The question “how to protect your assets” is asked by every entrepreneur. The main objective of asset protection is to create conditions through which assets become inaccessible to attack by potential opponents in order to preserve the following opportunities for owners:
- own and control assets;
- take advantage of assets;
- manage assets (sell, lease, etc.).
- Corrupt government officials;
- Counterparties in commercial transactions;
- Business partners – co-founders / co-owners of companies, partners in partnerships;
- Individuals who have access to confidential information;
- Persons who deliberately file claims to exhaust an adversary
- Criminals – extortionists, blackmailers, raiders;
- Family members – spouses in case of divorce and division of property, negligent children, etc.
How to protect your assets
- Legal separation – the formal transfer of company assets with less risk. In such schemes, the owner of the assets has no legal connection with them, but a certain level of indirect control may remain. The main postulate on which the schemes of this group are based is: “Any assets can be attacked and taken away from you, except for those that you do not formally own.”
- Owner anonymity – using schemes that hide the identity of the asset owner
- Encumbrance of obligations – a situation in which assets lose their economic value, becoming unattractive to capture.
Selection of Jurisdiction
Pay attention to:
- Political stability;
- Independence of the judiciary and proper implementation of decisions of state bodies;
- Optimal taxation;
- The level of protection of confidential data;
- Business-oriented legislation.
Choose a trust
What is a trust and why is its role so important in building asset protection strategies? A trust is a special form of agreement, according to which the founder transfers some of its assets to the trustee for the ownership and management of these assets in the interests of the beneficiaries to achieve a specific goal. The idea of breaking the legal connection between the assets and the founder is often perplexing. However, a correctly designed trust creates a reliable barrier against ill-wishers. In this case, the risk of losing assets tends to zero. Important from the point of view of protection is the irrevocability of the trust and the inability of the founder to explicitly control the assets transferred to him.
What to consider when building an asset protection strategy
- Analyze the specific situation of the asset owner – single or married, planning to defend in advance or already under attack;
- Nature of assets – personal or business assets;
- Asset types – cash in bank accounts, real estate, corporate rights (stocks, shares in partnerships, etc.);
When planning protection, all circumstances must be considered. Quite often, in similar situations, the same strategies may not work, and sometimes even do more harm than good.
We draw your attention to the fact that this article is for informational purposes only. For more advice, contact us at the contacts listed on the site.