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9 Million California Lawsuits 2003-Irrevocable Trust to Protecting Assets

Posted on: March 24, 2017 at 9:50 pm, in

With so many lawsuits occuring in America that destroy people’s financial well-being you should be aware that the wrong legal and financial advice can cost you a lot of money. Did you know that a LLC may not be enough to protect your personal assets because of the charging order protection?

Lawsuits can arise from many circumstances and situations.
Your under age driver just had a nasty accident. Your wife said she’s leaving you and she wants half of everything you have. Your business partner just quit and is taking your largest client with him. Your dog just bit the mailman. Your son just impregnated his girlfriend. Your secretary said she was sexually harassed by her co-worker.
Can you be personally sued? Can it happen to you? Chances are very good. In California, lawsuits are as common as eating, drinking and sleeping. According to superior court records, almost 9,000,000 lawsuits were filed in California during the 2003 -2004 fiscal year. Over 30% of lawsuits were filed in Los Angeles County alone.

Most legal and financial advice is bad or incorrect

90% of legal and financial advisors give the wrong advice. They will tell you that a Limited Liability Company or a Corporation or a Partnership will avoid fraudulent lawsuits and protect your assets. Ignorance is bliss, isn’t it? But it can cost you more than just money.
Single shareholder corporations, single shareholder of Sub “S”, and single member LLCs can provide the owner with protection against liabilities arising from “the conduct of the LLC” but not the owner of the LLC membership shares. In other words, “if” the LLC does something wrong, the owner is not necessarily responsible.

When the LLC will not protect owner’s assets

To reach the owner’s personal assets, a plaintiff would have to “pierce the veil” of the entity showing that:
  1. The LLC, the corporation, or the Sub “S” was undercapitalized for it’s intended business purpose,
  2. Formalities were not followed,
  3. The owner used the LLC, Corporation or Sub “S” mostly for personal purposes,
  4. It did not serve a “bona fide” commercial purpose,
  5. It lacked in economic substance and was merely an alter ego of the owner whose sole intention is to frustrate the creditor(s), etc.
A single member LLC (one owner), Corporation or Sub “S” will not protect the owner’s assets because the charging order protection that is much touted is based on protecting the “innocent” non-debtor. Only an irrevocable trust with an independent trustee will protect your assets from a past, present and potential future creditor.

Importance of preparing for a lawsuit

“Preparation, preparation, preparation,” I say. Just like when you buy a house – location, location, location. Asset protection is about reducing the risk, not only from outside creditors, but also from inside creditors like your ex-wife or ex-husband or ex-common law, your brother-in-law, damages caused by your minor children, your dog or your business partners.

Type of trust to choose and importance of an independent trustee

A trust, any trust, is not worth the paper it’s written on if you have the power to void or amend it. A trust is nothing more than a contract. If you can void any section of the contract, you have the power to void the whole contract.
Most lawyers will tell you, that you can write an irrevocable contract, even if you are at the center of the agreement by electing yourself to be the trustee. It seems these guys just went to law school to warm up the seats. If you run into one of these guys, run, don’t walk because their incompetence is going to cost you plenty.
Let me say it clearly and without recourse. The power of a trust contract vests with the power of the independent trustee. The keyword here is “independent”. Your trustee must be independent of you. He cannot be related to you by “blood” or “marriage.” The more independent your trustee, the stronger your asset protection plan. When you are dragged into court, even by your former spouse, you can look at the judge straight in the eye and calmly state, “Your Honor, I don’t have any assets.” With so many lawsuits in America, it’s in your best monetary interests and health to learn what you can do to reposition your assets and implement a complete roadmap to asset protection, minimize your taxes, stop the probate process and stop the only voluntary estate tax system from reaching you.

Ways to Protect Yourself from the Lawsuit Epidemic

Posted on: March 24, 2017 at 9:49 pm, in

Protecting yourself from lawsuits and sue-happy lawyers.

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Now that you are aware that there are lawyers just waiting to sue you, you may be asking how you can protect yourself and your assets. The only way to avoid losing your assets if you are sued is to be devoid of those assets. Basically, if you own nothing, there is nothing worth suing for. To put it simply, you would need to sign over all your assets to a trusted individual. While this may be an issue for some people, it is truly the only way to protect and save what you worked so hard to earn and achieve. For example, if you own a business, you are at a high risk of being sued. However, if you sign that business over to a trust, you no longer own the business and no longer have the asset. This does not mean you are ridding yourself of the business. You still control the business, but you do not own it.
This is one of the most common ways to protect assets, especially if you have a lot. There are a variety of other tactics people use to protect themselves from being sued and losing their assets. Not all tactics are legal methods, but they are effective nonetheless. Securing assets with loans from members of your family and transferring your current assets to other family members are two popular ways to avoid lawsuits. Many people will choose to place their assets into limited partnerships, irrevocable trusts or into life insurance policies that are owned by someone other than themselves.
Unfortunately, many people are not aware that there are things that can be done to protect yourself and your assets. The above mention methods are only a few of the many ways. Many people have the misconception that the only way money is safe is if it is in an offshore account. While this method is extremely effective, it may be best to weigh all the options before making a decision.
There are many people who believe that offshore trusts and accounts should be the very last method employed, and this is true. The use of an offshore trust is one of the most common devises used by wealthy individuals who want to protect their assets from those lawyers seeking to sue them. Generally, an offshore trust should be the last resort and it is not the only way to protect your assets, nor is it always the most effective. The key to protecting your assets is to find a way to transfer ownership of those assets.
Another misconception is that jointly owned property is safe. This is far from being true. Jointly owned property is an even higher risk. This is because money hungry creditors of either owner can take any property that is held jointly. So, with joint property, you have doubled the chances of getting sued because the creditor can go after either party.
When devising ways to protect your assets, remember that there are simple ways to do this. You do not need to spend a lot of money on legal fees. It can be as simple as transferring ownership of an asset to a trusted person. Asset protection is an important thing to consider, especially since there are so many lawyers waiting around the corner to get their hands on your money.
It is important to take these steps before you are sued. If you are already involved in a lawsuit and then transfer ownership of your assets, it will be deemed a fraudulent conveyance. This means that the courts can repossess the asset from the transferee. Always remember, you must protect your assets before there are any potential lawsuits filed against you. If you wait until the problem arises, it is too late. If you want to begin the steps to protect your assets, seek out a competent lawyer that is familiar with asset protection and who is well versed in the variations of state laws or simply contact Estate Street Partners.

To learn more about how estate planning & trust planning are affected by asset protection strategies visit Asset Protection Trust, Getting Sued Hiding Assets, Offshore Asset Protection, Living Revocable Trust.