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ASSET PROTECTION ATTORNEYS

One of the main goals in estate planning is securing assets for the future and finding methods to ensure the growth of those assets. However, one aspect of your estate plan may be how to properly protect the assets you have worked so hard to accumulate over your lifetime. Unfortunately, a whole lifetime’s worth of efforts in accumulating assets can be swept away due to life’s uncertainties, such as automobile accidents, divorce proceedings, personal injury lawsuits, judgment creditors, contractual disputes, or employment law actions, to name a few. The experienced attorneys at the law firm of Gorman & Jones, PLC are well-versed in helping clients minimize their liability to potential creditors and mitigate their potential exposure.

There are many different methods that clients can utilize in minimizing their liability exposure to potential creditors. Some of these include certain types of trusts, securing insurance policies, and creating other legal entities (such as limited partnerships or limited liability companies). Once an individual has placed their assets into an asset protection trust, limited partnerships, or other business entity, their creditors will likely discover that they have little to no collectible assets, since the assets are not legally owned by the individual being sued. Additionally, an individual who creates a trust or limited partnerships and names beneficiaries, the creditors of the beneficiaries will likely be unable to collect the assets of the trust or business entity that are set aside for the beneficiary, so long as the trust or business entity provides for such protection and subject to certain exceptions under Florida law.

With over 30 combined years of estate planning experience, the skilled asset protection attorneys at the law firm of Gorman & Jones, PLC will be able to help meet your asset protection goals and mitigate your liability exposure. Contact our Tampa, Florida office today at (813) 856-5625 to schedule a free initial consultation.

Business Entities for Asset Protection

One method of limiting your liability exposure is by creating one or more types of business entities. For example, imagine this scenario:

  • Client owns three pieces of real property, all titled in his name alone: his homestead, a condo in Clearwater Beach, and a two-story house on Anna Maria Island.
  • Client allows his friend to live in his Clearwater Beach condo for a reasonable rent every month.
  • Client rents his house on Anna Maria Island to vacationers on a weekly or monthly basis.
  • One day, a vacationer and his family were leaning on the balcony to admire the sunset at the Anna Maria House when the balcony gave way, resulting in severe injuries for all family members.
  • The next day, Client’s friend was cooking dinner in the Clearwater Beach condo when the floor caved in due to an undiscovered water leak and he fell into the condo below, resulting injuries sustained by Client’s friend and the neighbor living in the condo below.

Under this scenario, the injured parties would be permitted to recover for their injuries under the respective liability insurance policies on each respective property, but what happens if the injuries exhaust the liability insurance limits? The injured parties would be permitted to seek additional personal assets owned by the Client to satisfy their damages. This includes the value of the respective real property and the injured parties will even be able to collect from other assets owned by the Client, such as bank accounts or business ownership interest (subject to certain protections as offered by law, such as Homestead protections). What could Client have done to protect his assets from the potential liability exposure under this scenario? The answer is simple: Client should have created Limited Liability Companies, Limited Partnerships, or Corporations.

Limited Liability Companies, Limited Partnerships, and Corporations can be very effective liability-mitigating tools in your arsenal, especially if you own and rent multiple properties to tenants. One of these business entities would hold legal title to a piece of property and would secure insurance on that property, giving it initial protection it from liability. This means that any injured parties, such as the ones detailed above, would only be able to collect from the insurance policy on the piece of real property and then would only be able to recover from the assets of the business entity, which would only be the value of the piece of real property. Because they are limited in their recovery to these two options, the assets of the individual who created the business entity are protected.

With over 30 combined years of estate planning and asset protection experience, the skilled attorneys at the law firm of Gorman & Jones, PLC will be able to help meet your asset protection goals and mitigate your liability exposure. Contact our Tampa, Florida office today at (813) 856-5625 to schedule a free initial consultation.

Trusts for Asset Protection

Using certain types of trusts can be very useful tools when considering asset protection and mitigating your liability exposure. Primarily, irrevocable trusts are utilized for this purpose. When creating a trust for asset protection purposes, the trustor (creator of the trust) will appoint a trustee to manage the trust, who is required to carry out the intent of the trustor.

