What Is the Best Way to Protect Investments and Liquid Assets?

There are a few options available to you but the one we most frequently use is limited partnerships (LPs). You can use limited partnerships to protect your liquid investments such as cash, CDs, mutual funds, etc., by titling it to one or more limited partnerships. Some of the benefits of the Limited Partnership are as follows:

  • The LP lets you control these assets.
  • Your LP interest cannot be claimed by your creditors.
  • The LP is tax-neutral.
  • The LP gives you maximum ownership and operating flexibility.
  • The LP lets you better plan your estate and reduce your estate taxes.

The LP is both versatile and protective. Most comprehensive Asset Protection plans include at least one limited partnership. But the limited partnership is only one option. A second option is to title them to an LLC. Some planners recommend limited liability companies (LLCs) because they limit creditors in their ability to get to your personal assets as well as protect your LLC assets from personal liabilities. But we prefer the limited partnership for these assets because the limited partnership is designed to own 'safe' assets and the LLC is preferable for business purposes or to own non-residential real estate which has the potential to create liabilities. Moreover, the limited partnership provides for discounted estate tax valuations and finally, the limited partnership can simultaneously own the client's multiple LLCs or C Corporations and thus serve as the foundation for their entire plan.

Some clients use domestic trusts to hold their investments. Revocable living trusts are not recommended to own these assets because they provide no protection. On the other hand, irrevocable trusts require you to relinquish control and beneficial enjoyment of these assets. Domestic Asset Protection Trusts (DAPTs) can be self-settled; that is the settlor can also be a beneficiary. However, DAPTs have their own limitations and restrictions. There are, of course, other options, but these are the most typical ways to protect investments.

In summary for liquid assets we prefer to utilize the limited partnership method but ultimately what strategy we use depends upon your personal situation, the value of your assets, your estate plan, and your financial and tax objectives. For this reason, you should involve your financial planner, tax advisor and the rest of your financial team in your planning. Asset Protection is one goal, but you also want to structure your assets correctly considering your other goals. Remember, your financial professionals are important members of your wealth protection team and they are essential to a coordinated, integrated plan. Contact us today for a complimentary preliminary consultation regarding your Asset Protection options.

The Presser Law Firm P.A.

6199 N. Federal Highway, Boca Raton FL 33487

(800) 999-9992 or e-mail info@assetprotectionattorneys.com