Asset protection basics: the types of structures.

By Tresp, Day & Associates · February 12, 2020

This is the first in a short series on the fundamentals of asset protection. Before choosing a plan, it helps to understand the building blocks, what each structure does, and roughly how they compare.

Exemptions and insurance

The foundation, and the cheapest layer. Retirement accounts, homestead exemptions where available, and adequate liability and umbrella insurance protect a meaningful amount before any advanced planning. Maximize these first, but know they have limits.

Business entities

LLCs and corporations separate business liability from personal assets and can isolate risky assets from safe ones. Their strength depends on the state of formation and on maintaining formalities. Powerful and flexible, but not a complete shield on their own.

Domestic asset protection trusts

An irrevocable trust formed in a protective U.S. state (such as Wyoming, Nevada, or South Dakota) that places assets beyond your ownership while allowing you to remain a discretionary beneficiary. A major step up in strength, still within the U.S. system. See domestic asset protection.

Offshore trusts

The strongest tool. Formed in a jurisdiction like the Cook Islands, an offshore trust removes assets from the reach of U.S. courts entirely. More involved, but unmatched in protection, and, through the Bridge Trust®, more accessible than it used to be.

Next in the series: legal ownership and fraudulent conveyance.