Asset Protection

Protecting your assets, whether from accidental liability creditors, business creditors, public benefits programs such as Medicaid, or other sources of liability, is important but not necessarily easy. At Monarch Wealth Attorneys, our firm has extensive experience in all aspects of asset protection including structure design, the use of business entities such as LLCs, and jurisdiction selection.

The protection of assets usually takes two approaches, working together.

First, investment assets that could produce liability should be held in such a way that one investment asset is not automatically available to satisfy a court judgment resulting from the liability produced by another asset. As an example of this, if an individual directly owns several pieces of rental property, all or any of these properties would be available to satisfy liability arising from a slip and fall by someone on any of these properties.

Conversely, if these properties were each held in separate limited liability companies, with the individual owning each of the limited liability companies, the only assets that would be available to satisfy the same slip and fall claim would be the property in which the slip and fall happened. This simple structure technique would likely save all of the other properties from judgment liens or forced sale. If appropriate, this structure would not in any way affect the tax compliance or payments necessary for the properties—no additional tax returns or payments would be required.

A second often-used form of asset protection is the segregation of assets that will not produce liability from all other assets. This segregation is often accomplished by the use of asset protection trusts. Such trusts, formed either domestically or internationally, provide shelter for your assets from claims of unanticipated future creditors.

An individual considering asset protection planning needs to consult counsel experienced in this area as attempted asset protection is usually ineffective against current creditors and potential (future) creditors—transfers of assets in such cases may likely result in a fraudulent transfer claim.

Our firm will help you plan an appropriate asset protection structure, such as:

  • Segregating assets with a high potential of liability from other assets using business entities such as LLCs
  • Understanding how to protect assets under Colorado law using creditor exemptions for retirement assets, a portion of the equity in your personal residence, etc.
  • Protecting assets under the law of a jurisdiction with specific asset protection trust legislation (such as Alaska, Hawaii, South Dakota, etc.)
  • Protecting assets under the laws of a non-U.S. jurisdiction with comprehensive asset protection legislation (such as the Cook Islands or Gibraltar)

Other more esoteric options exist depending on the type of assets you own and the type of liability from which you are protecting yourself.

These options vary widely in their utility for specific purposes under different factual situations. Therefore, it is crucial to receive counsel from a skilled planner with experience in each of these areas.