What Other Asset Protection Options Do People Have?
What Other Asset Protection Options Do People Have
?
Hi, this is attorney Gary Fales. Today I want to talk about what other options are available besides using the Asset Protection Trust that is located here in Nevada.
I have changed the facts for the following case example: I was speaking to a woman who was concerned about her financial situation. She had a home that was worth $500,000 and there was a mortgage on it for about $800,000. Her concerned was that she was going to be foreclosed upon and that she would be get sued for the amount that she still owed, which was about $300,000. In fact, she was convinced that she was going to get sued. Yet, she was really hesitant to do the Nevada Asset Protection Trust.
Any transfers that are made into the Asset Protection Trust must not be in violation of the Uniform Fraudulent Transfer Act. Let's assume that the transfers in this example are not in violation; this client had a $900,000 piece of property that she was going to transfer into the trust, because she wanted to protect it.
She was concerned about the trust because, as she said, "It's going to take two years before the assets in that trust are protected." I replied, "Yes, but what else are you going to do?" I explained that if we analyzed her situation, and she did get sued in 6 months (because that was her number) what would she do at that point in time? I asked her, "Are you going to defend yourself? Are you going to try to plead for mercy? What is your strategy?"
Unfortunately, she didn't have a strategy. I then explained what would happen without any strategy or protection. If she was sued in a breach of contract case and lost, she would then go to the debtor's exam. In the debtor's exam, they can ask about all of an individual's assets, and they are able to put a lien against any unprotected assets that are not protected under state law.
I then explained that with the Asset Protection Trust, if she was sued in 6 months, she had other options. I explained that, if it were me, I would defend myself by using any legitimate claim that I could to delay this lawsuit until at least after the two year window of time has expired.
As long as I don't have the intent to hinder, delay, or defraud my creditors, I have many valid reasons to put my assets into this trust. Wanting to avoid probate is only one of those reasons. If I ended up getting sued in the future, I would do everything I can to defend myself so that I either win the lawsuit or at least let my assets season in the trust long enough so they are protected. After that window of time has passed, no action may be brought against the trust itself.
The other alternatives are very bleak. For my clients who call me from other states, and who don't know anyone in the state of Nevada, I think the next best option is to try to use a combination of offshore entities and liens.
The problem with the offshore entities is that they cost $4,000-$6,000 per year just to maintain them. Plus, the initial startup fees are very expensive, not to mention the onerous filings that are required by the Treasury Department and the IRS. Liens are also a problematic option. In order to make a lien you might put against the property legitimate, you would have to find a lender who is willing to lend you the money necessary to put a legitimate lien against the property.
So there are very, very few options, in my opinion, that are as great and as cost effective as the use of the Nevada Asset Protection Trust. This is Gary Fales, and I hope this was educational. Thank you!
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