Assets that are almost always unreachable are those to which one does not hold legal title. In many cases it is possible to vest legal title to personal assets in a trust, an agent or a nominee, while retaining all the control of protection of assets pdf assets. When a debtor has none to few assets, the bankruptcy route is preferable.
When the debtor has significant assets, asset protection may be the solution. If the debtor is an individual, does he or she have a spouse, and is the spouse also liable? If the spouse is not liable, is it possible to enter into a transmutation agreement? Are the spouses engaged in activities that are equally likely to result in lawsuits or is one spouse more likely to be sued than the other? If the debtor is an entity, did an individual guarantee the entity’s debt?
How likely is it that the creditior will be able to pierce the corporate veil or otherwise get the assets of the individual owners? Is there a statute that renders the individual personally liable for the obligations of the entity? Are there specific claims or the asset protection is taken as a result of a desire to insulate from lawsuits? If the claim has been reduced to a judgement, what assets does the judgement encumber? What is the statute of limitations for bringing the claim? How aggressive is the creditor?
Is the creditor a government agency? Some government agencies possess powers of seizure that other government agencies do not. To what extent are the assets exempt from the claims of the creditors? Whilst the aforementioned use of Trusts will be of benefit in a number of cases the question of ownership can still arise, as although legal ownership may have been transferred to the trustees, beneficial ownership may still in many cases lie with the settler of the Trust. Trusts, and can also be integrated with an existing trust if necessary.
Whilst Trusts may not be recognised in many Jurisdictions, Life insurance also has the advantage of being Multi jurisdictional. Bail Ins’, this is sometimes referred to as Crisis Deposit Assurance. United States federal bankruptcy laws and ERISA laws exempt certain assets from creditors, including certain retirement plans. All fifty states also have laws that exempt certain assets from creditors. Many states limit the remedies of a creditor of a limited partner or a member in an LLC, thereby providing some protection for the assets of the entity from the creditors of a member. Creditors have several tools to overcome the laws that provide asset protection. The UFTA and the Bankruptcy Code both provide that a transfer made by a debtor is fraudulent as to a creditor if the debtor made the transfer with the “actual intention to hinder, delay or defraud” any creditor of the debtor.