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I think it is wise to use multiple entities. Why? The main reason is to divide and conqueror. If there is a problem with one entity (and we assume you own several, such as an apartment house, interests in a donut shop and an operating business) it is difficult for a creditor to get to it all when there is a problem with one.
The other reason, particularly with FLPs and LLCs, is that these entities are especially helpful in separating ownership from control. This is often the main reason why they are useful. They also sometimes offer charging order protection (more on this in a later newsletter in this series).
Samuel Clemens once said: "Put all you eggs in one basket, and watch that basket." Of course, the famous writer was full of wonderful idioms. He seems to always be able to look at life with a pair of glasses different from our own. I can only imagine what Mark Twain would have thought about the world of Asset Protection. Interesting it is that the prolific writer went from business deal to business deal never fulfilling his quest for the good life.
Asset Protection takes a different approach. It resides in the separation of assets; it uses more than one basket. What is needed for a well thought out plan is separating liability generating assets. Assets that are for trade generally would be in an LLC, S corp. or C corp. The decision is usually what suits best tax wise. Partnerships can be very flexible for business purposes, but the main Asset Protection reason to use the FLP is that it separates ownership from control. This triggers the first rule of Asset Protection: What you don't own can't be taken from you. The General Partner is a one or two percent owner, and the Limited Partner gets the rest. The General Partner controls the assets, but doesn't own anything; while the Limited Partner just about owns everything, but has no control.
The offshore prong being the Asset Protection Trust should never engage in any liability generating anything. It will have its own offshore assets that can be invested any where in the world. It should always be a top financial institution that is safe and secure. This now becomes a fully functional Kinetic Asset Protection Plan. By invoking the second rule of Asset Protection, you have now triggered the second rule of Asset Protection: No country in the world automatically recognizes U.S. judgments.
Don't get hung up on the offshore part. This is safe and secure, and no Trust Company will steal your money. The technology won't allow it.
Asset Protection does use more than one basket, but I think Twain would have liked the idea. I think he would have said, "You need to watch all of your baskets."
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