Have you done all you can to ensure that your personal and corporate assets are protected from adverse events, such as divorce or lawsuits?
In the Asia-Pacific region, family-owned firms like trust and corporate services provider Asiaciti Trust provide bespoke, comprehensive asset protection services for families and business owners. As asset protection is a complex matter that demands substantial pre-planning, it’s in your best interest to work with a firm with which you feel comfortable.
During your initial consultation with your trust and corporate services firm, you’ll want to discuss your unique asset mix to determine the most appropriate structures for their protection. Pay particular attention to these nine asset types, some of which are strong candidates for inclusion in a family or corporate trust that — in addition to providing protection from adverse events — may help your estate avoid probate and the attendant public scrutiny.
- General (Taxable) Investment Accounts
Many high net worth individuals and families’ greatest pool of liquidity is found in taxable investment accounts held in the care of licensed brokerage firms. These are distinct from tax-advantaged private or public retirement accounts guaranteed by local, regional, or national governments. If you have substantial assets in stocks and other securities held in taxable brokerage accounts, consider transferring ownership of those accounts to a revocable trust that provides some measure of legal protection.
- Cash Accounts
Many high net worth individuals and families, not to mention business entities, hold substantial assets in deposit accounts, such as checking, savings, and money market accounts. These cash accounts provide crucial liquidity for day-to-day and recurring expenses, as well as personal and business debt service.
Consult with your trust services provider as to the suitability of transferring ownership of these accounts into a protected structure whose trustee(s) is/are authorized to dispose of their contents for your benefit — and that of any other beneficiaries you choose to designate.
- Real Property
Many individuals and families hold the bulk of their personal wealth in real property. High net worth individuals and families often have complex, geographically dispersed real property holdings that include primary residences, vacation homes, income-producing rental properties, unimproved land, and more.
In divorce and probate proceedings involving multiple heirs, real property is frequently the subject of the most acrimonious disputes. It’s therefore crucial for high net worth individuals to establish some framework for protecting and disposing efficiently of real property in such situations. For property held for personal benefit, a revocable trust may be appropriate. For income-producing investment properties, a corporate structure may be better suited.
- Tangible Personal and Business Property
Real property isn’t the only valuable asset type over which disputes may develop. Tangible personal property is a broad asset class that may include jewelry, works of art, memorabilia, aircraft, pets and livestock, home furnishings, watercraft, and other valuable items.
Though legalities and customs may vary by jurisdiction and personal or familial preference, individual or family trusts may be suitable to hold tangible property with no business or income-producing purpose. Tangible property that does produce income or exists for a distinct business purpose may be better suited for inclusion in a corporate structure created to hold like items, such as livestock herds or works of art that may be sold at a later date.
- Business Interests and Stock Certificates
Interests in business enterprises in which you take an active management role may be suitable for inclusion in a personal or family trust. So too may passive business and corporate interests. If you hold stock certificates to secure passive interests in publicly traded firms, these may be suitable for inclusion in a personal or family trust as well. Though business enterprises’ corporate structures may provide some measure of legal protection from personal creditors, this additional layer of protection may be important in other circumstances, such as divorce.
- Unsecured Personal Loans
Unsecured personal loans issued on the recognizance of the borrower may be eligible for inclusion in a personal or family trust. However, if your business enterprise is engaged in personal or commercial lending, a personal or family trust likely is not the appropriate vehicle.
- Intellectual Property
If you own valuable intellectual property, such as copyrights, trademarks, or patents, you may wish to transfer their ownership to a formal corporate structure that at present or may in future hold other liquid and non-liquid assets associated with the business activities that may arise out of the intellectual property. For instance, if you devise and subsequently patent a new chemical or mechanical process, it will likely be in your interest to house that patent in a corporate structure, even if the process has no intrinsic value at present.
- Personal and Business Vehicles
The titles to your personal and business vehicles — cars, light trucks, and commercial vehicles, as well as motorcycles, scooters, and other roadworthy conveyances — may be suited to transfer into a trust or corporate structure, depending on their nature and purpose.
Many high net worth individuals include auxiliary vehicles designated for minor children’s future use in family trusts, where they’re held until said children reach driving age. Consult with your trust services provider or financial adviser to determine whether such assets can legally be held in trusts established in your preferred jurisdiction.
- Mineral Ownership and Extraction Rights
Depending on their nature and the laws and customs of the jurisdiction in which they exist, you may be in a position to transfer mineral ownership and extraction rights to a personal or family trust. If you plan to invest in said minerals’ extraction on an active basis, rather than selling or leasing the rights to a third-party firm, you may wish to transfer them to a corporate structure established specifically for that purpose.
Prepare for the Future With a Comprehensive Asset Protection Plan
Your assets deserve comprehensive protection. If you have yet to explore your options on this front, perhaps it’s time to begin. No one can be quite certain what the future holds, and even a modest degree of protection can go a long way toward ensuring your peace of mind — and your family’s — now and in the years to come.