There are literally hundreds, or even thousands, of ways to shield your assets. There are many more entities we could discuss in one blog post, but most entities and strategies, conceptually at least, fall within one of these eight 'firewall' categories.
- 1. Federal and state exemptions
- 2. Co-ownerships
- 3. Corporations
- 4. Limited partnerships
- 5. Limited liability companies
- 6. Domestic trusts
- 7. International entities
- 8. Debt-shields (equity stripping)
One asset shield or firewall is not necessarily better than another, each tool has its place and purpose. Firewalls can also be combined to give stronger protection in a given case. Each specific firewall brings unique characteristics, strengths and weaknesses, advantages and disadvantages, applications and instances where they would or wouldn't be useful. Think colors on the artist's palette. Some colors are more commonly used than others; however, each is vital to achieve artistic perfection. But like any great work of art it all depends on the correct application.
Since we can't fully discuss every possible firewall or get too technical with when to apply them. We are just sharing the more common tools and strategies.
More advanced methodologies may combine legal and financial strategies. These invariably complex arrangements can provide financial as well as protective benefits. Asset Protection planning is never a static exercise.