In the News:

PROTECT YOUR ASSETS FROM THE SHARKS
By Angel Y. Dayan, E.A.

In a capitalist-democracy where the written Constitution is the highest law of the land, our rule of law dictates that we can own our assets. We can hold title to them under our own name and then we can pass them on to our children or heirs either during our lifetime or upon death.. As our life goes on daily like a rotating planet in the universe, we continue to gather up assets. We also pursue the most valuable of them as we possibly could. The beauty of our known system comes with asset ownership that is the opposite in a communist or totalitarian society where most assets are owned by the State and the people are mere users and/or possessors of them. There are no rules for ownership and transfers to other persons under this system. Paradoxically, the fact that we could own our assets and even find the best comfort in them for both the body and the soul do not guarantee that we could keep them in our lifetime. Only the prudent, the vigilant, and the wise will be able keep them. The changing laws, the influences of market forces, and the greed of people in our society could easily make us lose our precious possessions. Estate tax could also hit as high as 55% of our asset values, real estate prices could be reduced by the dictates of sales and purchases, and we could be sued for every possible reason that our legal system would allow. We should therefore take serious concern over these realities if we have accumulated enough assets or keep a modest amount of wealth.

Our society offers us many ways to protect our assets from suit "predators". Those who will likely take it away are our creditors, clients suing for professional malpractice, insurance cheats, scheming lawyers, government bureaucrats, pyramid games and believe it or not even relatives and "friends" who borrow money without paying back. Even the most virtuous person in the planet could be blinded by the "twinkle of gold." The reason for this is the sin that lives in our body even if the Spirit tells us to do what is good. So, what are some simple ways of asset protection then that we could use.

a) Homestead Filing on Residence. This is a simple notarized paperwork sent to the County Recorder's on Real Estate that shields the equity of the home that you own. The amount that is protected from creditors varies depending on your marital status and the State of your residence.

b) Re-organizing Asset Ownership Title. A client of mine put the title of his car under the name of his son that when the IRS came running after it, it could not be touched. Some small assets could be titled under the name of the children to be held in trust by the parents. This may require the setting up of Children's Trust.

c) Family Limited Partnership Set Up. This method is rather sophisticated and you may need legal advise. It is not difficult to form. A few pages of paperwork is sent to the Department of Corporation to register the partnership and in about a month it will be approved or registered.. What could get complicated here is the splitting of partnership interests between those who are American citizens and residents of the U.S. and the non-resident partners. The is a super-tool on asset protection that have been sustained by many courts. Assets that are owned by this partnership are not owned personally by the partners who control them.
d) Gifting of Assets to the Children. Some assets could be gradually given to the children every year in parcels of no more than $20,000 by both parents. This method avoids the gift tax that is chargeable to the giver or to the recipient and uses the lifetime exclusion that exempts the gifts from taxation.

As a word of caution, do not implement the above asset protection tools unless you are assisted by a professional. The laws are changing constantly. Please call our office for help.