June 27, 2022

The U.S. economy is suffering. The war in Ukraine, the lingering pandemic, federal stimulus money, and low federal interest rates (until recently) have each taken their toll.

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Now we’re experiencing the highest inflation rate since 1981, stock values are plummeting, and gas prices are hitting all-time highs of over $5 (some places are even adding an extra digit to pump meters in anticipation of $10 gas).

This is why it’s more important than ever for Americans to get a grip on their financial security.  For all we know, we could be on the brink of another recession.

One way to boost your financial security is to guard the wealth you already have — aka asset protection.  Asset protection means protecting your property against lawsuits, bankruptcy, and creditor claims through legal means (not illegal means like concealment, contempt, fraudulent transfers, tax evasion, or bankruptcy fraud).

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And since the poor have few assets and the wealthy are usually already familiar with asset protection, it is the middle class that most need to learn about asset protection strategies.

And the sooner you do, the better.  Once a claim or liability occurs, it’s typically too late to implement asset protection strategies.  Courts will view them as evasive, and you could get accused of engaging in “fraudulent transfers.”

So here are a few ways you can start protecting your assets today:

  1. Create an asset protection trust

Asset protection trusts (APTs) are trusts designed to shield your assets against creditors.  Basically, it’s giving ownership of your assets to a trustee and then designating yourself as the beneficiary.  There are two kinds of APTs: domestic APTs and foreign APTs (aka offshore trusts).

Domestic APTs are irrevocable (meaning you can’t modify them once they’ve been created) and are only allowed in 17 states, but they come with unique benefits like state income tax savings when situated in a no-income-tax state. 

Offshore APTs are simply APTs created abroad.  Popular sites for offshore trusts include the Cook Islands, Nevis, and the British Virgin Islands.  People use offshore APTs to make it harder for creditors to come after their assets and lower their tax liability — hence the term “tax havens.”  But they are usually more expensive to set up.

  1. Leverage homestead laws