Bite-Sized Bits of Knowledge

Hi, thanks for tuning in to another dose of bite-sized Bits of Knowledge, where we give you meaningful information in a short amount of time. Today, we’re going to talk about asset protection, super high level. I just want to impress upon you that there’s a lot you can do when it comes to asset protection, but it’s a worm hole. Starting from the top, typically Basically, most states have protections that are codified by statute or common law, and I would recommend starting there. In Florida, for example, you have your assets that are protected, like Homestead, for example, or retirement accounts. These are things that are protected. There’s exceptions to everything, of course, but you have your little waterfall of assets that are protected. Beyond that, you have things you can do with certain types of trusts and certain types of businesses that have benefits if structured properly. But of course, insurance is always the first line of defense, but we all know that insurance companies like to reject claims, and that’s why you start to think about these other options. Florida is relatively straightforward. You have your waterfall, you have your insurance, some businesses, some trust. You can always go exotic and go to other states like South Dakota.

They have very favorable trust laws, self-settled asset protection trusts, Alaska as well. You can also go offshore to countries like Nevis. But when we’re talking exotic, planning requires big budgets. When it comes to asset protection planning, you want to do it right, and of course, subject to your budget, the things I would mention before I conclude here are that you need to be mindful of when you’re doing your planning. Planning is totally allowed. There’s nothing wrong with it. But if you’re doing it the wrong time, there’s something What are you wrong with it. There’s something called the Fraudulent Conveyance Act, or the Fraudulent Transfers Act, depending on the state you’re talking about. And so these types of transfers will unwind all of your planning. So the question is, when does it take effect? And that requires really understanding the Fraudulent Conveyance Act and how it works. And so to give you a super high level of how that works, obviously, if you’re intentionally defrauding creditors or intentionally making yourself insolvent so you can’t pay creditors, that’s not allowed. But the act basically looks at not subjective intent, but objective intent. And it says, Okay, well, here’s a laundry list of things that if you do, you’re deemed to have the intent to have defrauded creditors.

So things like that are like, the difference between Are you in a lawsuit? Is the lawsuit filed? Has there even been a demand letter? Versus do you have a judgment where you’ve lost and they’re trying to collect. That time horizon matters of when you’re doing your plan. In other words, has the issue arisen to the point of there’s a cause of action, there’s a claim filed, versus has it already been adjudicated and you’ve been deemed liable and you’re trying to avoid it? That’s just an example, or one of many examples, of where the file and conveyance at could unwind your planning. So you really want to do it the right way at the right time. And before you have a problem, that’s the right time. So we can help you with that. We do a lot of it, and we’re happy to talk to you further about how we approach doing it. So that’s all for today. Thank you for stopping by, and stay tuned for more. Hey, Mo. Hey, Mo, love.