Talk:Asset protection

Just getting started on this page. Your assistance is welcome!


 * Here are some potential links from investopedia:


 * Asset Protection For The Business Owner
 * Protect Your Personal Assets
 * Build A Wall Around Your Assets
 * Pros and Cons of Offshore Investing
 * Equity Stripping Leaves Creditors Empty-Handed --Blbarnitz 09:36, 14 November 2011 (CST)


 * The most objective terse definition I have found for the term "asset protection" comes from Wikipedia:

"'Asset protection (sometimes also referred to as debtor-creditor law) is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. The goal of all asset protection planning is to insulate assets from claims of creditors without concealment or tax evasion.'" --Blbarnitz 10:04, 14 November 2011 (CST)

What are the authoritative agencies (or other organization, such as a Bar Association) for legal guidance in this area?

I don't understand the connection between the Klueger & Stein quote and the Madoff article. Please explain why was this article chosen; it doesn't make sense as a footnote. Instead, can you use a different example? It would be better to relate to the average investor, not a convicted multimillionaire and his celebrity wife.

Tip: To include your signature after your post (Wikipedia does this), click on the 4th icon from the right ("Sig"). It will look like: --~ and expand to your name and date upon page preview / save. --LadyGeek 16:33, 14 November 2011 (CST)


 * A note regarding personal bankruptcy while having an outstanding loan with a 401-k plan: A Cautionary Note to 401k Plan Borrowers and Administrators
 * Another potential helpful link: Protect Retirement Assets, Journal of Accountancy (2006)
 * Another potential helpful link: State-By-State Main Creditor-Debtor Exemption Chart Riser and Adkisson forum (note authors' disclaimers).
 * Another potential helpful link : Lexicon of Asset Protection Riser and Adkisson forum

--Blbarnitz 10:31, 15 November 2011 (CST)

I have never used a Wiki before, so forgive me for any breaches of etiquette.

First, thank you for your assistance with this page. I think it's an important topic. Many estate attorneys offer very poor, self-serving advice on this topic. Generally, estate attorneys favor expensive, complicated asset protection strategies, even though simple, inexpensive approaches (such as splitting up assets between spouses or putting money into a 529 plan) are just as effective if not more so.

LadyGeek: I cited the Madoff article because I thought it illustrated the point that putting assets in a spouse's name does not provide ironclad protection. I realize that the average reader can't relate to the Madoffs, but I think there is something to be said for citing an example that people are familiar with. For example, when the homestead exemption is discussed, people often cite the example of OJ Simpson, who bought a home in Florida due to its generous homestead exemption.

Blbarnitz: thanks for your assistance,contributions, and the helpful references.

I will try including my signature on this post. We'll see how it goes.

--Fredflinstone 10:53, 16 November 2011 (CST)

Fredflinstone: I see your point, as your updated wording drives the point home. Could you please define in simpler terms what a "less vulnerable spouse" means? I think it means the one who has the most to lose, e.g. the spouse with the most money. An introduction would be helpful (I don't know what to write).

On the other hand, is there an opposing viewpoint? Could the concept of asset protection apply to someone who depends on a spouse for an income stream?. So far, I only see protection from the "less vulnerable" side. What about the "more vulnerable" side? I'm looking for a balanced perspective.

--LadyGeek 15:46, 16 November 2011 (CST)

Thanks, LadyGeek. Please see my latest revisions and see if this discussion is any clearer. If not, I am happy to take another stab.

Provided the marriage is strong, I think splitting up assets in the manner I've described in in the interest of both spouses, because it reduces their total exposed assets by 50%.

Example: Let's say a surgeon has $10 million in assets. He and his wife keep all of this money in a joint account. The surgeon is sued for $20 million. He loses everything. If he had put half the money in his wife's name, that money would have been shielded from creditors. The wife would still have $5 million and (assuming the marriage is good) she would share that money with her surgeon husband.

