Good asset protection strategies use secure and legal means to guard a person’s assets against seizure due to a lawsuit or judgment. Attempting to protect assets through Bearer-Share schemes and “secret” Nevada corporations or LLC’s is not good estate planning. Asset protection does not occur through these schemes because the person who resorts to these strategies would have to perjure him or herself when asked under oath what assets they own.
As an estate planner in Florida, I’m often asked about the ads featuring a company that encourages the listener to use the company’s services to establish a Nevada corporation or LLC, along with the use of Bearer Shares (shares not in your name) that would be held by a third party. The company claims that, with a third party holding the Bearer Shares, if a creditor performed a search to try and “find” the person’s assets, the creditor would not be able to determine who really owns the Nevada corporation.
The theory is that if you do not have the Bearer Shares in your physical possession, you do not technically “own” the Bearer Shares. This is a sham. If you use this sort of strategy and a creditor takes you to court, you’ll be required under oath to reveal all the assets you own, including the Bearer Shares for the “secret” corporation/LLC, which will then be subject to collection.
Bogus Asset Protection Strategies Attract IRS Scrutiny
The IRS is among the federal agencies that are taking a close look at whether the corporation/LLC secrecy laws in states like NV, WY, and DE should be changed. A recent USA Today article states that the use of secret corporations seems to be a tool used by everyone from tax evaders to Ponzi scheme artists to money launderers. In an IRS report issued in November 2006, Nevada is named as one of the jurisdictions most commonly used by “non-filers, fraudulent taxpayers, abusive promoters and under-reporters” to evade taxes.
The core of reliable and legal asset protection strategies is to have legitimate business or estate-planning reasons for everything that you do in the implementation of your plan. Everything should be done in the light of day, not in secret.
Because of the continued scrutiny of the so called “secrecy” laws, it is my view, and that of other estate planners in Florida and elsewhere, that the days of “secret” corporate and LLC entities will inevitably come to a close. There are legitimate reasons to use NV, DE, and WY LLCs for estate planning and asset protection purposes. One of those purposes should not be to “hide” assets.
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Howard C. Stross and the estate planning and asset protection attorneys at Stross Law Firm, P.A. recommend the following pages on this website for more information on asset protection strategies:
Estate Planning & Asset Protection Strategies
Would like to speak with an estate planner in Florida? You can receive a Free Consultation regarding asset protection strategies by calling Stross Law Firm, P.A. toll free at 1-813-852-6500.