Irrevocable Trusts

An irrevocable trust is one that cannot be amended or revoked once created. (See also TAMPA BAY IRREVOCABLE TRUST ATTORNEYS for more information on irrevocable trusts). Under irrevocable trusts, the trustor will relinquish ownership of certain assets and thus those assets would not be considered a part of the trustor’s estate. An irrevocable trust can be a useful asset protection tool if several factors are met, such as appointing an independent and unrelated trusts, having a spendthrift clause, and irrevocability. However, less than half of states permit the enforcement of the type of trust which allows the most advantageous asset protections: a self-settled spendthrift trust. This type of trust is created by the trustor, who names an independent (unrelated) third-party as the trustee, and names themselves as the beneficiary.

Irrevocable trusts can still be a useful asset protection and preservation tool utilized to ensure those assets are distributed to specific individuals who are not the trustor. For example, an irrevocable trust will protect the trustor’s assets from their creditors once the assets are transferred into the trust. This is because the trustor is no longer the owner of the assets: the trust is. However, it is important to recognize that certain asset transfers into irrevocable trusts can be reversed if the transfer was made with the intent to defraud the creditors. Because the assets that were previously held by the trustor and potentially subject to future creditors is no longer owned by the trustor, those assets are effectively protected from potential liability of the trustor’s creditors and the assets are preserved for the beneficiaries named in the trust.
If asset protection is a primary goal of your estate plan, the skilled asset protection and estate planning attorneys at the law firm of Gorman & Jones, PLC will be able to help meet your goals and mitigate your liability exposure. Contact our Tampa, Florida office today at (813) 856-5625 to schedule a free initial consultation.

Offshore Trusts (Bridge Trusts)

Creating a trust in a foreign jurisdiction can be very beneficial to individuals who are concerned with shielding themselves from potential lawsuits. This is most advantageous for individuals who have a high net worth and could potentially be subject to large liability exposure. There are several countries that have protective laws that help asset protection for individuals who establish trusts within their jurisdiction, but many do not permit such protection.

The primary reason why trusts in foreign jurisdictions are the most advantageous for asset protection is because they are outside of the jurisdiction of the United States. If a court order is issued in the United States to compel a trustee of a trust to act, this same court order does not have effect outside of the United States and the trustee is not obligated to comply with the order. Additionally, the assets which are placed inside of the trust are also outside of the grasp of the creditors of the trust’s beneficiaries. One of the most beneficial aspects of an offshore trust is that the trustor can also be named as the trustee of the trust (also known as a self-settled trust). This means that an individual can create an offshore trust, name a third party as the trustee, name themselves as the beneficiary of the trust, and be awarded asset protection from their creditors under the shielding laws of the foreign jurisdiction (if that jurisdiction permits self-settled trusts).

However, creating offshore trusts can be complex and there are certain compliance requirements that needs to be met which can be cumbersome. The experienced asset protection attorneys at the law firm of Gorman & Jones, PLC have a strong relationship with an asset protection firm specializing in utilizing the laws of the Cook Islands. Through this relationship, what has been coined as a “Bridge Trust” will be created, which is a trust registered in the Cook Islands but is domestic for tax and administrative purposes. This eliminates the high costs and complexity associated with having to create an offshore trust for asset protection purposes. If liability may occur against an individual who has created a Bridge Trust, the assets will simply “cross the bridge” to the Cook Islands and be sheltered by the laws governing asset protection. However, if there is no liability or threat of liability, the trustee will simply manage the assets as usual. (For more information regarding Bridge Trusts, please visit The Bridge Trust®).

If asset protection is a primary aspect of your estate plan, the skilled attorneys at the law firm of Gorman & Jones, PLC will be able to help meet your goals and mitigate your liability exposure. Contact our Tampa, Florida office today at (813) 856-5625 to schedule a free initial consultation.

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