Likewise with your domestic investments:
If you set up a securities account in another state, Bill will have a much
tougher time finding it, because he won't know where to look.
Next, let's assume that you've taken
the precaution of using a structure to house your wealth. Let’s say
you set up a limited liability company (LLC) to hold your bank accounts
and securities accounts, and that you keep them out of state. That
makes these assets even more difficult for Bill to find, especially if
you don't appoint yourself as the "managing member" of the LLC.
Even if Bill does find the LLC, in
most cases, the best he can hope for is to obtain what's called a "charging
order" against it once a judgment is rendered against you. That gives
the judgment creditor the right to any future distributions to you from
the LLC, up to the amount of the judgment, but doesn't obligate the LLC
to make a distribution.
Take Your Assets Offshore - Far
Beyond Your Average P.I.’s Reach
Going a step further, let's assume
that you have a bank account in your name or the name of an entity outside
the United States. In that event, Bill's looking for a needle in
a haystack. While he says there are ways he can obtain information
about foreign accounts, he has to have some clues about where to look (at
the least, the name of the bank, and ideally, an account number as well).
Moreover, Bill says it's difficult
for him to get his hands on the forms submitted to the government that
would have this information on them - Treasury Form TD F 90-22.1 in particular.
If he does find your foreign accounts?
It's almost impossible for a private party in the United States to enforce
a U.S. judgment abroad. And while a creditor might be able to obtain
a court order requiring you to repatriate the assets from abroad, such
orders aren't easy to obtain, according to Bill.
And, while it's possible to enforce
such an order with a contempt of court citation (including possible incarceration),
such citations are very rarely granted. Moreover, if you hold those
accounts through an entity such as an offshore LLC, they're even more difficult
to seize.
The Three Levels of Privacy and
Protection for Your Assets
Suffice it to say that multiple
lines of defense to protect your privacy, and your assets, are your best
strategy.
The first line might be to keep your
bank accounts and securities accounts in another state, and to avoid having
a local safety deposit box. The second line of defense might be to
keep them out of your name, preferably in an entity that provides asset
protection (such as a LLC). A third line of defense could be to keep
the assets offshore.
This strategy doesn't provide iron-clad
protection. If you're truly at a high risk of being sued, you may
want to make it even more difficult for private investigators to discover,
much less recover, your assets. Here are a few ideas:
• Purchase life insurance and annuities
(domestic but especially offshore)
• Set up an offshore asset protection
trust
• Use "equity stripping" hard-to-protect
assets like real estate
• Reinforce the charging order protection
of LLCs by making sure there's at least one member other than yourself,
and that the LLC doesn't exist for the sole purpose of holding passive
assets.
Whatever strategies you use to protect
your assets, the time to act is BEFORE there are any clouds on the horizon.
That means, act right now before your sued, or threatened with suit.
Remember: If you have recoverable assets in plain sight, Bill --or one
of his competitors in the P.I. business - will find them.
MARK NESTMANN, Privacy Expert & President of The Nestmann Group
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