Asset Protection
Welcome to the page that talks about the major benefits of asset protection. Now, I know what you’re thinking, “Why do I need asset protection? I’m not a billionaire superhero.”
But trust me, this is something that everyone needs to consider, whether you’re a big-shot CEO or a small business owner, to someone that has worked 20 years or more and acquired assets
First and foremost, let’s talk about how this is the #1 thing the wealthy do PERIOD besides having the correct mindset and practicing the Dynamic Laws of Prosperity! Again do you think Bruce Wayne didn’t have his assets protected? You betcha, he sure did. However, that doesn’t mean that his employees didn’t. The truth is, for anyone who has over $100,000 in assets (think if you own a home or two with $100k in equity) then you should look at proper asset protection.
“Did You Know That 96% of the World’s Lawsuits Are Right Here In The USA and That 53% Of All Business Owners Are Involved In At Least One Lawsuit In Their Career?
Here are 5 Main Reasons Why You Want To Protect Your Assets!
1.) To Preserve Wealth For Future Generations:
Many wealthy families want to ensure that their wealth is passed down to their children and children’s children. Protecting their assets can help ensure that the family members have financial security in the future. Look at Bruce Wayne, aka Batman, now his family knew what they were doing by handing down Bruce Billions in assets while having them protected from creditors and lawsuits.
2.) To Reduce Taxes:
Why on earth would you want to keep paying high taxes when you legally can pay as little as $0 In taxes? Well some of the wealthy utilize various types of asset protection strategies to drastically reduce their tax liabilities. By protecting their wealth and utilizing the right structures such as various trusts to eliminate taxation period or at least Capital Gains taxes not only works in their favor to protect what they own but to also provide them with more money to invest from the savings on their taxes. Now let’s not overlook the massive tax benefits. With asset protection, you can legally minimize your tax liabilities and keep more of your hard-earned money in your pocket through a variety of ways especially using the right type of Trusts and proper tax planning which is the #3 thing the wealthy do
This means more cash to invest in your business or to invest in other cash flowing assets which now you have to take more “Workcations or Work Vacations” giving you the ability to write off the majority of your workcation. And let’s be real, who doesn’t like the sound of that?
3.) To Limit Liability:
Wealth Individuals may be exposed to various types of liability, such as lawsuits or creditor claims. Example: You have rental properties (a great tax strategy by the way) and a tenant slips and falls and sues you for everything you have and WINS! This has happened way to many times to count and doesn’t have to happen to you.
As quoted above, 80% of all attorneys are in the USA and 96% of all lawsuits are in the USA so this happens more than we would like to admit (a lot more). And about 72% of those are frivolous lawsuits and with 80% of the worlds attorneys in the USA, they got to eat, so they create lawsuits to go after people so they can reap some of the bigger fees. By utilizing asset protection, a business owner or person can drastically reduce their lawsuit and creditor exposure and ensure they are not at risk. Ask this question, how can I get sued if I don’t own anything? Remember that saying “Own nothing and control everything?” That is 100% the case here. An attorney cant look you up and see all the assets you have when you have proper asset protection because NOTHING will be in your name. It will be in a mixture of LLC’s, TRUSTS, NON-Profits, Ministries and Other Entities.
4.) To Maintain Privacy:
This is also a big one. Wealthy individuals (unlike Bruce Wayne) may want to keep their financial affairs very private as most should. By having proper asset protection you can keep a vary large amount if not all of your financial affairs highly private. Again this is NOT something you can obtain with a Living Trust as its tied to your Social Security Number and everything you own in it is fully exposed and when you pass, all of that information is now passed on to your family which also makes them a target for lawsuits and creditors
5.) To Plan For Retirement:
There are many ways that a wealthy person can utilize their asset protection to help build and establish their retirement (privately of course) and leave the remaining of their retirements to their family if they so choose all while keeping their beneficiaries and family’s financials and assets safe, secure and private.
Look at you getting all educated, how fun!
MISCONCEPTIONS ABOUT TRUSTS!
It’s important for everyone to understand the Big Misconception about Trusts, Trusts are not only for the mega-wealthy. In fact, they can be for anyone who wants to avoid probate so that their families don’t suffer the wrath of the courts. They also protect their assets from outsiders such as a guest who is on your Yacht who may slip and fall and come after you for all you got (which happens more than you would think.) Trusts can be a huge blessing when set up with the right Trust as not all Trusts are created equal. We like Private Trusts and we have our very own unique Trust that is super awesome called “The Legacy Wealth Trust™ which offers top-tier asset protection and combines it with major tax benefits!
However, it’s used in a very specific way right along side your tax planning. We also offer our own Ministry or Outreach Trust that helps people be able to donate up to 60% of their income to their own ministry they can use those funds for good, loan them out (to yourself, put them into a Legacy Leveraged Wealth Account which is what we typically have clients look at doing) and donate at least 10% of the income to other charities of their choice. Some very cool things we do here and by donating 60% of your income, you just saved a HUGE amount in taxes. Isn’t that pretty brilliant? Again it’s what the wealthy do!
MORE ON TRUSTS..
But that’s not all, folks. Asset protection also offers protection from creditors as well as lawsuits. You never know when someone might come after you with a frivolous lawsuit (these are happening around us all the time in fact 96% of the worlds lawsuits are in the USA), or when a creditor might try to seize your assets. Asset protection can shield your personal and business assets from these kinds of attacks, keeping them safe and secure. That means more peace of mind for you, and less stress when it comes to dealing with legal headaches. I mean let’s face it at least 53% of all business owners will face or have faced a lawsuit in their business careers. That could be you, but it doesn’t have to be.
