Asset Protection. Asset Protection is an integral part of effective estate planning for individuals who wish to guard against claims that may be made against them in the future, whether as the result of a disputed claim or a mistake that the client may make. When the Will or Living Trust that I prepare on your behalf leaves assets in trust for descendants, I recommend the drafting of provisions that will best protect the assets in the trust from being attached by creditors, even if the trustee whom you have appointed is the descendant him or herself. Although perhaps over-blunt to say so, it is often your descendant's spouse, from whom he or she may later get divorced, who will be the most likely unwelcome "creditor," and the use of trusts provides a means by which the assets therein can hopefully be protected from mandated use in satifying such a claim.
During your life, if you are engaged in a business, or operating a professional practice, how you structure your business or professional practice, for example through the use of one or more limited partnerships or LLCs, can serve to increase protection of the assets that are employed therein from attachment by creditors whose claims may arise from your mistakes or
other actions outside of that business or practice, or can shield you from liability for claims made against your partners or associates in that business.
Giving to family members non-controlling interests in an LLC or Limited Partnership, in which you operate your business, is a means by which you can protect assets of the business from future claims against you arising outside of that business, while at the same time not divesting yourself of control over the business or assets in which you have given such interests. Giving such interests can also result in estate tax savings in the future, should you fall within a bracket subject to taxation under existing or future estate tax laws, since any increase in the value of such interests, after they have been given, will be outside of your estate.
In Florida, under the current statutory scheme, you cannot, during your life, establish a trust of which you remain a beneficiary, even if that trust is "irrevocable," that protects the assets therein from your potential creditors. An increasing number of other states provide otherwise, thereby presenting opportunities for creating a trust or trusts for your benefit that are governed by the provisions of another state. (See discussion above with respect to "Situs" of trusts).
The use of offshore trusts, though infrequent, and considerably more expensive to establish and maintain, can be the means of choice to protect assets from future creditors if there are sufficient assets potentially at risk to warrant such planning. The use of an offshore trust is not a strategy that relies on "hiding" such assets, but that relies on the structuring itself to deter or protect against unwanted claims. I am prepared to meet your needs in such regard.