by: Thomas Fafinski
Real asset protection planning is not about any one strategy or following which way the wind is currently blowing. Functional asset protection planning is about creating multiple layers of defense so that creditors are forced to peel through the protection like the layers of an onion, finding only another layer to get through and never finding the core. The very first and basic objective to asset protection planning is to invest in exempt assets. There is no place like home, or the $200,000 you can store in your home equity in Minnesota. You also want to keep your personal assets safe from the liabilities associated with your business activities. But you really need to go further to get down to the brass tacks.
After accomplishing some protection from your business affairs, you need to begin to segregate the various business activities and begin protecting them from each other before you open for business. By doing this, you are keeping the spoiled fruit [liability-ridden investments] away from the ripe fruit [property with equity]. Basically speaking, you are protecting your lead. You are keeping the other side’s offense off the field and giving yourself an opportunity to concentrate on building a bigger lead.
But you still have not completed your journey. Creditors should feel like they have scaled a mountain with its top in full view and, upon arriving at the top, are in full view of the next crest to conquer. Other techniques including sealing the equity within your investments, protecting your income streams, investing in exempt assets, investing in qualified plans and more. Just when you think its over, it is time to make sure your family members will not look a gift horse in the mouth because keeping it in the family may provide you asset protection from your creditors but still allow you the ability to enjoy the asset.