As an Ohio asset protection attorney, I frequently recommend that clients use an out-of-state irrevocable trust and limited liability company (LLC) to protect their assets against creditors, lawsuits and unnecessary taxes because using the two together provides a powerful level of protection while still giving the individual control over their assets.
“How can I control my assets if I sign them over to a trust or limited liability company?”
I get this question a lot. It’s a good question. In order for an irrevocable trust or LLC to provide protection to assets an individual must transfer ownership of the assets over to the trust or limited liability company. So how can you control something you don’t own?
At our Ohio asset protection attorney’s office, we often use the trust and limited liability company in combination. The client’s assets are transferred to the limited liability company and the LLC is owned by an irrevocable trust that is managed by an independent Trustee.
Since the assets are owned by the LLC and the LLC is owned by the trust, which is controlled by the Trustee, ownership of the assets is completely removed from the client. This makes for a very strong case against any claims by creditors or lawsuits trying to procure the client’s personal assets. However, the client still retains control over the assets in two ways.
Asset control feature #1: Control over appointment or replacement of Trustee
When properly structured by an Ohio asset protection attorney, the maker or creator of an asset protection trust has control over who is appointed Trustee. If the independent Trustee does not handle the trust assets as expected or asked by the trust creator – such as failing to appoint the desired person as manager of the LLC (See asset control feature #2 below) or not making disbursements to the lifetime beneficiaries – the Trustmaker can replace the Trustee. This, along with the customary annual fee for Trustees, is usually sufficient motivation for the Trustee to manage the trust assets as required by the trust maker.
Asset control feature #2: Appointment as manager of the LLC
The client can also retain direct control over his or her assets by being named manager of the limited liability company. The Trustee, acting on behalf of the trust that owns the limited liability company, simply adopts a resolution that appoints the client as manager and outlines the authorities and responsibilities of the manager. In this capacity, the client can then buy, sell, transfer or invest their assets as they see fit or pay business expenses from the LLC while retaining the protective value of both the LLC and the irrevocable trust. In this arrangement, the Trustee is only involved if disbursements are made to the Trustmaker.
As you can see, this is a powerful combination. However, it is also a very complex strategy to put in place and should only be done with the help of an experienced Ohio asset protection attorney.
In Ohio, Gudorf Law Group, LLC, can assist in setting up an irrevocable trust and limited liability company strategy that allows you control of your assets while protecting them from creditors and lawsuits. Call our Ohio asset protection attorney’s office at 1-877-483-6730 to schedule a free consultation.