By changing the title of property you own, you can protect it from creditors, divorce
settlements, etc. If you have substantial assets, it may be worth spending money on these
sophisticated arrangements:
- Family limited partnerships (FLPs) and family limited liability companies (LLCs).
Assets held by multiple family members may be sheltered from creditors while gift and
estate tax savings also might be available.
- Traditional trusts. When you shift assets into an irrevocable trust and those assets
are truly out of your hands, they’re out of the reach of your creditors, too. Depending on
your choices of trustee and beneficiaries, your family may continue to enjoy use of the
assets. (Some states even permit grantors to be discretionary beneficiaries.)
- Offshore trusts. Certain foreign jurisdictions are setting themselves up as “asset
protection havens,” where creditors have extra hurdles to clear. Often, the assets can
remain in the U.S. even though title to those assets is in an offshore trust. Just having
assets in a foreign trust may discourage some plaintiffs (and their attorneys) from
proceeding against you: they’ll seek easier pickings.
