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CATT: Our 4-Part Safe Combination for Your Asset Protection

The wrong structure for your business now could mean more taxes and liability later. We take a comprehensive look at your situation from a legal asset protection perspective and a tax savings and financial planning perspective. That’s why our process begins with identifying your goals and applying them to our CATT Process for Asset Protection.

A 4-Part Safe Combination for Your Asset Protection
Calculated Limited Exposure,
Armored Irrevocable Trust,
Tactical Asset Transfers, &
Tax Efficiency

Calculated Limited Exposure

Most of the time small business owners keep busy with work, life, and family. They generally have just enough time to keep it all together. Many never fully understand the potential liability they expose their assets to in a business day. Moreover, many are unaware of how asset protection plans can limit that risk by offering calculated limited exposure.

Asset Protection is the idea of building a shield to protect you and your assets that could be susceptible to legal claims by creditors, an ex-spouse, or a judgment. We do that by implementing ways of keeping your assets and wealth private, such as transferring assets to reduce or eliminate any exposure to liabilities in conjunction with your estate plan or other financial concerns. This calculated limited exposure can deter lawsuits by keeping a portion of your assets out of public view. If you are not seen as a high-value target, it is less likely someone will see value in filing a claim against you or pursuing your assets in other ways. 

An example of this would be suggesting the formation of an LLC before a client acquires a parcel of commercial real estate, because having the real estate under the LLC may protect the client from liability exposure.

Armored Irrevocable Trust

The idea of armor is to protect you from a variety of different threats. Using an irrevocable trust puts armor around your assets that protects them from a variety of potential threats, both expected and unexpected. Many people are wary of using an irrevocable trust because of what they have heard about them. What they may not understand is the ins and outs of using it and how versatile it can be. 

Some of the cons of irrevocable trusts indeed are that they cannot be modified, amended, or terminated without permission from the grantor’s beneficiaries or by court order and that the grantor transfers all ownership of assets into the trust and legally removes all of their ownership rights to the assets and the trust. 

However, when we create an irrevocable trust, we give clients all of the great benefits that come with an irrevocable trust, while mitigating as many of the above concerns as possible. For example, some of the benefits of irrevocable trusts are that as charitable, insurance, grantor, and/or asset protection trusts they offer tax-shelter benefits that revocable trusts do not.

In and of itself, an irrevocable trust can be an obstacle for asset protection, but in our system, it’s only one component of a larger plan that combined makes every piece beneficial and advantageous for protecting your assets.

Tactical Asset Transfers

In general, a transfer of assets to an LLC protects the assets from the LLC member’s creditors. Care must be taken to avoid transfers specifically to avoid creditors, which can be considered fraudulent transfers. It’s too late to make changes when the creditors and lawsuits are coming. Take action now and don’t wait for potential problems to arise. Better to be over-protected than to lose everything because it is too late to act.

As part of our CATT process, we might suggest that you restructure your existing holdings or create new independent business entities to protect your assets. For example, if you own rental properties, you will want to create an asset protection plan for each property. This affords you additional layers of protection. If a tenant decides to sue you, and they happen to win the lawsuit, this will limit the portion of your assets that is vulnerable to judgment and collections. This is similarly true in non-rental cases. It can create a divider between businesses, income, and major assets that leaves each of them less exposed to claims.

Tax Efficiency

The average American spends 20-25% of their time on the taxes they have to pay, while wealthy people like Warren Buffet, Elon Musk, and Jeff Bezos only pay 1% in taxes. When many people hear numbers like these they think that wealthy people must have different tax laws than “regular” people. But it’s not that they have different tax laws; it’s the fact that they either inherited or discovered the knowledge of the right techniques and structures to get the best tax benefits to save money. 

Taking advantage of this “wealthy people” knowledge begins with learning these strategies. Working with an Asset Equalizer, and using our CATT process for asset protection, can help you save more money on your taxes. It might take changing your mindset, to recognize that these don’t have to just be rich people tactics but can work for your life and businesses.

Disclaimer: While this is meant to be informational, communicate directly with a professional about your specific situation before making major decisions and changes.

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Disclaimer: While this is meant to be informational, communicate directly with a professional about your specific situation before making major decisions and changes.