--Fredflinstone 18:34, 16 November 2011 (CST)

I see now that this is a discussion of protection from liability, i.e. a lawsuit. That's good advice for a career professional, but my first thought on asset "protection" is from a more common concern - how to keep your spouse (or partner?) from taking all your money when the relationship goes awry. Is there a suggested protection strategy against a potential change in relationship or marital status down the road?

Often discussed in the forum are situations on how to handle finances in a relationship, e.g. who pays the bills, account titling (individual or joint), credit card management, etc. What would be the advice to protect against a potential divorce, unplanned death, or long-term illness? Especially if one spouse has the majority of income, the other needs protection in the event that the income stream is interrupted.

--LadyGeek 19:03, 16 November 2011 (CST)

Another asset protection area, Medicaid, is discussed here: Alzheimer There may be better references, but it's a start. --LadyGeek 19:37, 16 November 2011 (CST)

LadyGeek, I'll take another stab at it, but basically this Page is only about protection from creditors. I don't have anything to say about protecting oneself from an unscrupulous spouse.

--Fredflinstone 12:55, 17 November 2011 (CST)

The first sentence helped considerably and I see the confusion (mine). The use of the Madoff example muddied the waters. Is Madoff's ex-wife a creditor?

I took a stab to rewrite the first paragraph using my interpretation. If this is incorrect, you can see where my lack of understanding is and update accordingly. I also added a caveat.

The purpose of this page is to describe and assess various asset protection strategies designed to mitigate the risk of financial ruin resulting from a lawsuit by an outside party. Internal family matters, including divorce proceedings, are not addressed here.

Caveat: This article is intended to show general concepts and is not be construed as legal advice. Please ask in the forum for guidance.

--LadyGeek 15:54, 17 November 2011 (CST)

You are right. I will remove the Madoff example. I like what you've written above. Please add it.

--Fredflinstone 20:52, 17 November 2011 (CST)

what is the Wiki policy with respect to linking to Bogleheads threads? I ask because I think this is an interesting thread about the asset protection implications of rolling over money from a 401K plan to an IRA: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=70513

--Fredflinstone 21:52, 17 November 2011 (CST)

Hey Blbarnitz, thanks for your contributions and thank you for fixing my poor formatting of references. The page is coming along nicely, don't you think?

--Fredflinstone 04:05, 18 November 2011 (CST)

The "policy" is that this wiki is the result of the combined knowledge of the forum. As long as there is a consensus of opinion on the topic, as well as meeting Wikipedia's Five Pillars, you are welcome to include the content. The post / thread should be from someone considered to be a credible source. Not necessarily the world expert, but has a level of knowledge that is accurate and is consistent with the Bogleheads' philosophy.

Tip: The 2nd icon on the left inserts wikitext for URLs: 401K vs IRA in terms of asset protection looks like this: 401K vs IRA in terms of asset protection. OTOH, don't worry about the details, get the content first and someone can fix the formatting later.

Images and tables can also be used (if in public domain). If you need help to get them in the wiki, just ask.

--LadyGeek 21:20, 18 November 2011 (CST)


 * Additional links regarding LLC:


 * Asset Protection For The Business Owner
 * Limited Liability Company(LLC) IRS
 * When One is Better Than Many: The Series LLC, Riser and Adkisson forum --Blbarnitz 11:36, 19 November 2011 (CST)
 * Family Limited Partnership (FLP) definition, investopedia
 * Protect Your Personal Assets Family Limited Partnership, investopedia --Blbarnitz 13:28, 25 November 2011 (CST)

this morning I added a note to the introduction saying that the wiki does not contain a discussion of the ethics of asset protection. I'm thinking that some asset protection is ethical and other asset protection is not. Bernie Madoff transferring his assets to his wife falls into the latter category. Just wanted to raise this as a possible issue.

--Fredflinstone 05:40, 29 November 2011 (CST)

Good point. On a new topic, can you please explain why a revocable trust is not asset protection? I read the Revocable versus Irrevocable Trusts (Dummies.com), but it's focused on taxes. Is it that revocable also means someone beside your self can access the property? For example: A married couple has a CD that's in the name of the husband only, but with children named as trustees (revocable trust). What happens?

