An Asset Protection Template

Asset protection strategies and tactics are discussed at length in Going Offshore: Is It For You?, W.I.L.’s most ambitious attempt at asset protection education. Those who find that publication too basic may find this page helpful for recalling or augmenting your existing knowledge. The asset protection neophyte will hopefully be inspired to investigation further.

In the table below, typical assets in need of protection – those associated with potential libilities – are crossreferenced with a summary of the recommended measures and the appropriate W.I.L. legal structures which apply. The services page contains a comprehensive list of the legal structures offered by W.I.L.

Even the highly knowledgeable may find it useful to review the specifics of the W.I.L. Discretionary Foreign Charitable Trust, as introduced here. Also, if the references to the use of contracts and private notes below are confusing, we recommend that you read through our educational piece titled “Interacting with Offshore Entities via Private Contracts”.

Asset to be protected Implementation and appropriate W.I.L. structure
Example(s) of implementation
 
All liquid (non-fixed) assets W.I.L. Trust. The trust can hold all liquid assets in its own name, isolating them from your personal liabilities
Example: Stocks, bonds, cash, precious metals, and other liquid, mobile assets can be conveyed to an offshore trust, in exchange for a private note holding the trust liable for the value at exchange-date. The assets will no longer turn up in searches of public records or other databases for assets held in your name or assets attached to your tax ID.
 
Domestic fixed assets (e.g., real estate, auto) Domestic LLC, trust or corporation. Although these assets cannot be moved out of your domestic jurisdiction, they can nevertheless be conveyed to a legal structure that holds them in other than your name, and not associated with your tax or other ID. For additional protection, the owner of the onshore structure can be an offshore entity.
Example: The house you live in can be conveyed to one of the above legal structures, in exchange for a private note. If the rent you pay to the structure – set at the prevailing market for rentals – in exchange for the benefit of living in the house at least covers the interest owed on the note, the house will be legally cushioned against legal liabilities that you may later incur. The house will not turn up in searches of public records or other databases for assets held in your name or assets attached to your tax ID.
Example: The house you live is conveyed to a domestic LLC. You are retain a 1% membership interest in and are the manager of the LLC. An offshore trust is the holder of the other 99% of the membership interest.
 
Encumbered domestic asset (e.g., real estate with mortgage) Domestic and international structures combined. The equity interest in the asset may be owned by either or both types of structures by, e.g., making a second-mortgage (or similar) loan secured by the value of the equity interest.
Example: If the bank holding a first mortgage allows it, the ownership interest in the house you live in may be able to be conveyed to a domestic LLC. Whether the bank is willing or not, an offshore trust can make a cash loan to you secured by the equity interest in the house, i.e., the trust makes a second mortgage loan. The cash from the loan may in turn be conveyed to the offshore trust.
 
Domestic business with fixed location Multiple LLCs or other domestic structure, depending on number and potential liabilities. To the degree there are logically distinct liability-producing assets in the business, e.g., multiple automobiles or structures, each such asset can be owned by a distinct entity.
Example: You own an auto servicing business, including several automobiles that are lent to customers while their vehicles are being serviced. Each of those autos is put in a distinct domestic LLC. Each set of equipment for each service bay (dangerous and therefore potentially libility-producing) is also put in a distinct LLC. The main business itself has separate lease agreements for the autos and equipment with each of the various LLCs.
 
Any mobile business that is not location-locked IBC, international LLC, or their legal equivalent. Any business that is not tied to a fixed location per se can be structured as an international business, with domestic subsidiaries if appropriate.
Example: You are a freelance photographer who licenses your works out for commercial use. The royalty interest in the photographs is owned by an IBC, which does the actual licensing and collects the revenues. The IBC itself is owned by an offshore trust or an alternative structure such as a Panama Foundation.