Analyze Your Assets, Then Decide

The first step is to analyze each of your assets and categorize them according to both their volatility and their exposure. Volatility denotes the amount of risk associated with each asset. Exposure denotes how easily the asset can be attacked. (This does not indicate the probability for success of such an attack, merely its exposure to attack.)

The volatility classification of every asset you own is either Dangerous or Safe:

  • Dangerous assets include businesses, professional practices, rental houses, apartment buildings, office buildings, hotels, restaurants, nightclubs, or any other building where many people work or gather. They can also include high-ticket vehicles such as super-luxury automobiles, yachts and airplanes.
  • Safe assets include bank and brokerage accounts, collectibles, and passive investments in publicly traded or offered stocks, bonds, etc.
  • The exposure classification of every asset you own is either Exposed or Covered.
  • Exposed assets include businesses or professional practices; all U.S. real estate; bank or investment accounts in your own name or the name of your business; business accounts receivable; IRAs and many other retirement funds; collectibles; and virtually any other assets insured or registered in your name or that of your company.
  • Covered assets include bank and investment accounts, and passive investments in publicly traded or offered stocks, bonds, etc. when these assets either are held outside the U.S. or in the name of a non-US owner. Most exposed assets can be converted into covered assets by utilizing advanced equity stripping techniques.

Having done this, you will be in a position to decide how badly you need an asset protection structure. Once you have made that decision, you can decide which structure or structures are best for you. These can range from simple incorporation, to family limited partnerships, to more complex domestic trust and/or LLC structures, to extremely advanced international structures.
My advice is to choose that structure that makes the most sense to you, and with which you are most comfortable, provided it is not some crackpot solution sold by a snake oil salesman based on a novel constitutional theory which is only recognized by the Republic of Sheep Dip in the interior of North Dakota.
Above all, avoid cheap quick fixes like Nevada Bearer Share Companies—they simply don’t work and require you to commit perjury for them to afford much asset protection at all. It does not make any sense to me to protect your assets by putting your *ss on the line in their place…

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