If you are an entrepreneur, you need to understand the value of a complex and comprehensive asset protection plan. The first step in a complex asset protection plan is to set up a separate company to operate cash-flow businesses. This helps to protect business profits from future creditor claims. Separating the operation of the business from its ownership can prevent creditors from seizing assets.
The next step in a comprehensive asset protection plan is to incorporate a separate company to own each business franchise. Your business can be separated into an operating company and an ownership company to protect assets from creditors. It is important to separate each real estate property that is actively managed. Actively managed real estate properties are more prone to creditor’s claims so it is crucial to shield them. Moreover, segregating real estate property can help to isolate the potential source of creditor’s claims from other assets.
High-value and high-risk investments should be in a separate company for each investment. For instance, an original painting by Van Gogh is best protected by being in a separate company.
In order to protect your assets, manage your company with a closely held corporation. A closely held corporation is a corporation that has few shareholders, generally family members. The corporation is protected from shareholders’ disputes by holding the capital stock in this type of company.
The main aim of establishing a closely held corporation is to offer asset protection for the cash flow generated from business activities. It is important to protect the capital stock from creditors. This can be achieved by transferring personal capital stock into a separate company that does not hold any other assets.
It is crucial to minimize the amount of funds left in your business entities or in your personal name. Any excess funds should be transferred to a separate company, promptly. You can have one or more companies to hold and manage your passive investments. Though homestead exemption gives protection to your home against creditor claims it is generally for a limited amount of the value of your home. Title of your home can be transferred to a company to protect it from creditors’ claims. You can incorporate companies for other assets.
International Business Corporation An international business corporation (IBC) is another powerful form that is used to hold offshore banking and conduct international trade and investment activities. An international business corporation can be used to hold and separate dangerous assets located in a foreign country.
There are two main types of assets: safe assets and dangerous assets. Stocks, bonds, and bank accounts are safe assets as they do not create risk through their existence. Rental real estate, commercial property, vehicles, and business assets are dangerous assets. It is imperative that you give more protection to dangerous assets, as they carry a high degree of potential liability.
IBC corporations are legal in most countries. Choose the jurisdiction carefully to establish the international business corporation. The Cayman Islands, the British Virgin Islands, Luxembourg, and the Bahamas are some of the major financial centers for the wealthy; as they are tax-free jurisdictions that allow complete confidentiality of ownership for corporations.
Some tax-free jurisdictions require a registered agent or sponsor in order to establish a company, so individuals can seek the help of local law firms or trust companies that can file the corporate registration to create the company. Shares of the corporation can be issued in bearer form if secrecy is required.