And let’s not forget about the other benefits of asset protection. It can help you with estate planning so you can ensure that your assets are distributed according to your wishes to the proper people all without having the courts dig into your family’s pocketbooks. This is another major benefit of Private Trusts. It can also help you to maintain privacy, so you can keep your personal and business affairs separate while making it much harder for attorneys to come after your assets if they can even see what you own which they won’t. Again major superpowers we are talking here.
WHAT TYPES OF TRUSTS ARE THERE?
Trusts are a valuable estate planning tool that can be used to protect assets, provide for beneficiaries, and transfer wealth efficiently. There are different types of trusts, each with its own set of features and benefits. The choice of trust will depend on the grantor’s goals and objectives. It is recommended to consult with an experienced estate planning attorney to determine the best trust strategy for your needs.
Do you need to protect your assets?
If you have more than $100,000 in any type of assets such as real estate (including your personal home), retirement and more, then YES you will most likely want to protect your assets just like the wealthy do.
First off Trusts are an essential estate planning tool that can be used to protect assets and transfer wealth efficiently. A trust is a legal entity created to hold and manage assets for the benefit of designated beneficiaries. There are different types of trusts, and each has its own set of features and benefits. Let’s discuss the various types of trusts and their uses.
Please Note that the above types of trusts also can be Private or Public. You also have Trusts written in Common Law or Civil Law. These drastically make a massive difference in ones ability to protect what they have while also paying the least amount in taxes to the IRS and their state.
Private Irrevocable Trusts are a great way to start your planning, again each one of these trusts is written differently and can-do different things, so you want to make sure you get the best of the best specific to your and your family’s needs.
Here at DoWhatTheWealthyDo.com (Obsidian Wealth Management) we have put together some various Asset Protection plans that are based on years of experience and making sure everything you own is protected based on your level of needed asset protection. It truly breaks down to what’s most important based on your situation
1. Revocable Living Trust:
A revocable living trust, also known as a living trust, is a trust created during the lifetime of the grantor, and it can be modified or revoked by the grantor at any time. The grantor can transfer assets into the trust and remain in control of them. The assets held in the trust will bypass probate upon the grantor’s death and transfer to the designated beneficiaries.
A living trust is often used to avoid the probate process, which can be costly and time-consuming. Did you know that Revocable Living Trusts are there to help eliminate probate, but you are still super exposed to lawsuits and creditors? In superhero terms that means “NO ASSET PROTECTION” or no real superpowers.
Not to mention it’s tied to your Social Security Number and it’s 100% public knowledge. So when you pass, that all becomes public knowledge which now informs on every asset you have and whom it’s going to which now exposes your beneficiaries to be attacked. However, Revocable Living Trusts do have their place, but holding your big assets isn’t one of them
2. Irrevocable Living Trust
An irrevocable living trust is a trust that cannot be modified or revoked by the grantor after its creation. Once the assets are transferred into the trust, the grantor gives up ownership over them to the trust and entrusts into a Trustee who controls assets in the Trust. An irrevocable living trust is often used for estate planning purposes, such as reducing estate taxes, protecting assets from creditors, and providing for the long-term care of a beneficiary. There are a many variety of different Irrevocable Trusts as you will see below. All Irrevocable Trusts typically have an EIN (Employee Identification Number) just like a business because its not tied to the grantor or person who setup the trust as its now its own entity and runs accordingly similar to how a business does.
3. Testamentary Trust
A testamentary trust is a trust that is created by the grantor’s will and takes effect after the grantor’s death. This type of trust is often used to provide for minor children or beneficiaries with special needs. The testamentary trust can be structured in a way that provides income and/or principal to the designated beneficiaries over time.
4. Charitable Trust
A charitable trust is a trust that is created to benefit a charity or nonprofit organization. There are two types of charitable trusts: charitable lead trust and charitable remainder trust. A charitable lead trust provides income to the designated charity for a specified period, after which the remaining assets are distributed to the grantor’s beneficiaries. A charitable remainder trust provides income to the designated beneficiaries for a specified period, after which the remaining assets are distributed to the designated charity.
5. Asset Protection Trust
An asset protection trust is a trust that is created to protect assets from creditors. This type of trust can be used to shield assets from potential lawsuits or creditors’ claims. Asset protection trusts are often set up in offshore jurisdictions, such as the Cook Islands or Belize, where they offer additional legal protections. This may vary based on the needs of the grantor and its beneficiaries. This can also be a great way to implement tax strategies for larger businesses.
6. Special Needs Trust
A special needs trust is a trust that is created to provide for the long-term care of a beneficiary with special needs. The trust can be used to supplement government benefits and provide for the beneficiary’s ongoing care and support. Special needs trusts are often used to ensure that the beneficiary’s inheritance does not disqualify them from receiving government benefits.
7. Spendthrift Trust
A spendthrift trust is a trust that is created to protect a beneficiary’s assets from their own mismanagement or from potential creditors. The trustee has control over the trust assets and can provide income and/or principal to the beneficiary over time. A spendthrift trust can be used to protect assets from a beneficiary’s creditors or from the beneficiary’s own financial irresponsibility.
So, there you have it, folks. The major benefits of asset protection in a nutshell. Now, I’m not saying you have to be a superhero (Batman/Bruce Wayne) to take advantage of these benefits, but it certainly doesn’t hurt. Just remember, it’s never too early to start thinking about asset protection. So, don’t wait until it’s too late. Protect yourself and your assets today because tomorrow someone may be taking them from you.