Ohio Asset Protection Attorney Recommends Multiple Levels of Protection for your Assets
August 17th, 2012
Ohio asset protection attorneys use a wide variety of tools and strategies to protect a client’s assets. Trusts, including irrevocable trusts, revocable trusts and asset protection trusts, are used in combination with limited liability companies (and sometimes other corporate structures), insurance policies and various types of accounts and property situations that afford varying levels of protection.
Protecting assets isn’t about shoving all of a person’s assets into one entity or account. It also isn’t about hiding assets so they can’t be found. A good Ohio asset protection attorney takes advantage of a variety of tools that provide legal protection against seizure by creditors while still allowing the client as much control over those assets as possible.
Often, the best way to get a grip on the various parts of asset protection planning is to look at them in levels:
7 Levels of Ohio Asset Protection in an Attorney’s Strategy
Level 1 — Property and accounts exempted by law
Some assets can’t be seized by creditors as a matter of law, either state or federal law. In Ohio these include personal property, cash value of life insurance policies, annuities, traditional IRAs, 401(k) plans, and up to approximately $30,000 of equity in a person’s home. (Note that there is a proposal in the state legislature to make a person’s home 100% exempt. However, it has not been passed into law yet). These things do not need additional protection against creditors. Sometimes it’s possible to convert non-exempt assets into exempt assets. For example, you can use cash to pay down a mortgage and increase the equity in the home or use the cash to buy more life insurance. Some Ohio asset protection attorneys recommend this sort of strategy when a person’s wealth isn’t substantial enough to warrant the formation of trusts or limited liability companies.
Level 2 — Transferring property to a spouse not at risk
In some situations, it may be beneficial to transfer ownership of property to a spouse who is at lower risk for liability lawsuits and other potential creditor situations. This can be particularly useful to physicians, lawyers and other professionals at high risk for being sued. While this strategy can be useful, there are a number of risks and limitations to it, so be sure to ask your Ohio asset protection attorney about consequences before implementing this strategy.
Level 3 — Create an LLC or PLLC
A limited liability company (LLC), or professional limited liability company (PLLC), can be used to separate assets from personal liability or, in the case of professionals and business owners, shield personal assets from business liability. We recommend forming a LLC or PLLC in Ohio, Wyoming, Nevada or Delaware as these states offer the most protection against outside creditors.
Level 4 — Create an LLC to lease equipment or premises to you or your business
When there is real estate, vehicles or equipment that needs to be protected, it can be useful to create an LLC to own the real estate, vehicles or equipment and have the LLC lease it back to you or your business. This is particularly useful for professionals, like doctors, who use expensive, specialized equipment in their work as it prevents the equipment from being seized by a creditor with a judgment against the professional’s practice. Combined with an irrevocable trust with a person’s children named as beneficiaries, an Ohio asset protection attorney can also use this strategy to remove a person’s home from their ownership and have the trust lease it lease it back to them.
Level 5 — Form a family limited liability company for non-business assets
A family limited liability company (FLLC) can be created to shelter non-business assets such as real estate, investment accounts, bank accounts, or high-value collectibles. The assets in the FLLC can be leased back to the individual for personal use. This way, a person can use and control the assets while keeping them protected from potential creditors.
Level 6 — Use domestic asset protection trusts
A domestic asset protection trust is a form of irrevocable trust created within the United States that is protected from creditors by law and permits the Trustmaker to also be a beneficiary of the trust. Assets in a trust of this sort cannot be seized by a creditor. However, not every state allows asset protection trusts. Ohio is one of them — though there is a proposal in the state legislature to allow asset protection trusts in Ohio. To take advantage of a domestic asset protection trust, an Ohioan must have their Ohio asset protection attorney form the trust in a law that allows them.
Level 7 — Use foreign asset protection trusts
Foreign asset protection trusts are similar to the domestic variety except that they are formed overseas in a foreign country. The added advantage here is that the foreign countries usually used for this purpose don’t recognize U.S. laws and U.S. court judgments, so even if a court orders assets in the trust to be repatriated, the trust company managing the trust doesn’t have to obey. However, it’s best to ask your Ohio asset protection attorney about alternatives before committing your assets to a foreign trust.
In Ohio the asset protection attorney’s office of Gudorf Law Group, LLC, can help you establish a reliable plan to protect your assets. Trusts, including irrevocable trusts, and LLCs in other states can be formed through our office. Call our Ohio asset protection attorney’s office at 1-877-483-6730 to schedule a free consultation.