Asset Protection Selection Part 1 by Paulie Sabol

There are some key questions which always arise in the selection of a business owner of investor's asset protection.

Some of those questions include:

1) What are the ways to protect my personal assets and/or business or investing assets?
2) Which is the best entity for ...this kind of business... or ...that kind of investing?
3) Where is the best place to incorporate or register your business entities?
4) Who can I set up my business asset protection so I can't be sued?
5) Why should I "control it all" and "own nothing?", etc.

I'll be addressing these questions and others from time to time in this blog. For now, let's take the first question.

There are only two ways to protect any asset.

Regardless of how many complex business entity structures you've seen, there are really only two ways to protect any asset.

1. You can protect your assets by not owning them
2. You can protect your assets by making them worthless
   

With in each of these two options, there are a few tools that facilitate asset protection success. Let's dig deeper.

Avoid lawsuits beyond all things;
they pervert your conscience,
impair your health, and
dissipate your property

Clearly if you don't own something, your actions will not put the assets at risk and the liability associated with the asset (slip and fall lawsuit for example) will resist attaching itself to your personal assets (like your home).

The use of various business entities such as the corporation, limited liability company, and the limited partnership are great asset owning entities which allow you to control assets and not own them.

Additionally, trusts of various types can also allow you to "not own" an asset.

For now the only other words to say about the "don't own it" strategy of asset protection is to be sure to have you "non-ownership" firmly established long before there is any threat to your assets. Entity set up, funding, and maintenance is definitely something to do before you do anything else.

It takes as much imagination to
create good debt as to create great income

The second way to protect an asset is to make it worthless. The key method to make something worthless is to fully (or even over) indebt the asset.

Say you own your home (personal asset), a rental property (investment asset), or inventory (business asset); you borrow as much of the value of the asset as allowed and then borrow even more by doing "friendly" loans with a business entity you control. I'll talk more about this in another blog post.

Most importantly in this strategy is a process called equity stripping. For now, focus on this. If an asset has no value, how attractive will it be to sue you to "take it over?" Not very.

Likewise, returning to the "don't own it" strategy, how much of a target will you be if you're "broke?" Not very.

Finally, if an object is worthless and owned by a broke person, how attractive will you be to a personal injury attorney working on contingency who is only paid for a win and only based on a the judgment awarded. Again, not very.

In future blog posts we can explore the other questions and even blueprint some asset protect strategies I employ.