Difference Between Domestic and International Asset Protection
It is essential to protect your assets from creditors and lawsuits. Thankfully, there are numerous ways for you to do so. Two potential options that you have for asset protection are Domestic Asset Protection and International Asset Protection. Though they are similar in that they protect your valuables, they differ in a few ways. Whether you decide to go domestic or international is based purely on your specific needs, but both options are great for asset protection.
Domestic Asset Protection
Domestic asset protection is defined as protecting your assets through means inside of the United States. There are a few tools within domestic asset protection that can be used to achieve financial protection such as LLCs, LPs, LLPs, Trusts, Equity Stripping, and Financial Exemptions.
LLCs, or limited liability companies, are used when you want to protect liability-producing assets. These include businesses, real estate, boats, cars, and any other risky assets.
When wanting to protect non-liability producing assets like cash, stock, or investments, then LPs, or limited partnerships, are used. It is best to structure the LP so that you have the least amount of liability while still maintaining most of the control.
LLPs, or limited liability partnerships, focus on protecting professional partners from debts incurred by their practice or claims of malpractice from any other partner in their practice. With that being said, LLPs do not protect the professional partner from any personal claims that may come from their own malpractice.
Trusts are another great option because they offer an additional layer of asset protection and come in many different forms. Consult with your Asset Protection Attorney or Estate Planning Attorney to determine which trust is best for you.
Equity stripping is the process of removing any vulnerable equity from your assets. By removing the value from your assets, they look less appealing which decreases the chances of any frivolous lawsuits occurring.
Financial planning exemptions offer protection by transferring your vulnerable assets into assets that are exempt from creditors. It is important to know that each state has different exemptions for different assets, so you should consult an attorney to find out what exemptions are available in your state.
International Asset Protection
International asset protection focuses on protecting your assets through means outside of the United States in foreign jurisdictions. Contrary to popular belief, it is legal for Americans to own and invest in foreign assets in order to grow their wealth and protect it from American creditors or lawsuits.
Similar to domestic asset protection, there are multiple mechanisms within international asset protection that can be used to protect your valuables. Some options are International Entities, International Trusts, Captive Insurance Companies, Cook Island LLCs, International Asset Protection Trusts, Nevis LLCs, and Offshore Equity Stripping.
These mechanisms are similar to the ones found in domestic asset protection, but they differ in that they do not take place in the United States and they come with their own set of rules like reporting specific information to the IRS and paying applicable US taxes on foreign income. This process and the rules can be complicated, so to better understand the ins and outs of tax responsibilities, foreign assets, and international protection, reach out to our international asset protection attorneys today.
In the end, no matter which forms of asset protection you choose, make sure you are being proactive and taking the steps to protect what is yours before it is too late.
For more information on how to protect your assets domestically or internationally, contact us online or call (561) 953-1050 today.