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Three Investment Structures for Asset Protection & Tax Planning

November 26, 2013

Filed under: Asset Protection,Trusts — Neel Shah @ 9:00 am

There is no one-size-fits-all asset protection strategy. Rather, asset protection needs to be completed for each individual or family and is based on particular needs. A recent article discusses different investment structures that may be part of your asset protection scheme.

Personal Ownership: Personal ownership of assets may work for individuals and families who have a low marginal tax rate. Additionally, personal ownership is important for those who require unrestricted access to their assets. However, personal ownership cannot protect assets from creditors. Therefore, if one anticipates facing personal liability in a lawsuit or divorce, one should consider implementing some level of asset protection planning.

Company Ownership: Individuals or families can also own assets through various business forms. These are common for families in high marginal tax rates, and those with large family trusts. Through company ownership (typically an LLC, a Corporation or a Partnership), a family can protect important assets from creditors, and pass them on through the generations.

Trust Ownership: Placing assets in a trust is popular for its ability to protect assets against creditors, maximize tax-effectiveness, and ultimately be used as an estate planning vehicle. When putting assets into a trust, it is important to carefully select the terms of the trust based on your use of the assets.

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