The 7 Levels of Asset Protection for Business Owners - Part 2

There are several levels of asset protection planning that can be implemented. Each level provides an additional layer of protection.

  • Level One – Exemption Planning: Some assets are automatically protected by state and/or federal exemptions.
  • Level Two – Estate Planning: Having a properly structured estate plan will not only limit estate risks, but should be coordinated with the asset protection plan as many of the same tools are utilized for both estate and asset protection planning.
  • Level Three – Professional Entity Formation: Picking the appropriate professional entity should be done with care based on your circumstances and the future of the business, as different entities have different structural and governance requirements (LLP, PLLC, PA, PC).
  • Level Four – Leasing and Financing Strategies: Strategies can be implemented to protect valuable equipment and/or real estate, as well as to protect accounts receivables.
  • Level Five – Entity Selection/Formation for Non-Business Assets: Again, picking the appropriate entity and structuring that entity so that it is coordinated with the estate plan is of paramount importance. Many people consider entities in other states in which the laws governing asset protection are more favorable to them.
  • Level Six – Domestic Asset Protection Trusts: Traditional domestic asset protection trusts (DAPTs) as well as 3rd party asset protection trusts are implemented to protect assets under U.S. jurisdiction.
  • Level Seven – Offshore Limited Liability Entities and Offshore Asset Protection Trusts: Foreign limited liability entities (e.g. FLLCs) and foreign asset protection trusts (FAPTs) are utilized to remove assets from the jurisdiction of U.S. Courts, and to discourage frivolous lawsuits or otherwise attempt to force suit in a jurisdiction with more favorable asset protection laws.

If you have questions about asset protection planning, feel free to contact our Firm at 203-651-5521, or visit our website to learn more about our Firm by clicking here.