Asset Protection Business Entities

Our site contains a lot of information on business entities created for the purposes of asset protection.  Among those entities are limited liability companies, family limited partnerships, and offshore asset protection trusts.  These are powerful tools, to say the least.  When used properly and in conjunction with one another, they can certainly provide you with bulletproof asset protection.  When misused, however, these tools can be dangerous to society.

Focusing on Fraud

There is some benefit to focusing on how various business entities are misused.  We do not (and never would) advocate misusing the tools of asset protection, but by looking at and analyzing the way in which such tools are misused, we can gain a greater understanding of the protection they provide.  Criminals push the limits and engage in fraudulent activities.  By studying those fraudulent activities, we can see exactly how much protection is afforded by certain tools and where they fail.

Consider Wyoming.  It seems like a sleepy state.  It is relatively small in terms of population.  But Wyoming is a haven for business incorporations.  That’s because Wyoming laws do two things: (1) they provide a certain degree of anonymity, and (2) they strictly adhere to charging order protection.  Recently, it’s been reported that several unscrupulous people have used Wyoming business entities to commit various crimes, including a Ukranian national leader and a online casino mogul.  The laws in Wyoming have allowed owners of certain businesses to remain largely anonymous and, in some cases, even retain ownership of their investments.

Asset Protection Doesn’t Require Secrecy . . . Yet, It is Private

The truth is what separates legal asset protection strategies from illegal asset protection strategies.  Lawful asset protection strategies do not require secrecy, which only means that you don’t have to lie about its existence in order for the plan to protect you.  In almost every scenario, lying can only hurt you from the standpoint of asset protection.  The only time you’re likely to be required to disclose your asset protection plan is after a court has entered a judgment against you.  If that happens, tell the truth.  Outside of that scenario, it’s highly unlikely that anyone could track your assets or your business structures.  Those things are very private.

Criminals, on the other hand, break the law by nature.  So when they are asked to disclose their holdings, they do what criminals do–they lie.  This is where the strength of asset protection tools can be seen.  When criminals lie, their holdings and various business interests can be very difficult to track down.  Creditors and even prosecutors may have ideas about where to find certain assets, but it’s difficult for them to be certain.  Of course lying often lands criminals in jail or prison (places you want to avoid), but it’s often the case that their assets are waiting for them after their time is served.

We’ll be writing additional articles about the use and misuse of asset protection entities soon.  In the meantime, if you’d like to read more on the topic, check out this recent article posted on Reuters: Shell Corporations.