Asset protection structures and mechanisms are nothing new. They’ve been around for centuries. The wealthiest people on earth take advantage of asset protection planning, and history shows that wealthy people always have pursued asset protection as a goal. A simple limited liability company, for example, is an asset protection structure. The primary reason that entities like family limited partnerships, corporations, and limited liability companies exist is to separate personal liabilities from business liabilities and, therefore, protect assets.
Yet, many people are unaware that asset protection laws are all around us. In fact, we are often asked about the legality of certain asset protection strategies. As an asset protection attorney, I am a student of history, and I want to share a little bit about the past with respect to asset protection.
Living in Perpetuity
The word “corporation” is a derivative of corpus. Corpus is the Latin term referring to a group or body of people. At least with respect to Medieval European business entities, the original idea behind a corporation was that it would allow a body of people to survive perpetually and not be limited by the lives of any member holding stock in the entity.
To the surprise of some, the Catholic Church was one of the first European organizations that took advantage of a “perpetual existence.” City governments, like the City of London Corporation, also formed nearly 1,000 years ago when William the Conqueror granted the city a royal charter. In terms of commercial enterprises, the Dutch East India Company played a major role in exploring the world and issued what were probably the first stock certificates during the 17th Century. A major feature of the Dutch East India Company was the limitation of liability for shareholders, or asset protection!
Asset Protection Has Been Around A Long Time
The message here is that asset protection has been around for a long, long time. There is absolutely nothing illegal about using every advantage conferred by law for the protection of assets. Some people question the use of offshore trusts as “pushing the envelope,” but the fact of the matter is that individuals and corporations have always availed themselves of international laws for the preservation of wealth.
The historical record, combined with the fact that assets are more accessible today than ever before, no matter where those assets are located, are factors that make asset protection less risky than ever. In fact, the only real risk you can take is to ignore the benefits of asset protection planning. Follow the lead of the smartest and wealthiest people who ever lived, and take the time to develop a comprehensive asset protection strategy.
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