctors, for example) might find this strategy practical. However, doing so should not be done without the counsel who understands the complexities involved, due to additional risks arising out of fraudulent transfer laws.
Create a PLLC or LLC. LLCs and PLLCs can be used to shield personal assets from business liability. But the client needs to know the best states or jurisdictions to do this and the best ways to arrange the transaction to protect against outside creditors.
Use a LLC for Equipment Leasing to Your Business. Anything from vehicles, real estate and equipment can be leased back to a LLC controlled by the business owner. This can inhibit creditors who might try to seize assets that can cripple the business.
An Ohio asset protection attorney may also use this practice to protect a home so that the homeowner retains ownership by having it leased back to them through the LLC. However, as in the case of a transfers to a spouse, this may not succeed and can cause added liability both for counsel and for the client if done improperly.
Form a Family LLC. An effective strategy for sheltering non-business assets is to create a FLLC and leasing the assets back to an individual for personal use. This can include investment and bank accounts, real estate and collectibles.
Domestic Asset Protection Trusts. A DAPT is an irrevocable trust that protects against creditors and allows the Trust maker, usually referred to as a Trustor or Settlor of the Trust, to be the beneficiary of said trust. Where these trusts are not allowed in the state of the individual’s domicile, it is possible to use another state’s law to do so. So, an asset protection attorney can create the trust in a state that does allow them, and can select a state where the type of asset to be protected receives the least amount of government interference and ample protection.
Foreign Asset Protection Trusts. Foreign Asset Protection Trusts (FAPTs) are sometimes used to avoid liability to creditors because of limitations in the foreign jurisdiction to attaching the asset. The advantage to FAPTs is that foreign countries are not obligated to recognize U.S. laws and decisions. That means even if a court grants assets to be repatriated, the foreign company managing the trust doesn’t have to comply.
If you believe your assets need safeguarding beyond the traditional, schedule a free consultation with Bale & Associates today.