Asset protection / proper estate planning - Posted by Nikki

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Asset protection / proper estate planning - Posted by Nikki

Posted by Nikki on July 05, 2003 at 01:47:59:

My husband and I are setting up a living revocable trust. The program we are using (Suze Orman) recommends that we transfer title of everything we own into the trust (personal home, investments, etc) for estate planning reasons.

However, we need info as to liability protection. If we transfer our business owned properties to this do we have any type of protection from lawsuits… If not, what is the proper way to go about getting this protection and still have proper estate planning set up. We’ve been getting a lot of mixed advice and we want to be prepared in the event of a life tragedy but also protect our business investments now.

Thanks in advance.

Re: Asset protection / proper estate planning - Posted by Earl

Posted by Earl on July 06, 2003 at 21:10:01:

I need to say up front I am not an attorney, but I’m thinking about the same thing - how about this idea - make the living trust the member of your LLC(s). Your husband and you would be the trustees of the trust and the managers of the LLC. That should be ok in every state, and would provide both the estate planning as well as asset protection. Perhaps John Hyre could give some thought on that(?) Is that ok, John?

Re: Asset protection / proper estate planning - Posted by John Merchant

Posted by John Merchant on July 05, 2003 at 14:17:03:

Generally speaking, a trust you’d set up for yourselves as beneficiaries, is pretty worthless as far as shielding that property from creditors during your lives…any creditor could, if he had a judgment against you and discovered that you are the beneficiaries of that trust, easily penetrate same and grab its assets. Or, on legitimate legal discoverey make you admit its existence and your relationship to it

IMHO the real value of such a trust is making it pretty much invisible to anybody looking to see if you do own RE, if the trust is named some ambiguous name (e.g. 1776 Washington St. Realty Trust). As you can readily see, if the creditor were to do an asset search by names of legal/title owners, since that RE wouldn’t carry your names, the search would miss it.

Remember, if any lawyer is thinking of suing you, he/she wants to know you’ve got assets in YOUR name, and if he/she can’t find any, he/she’s going to lose interest pretty quickly.

And in operating such a trust, you never want to admit any ownership interest in the trust, in anything you say. You just call yourself a manager ot that property, and say that you’re not privileged to discuss who or where the owner is.

I knew a gentleman who did this for years, managing lots of property, and nobody ever knew if it was his or a friends or relatives…so it was a very effective strategy. Now of course, if he were ever put on a witness stand, and the question put to him, and it was relevant info for whatever the court action was, he would have had to state the truth about it, but short of that, no way anybody could have forced the info or discovered who was the real beneficiary.

Re: Asset protection / proper estate planning - Posted by JHyre in Ohio

Posted by JHyre in Ohio on July 05, 2003 at 07:12:09:

LLC’s, limited partnerships and the like provide a degree of asset protection absent with trusts. In most states, such entities are cheap. There’s lots in the archives on the protection that such entities do (and do not) provide. Essentially, if a judgment bankrupts your business, the entity keeps it from bankrupting you. See also Bill Bronchicks material, for sale here, that focuses on asset protection for real estate.

John Hyre