--LadyGeek 15:58, 29 November 2011 (CST)

If the Grantor can revoke the trust, then he controls the assets. And if he controls the assets, creditors retain full access (i.e. there is no asset protection).

--Fredflinstone 22:12, 29 November 2011 (CST)

Now I understand. This is a very important distinction that needs to be (briefly) discussed. I updated the main article, please review.

--LadyGeek 16:47, 30 November 2011 (CST)

Yes, you did a nice add. Thanks.

--Fredflinstone 21:41, 30 November 2011 (CST)

What would happen if the Grantor of a revocable living trust dies? Apparently, a revocable trust becomes irrevocable after death of the Grantor, thereby protecting the assets (info received via PM). I guess a creditor can't reach the assets if the Grantor no longer exists. I think it's a point worth mentioning(?).

--LadyGeek 21:38, 1 December 2011 (CST)

Sorry, I don't know the answer to your question. I would have thought that what happens after the grantor dies is spelled out in the revocable trust, but I am not an attorney.

--Fredflinstone 06:30, 4 December 2011 (CST)

How do you know that off-shore trusts "are a popular choice among estate attorneys and asset protection consultants", i.e. what authoritative source defines "popular"?

--LadyGeek 19:01, 4 December 2011 (CST)

I will re-phrase. --Fredflinstone 05:32, 5 December 2011 (CST)

Update: re-phrased. See what you think. Not for inclusion on the page, but here is the backstory: There is a lot of hype about off-shore trusts and there are a lot of hucksters out there (including my former estate attorney) who are selling off-shore trusts to naive high net worth individuals as an asset protection tool. I'm not saying an off-shore trust NEVER makes sense, but more often than not it is a really bad idea. There are much simpler, less expensive asset protection tools out there that are more effective than off-shore trusts (e.g. 529s in some states, variable annuities in some states, splitting up assets between spouses, maxing out 401K plans, etc.). But most asset protection planners don't recommend the simple strategies. These planners have a self-interest in promoting the most expensive strategies possible. Basically, these planners are the moral equivalent of mutual fund advisors who steer investors toward high-cost actively-managed mutual funds rather than index funds.

--Fredflinstone 06:31, 5 December 2011 (CST)

Much better. I added citations so I can see a clear definition of self-settled spendthrift trusts, as well as being able to get a list of states that prohibit this. Is the referenced book a credible information source? I see the disclaimers, but is there a legal authoritative website (gov't agency, bar association, etc.) that can corroborate with the statements in the book and perhaps supply an up-to-date list? Why is this type of trust illegal in most states? (I assume "prohibited" is a nice way to say "illegal".)

--LadyGeek 16:44, 5 December 2011 (CST)

You raise a couple of questions:

1) "Is the referenced book a credible information source?" I'm unclear on which book you are referring to. Can you clarify this please?

2) "Why is this type of trust illegal in most states?" I don't know, but I can hazard a guess: If the grantor and beneficiary of the trust are the same person, it seems non-sensical to protect the assets in the trust from the grantor/beneficiary's creditors. Example: Joe sets up a trust for himself and deposits $5 million in it. Joe is the grantor. Joe is the beneficiary. Joe is sued and the creditor wins a judgement of $5 million. Joe says, "I have no assets." Should the $5 million in Joe's trust be shielded from the creditor? I guess most state legislatures say, "No."

3) yes I use "prohibited" and "illegal" interchangeably.

--Fredflinstone 21:22, 5 December 2011 (CST)

I misinterpreted the forum for the book, "Asset Protection: Concepts & Strategies", and corrected the citation. I didn't know if the site owners (book authors) were considered legal experts in this area and later found the answer on the home page: RISER ADKISSON LLP (yes). I also assume that gathering this type of information from numerous legal sources is difficult, so this forum is a good resource.

--LadyGeek 21:47, 5 December 2011 (CST)