When a creditor, lawsuit plaintiff, or other legal opponent comes after your money, you need to know how to protect it. The truth is, by the time someone comes after your hard-earned cash, it's already too late to take defensive steps; you need to have a protective strategy in place well ahead of time, especially to avoid accusations of fraudulent conveyance.
You might consider opening up a special bank account. With the right account, your money should be untouchable. Like with all money and asset protection strategies, however, this strategy can be quite complex, particularly if you want to defend your money against all types of threats.
Let's explore how to open a bank account that no creditor can touch.
Why Do You Need a Bank Account Safe from Creditors?
There are lots of situations where high-net-worth individuals, especially entrepreneurial executives and business owners, might need to protect their funds from creditors. Just a few examples include:
- A creditor tries to reclaim money from you because of a loan or debt you need to repay
- You are sued by a disgruntled customer, former employee, or any other party who wants to take as much money from you as possible
- You are subject to wage garnishment for some other legal reason
Of course, it's always wise to repay any money you legally owe. But that doesn't mean you can't protect money that you save up or use for business, family, or other purpose well ahead of time. If it's protected properly, the courts, creditors, and other parties won't be able to touch those funds.
It all stems from having a protected bank account. With the right bank account, you can store money away from your home jurisdiction and keep it safe from creditor claims, wage garnishment, and other potential attacks.
An Offshore Bank Account is Enough, Right?
An offshore bank account is simply any bank account based in any jurisdiction other than your own. So, for instance, if you are a US-based entrepreneur, an offshore bank account could be in France, Germany, Switzerland, the Cook Islands, or anywhere else.
Contrary to pop-culture expectations, a bank account being “offshore” doesn’t mean that it’s sketchy or illegal. You can set up an offshore bank account completely legally, safely, and wisely, especially if you do so well ahead of any financial troubles you may encounter.
Remember, the best way to protect your money or assets from legal attack is to do so well ahead of time. You purchase car insurance before you have a car accident, right? The same principle holds when it comes to protecting your finances.
Setting up just any offshore bank account isn’t enough, however. Depending on the country, the bank, and a variety of other factors, that offshore bank account may not be nearly as secure or untouchable as you initially think.
Risk of Angering a Judge
Aside from not being very protective, opening up any offshore bank account, then transferring your money into it shortly before judgment or a legal issue has a high risk of irritating or infuriating the judge for your case. The last thing you want is a judge to be aggressively motivated to go after your money, which makes your defensive strategy all the more important.
If a judge thinks you simply moved money to another country to avoid having to pay a fee, debt, or something else, they’ll look poorly upon you and all of your defensive efforts. This is doubly true if you move money to another country without any particular reason or legal basis.
Take it from the experts at Dominion; just moving your money to an offshore bank account you open in a hurry has yet to prove useful in any defensive legal situation.
Claims of Fraudulent Conveyance
On top of all that, you might be accused of fraudulent conveyance if you open an offshore bank account, but only move your money into the bank account right before you may be forced to pay a fine or penalty.
A fraudulent conveyance or fraudulent transaction occurs if someone moves money into another account or gives money to another person with the provable intent of avoiding paying a debt, bill, etc.
Of course, it can be tough to prove the intent of someone who moves money from one account to the other, but don't shortchange the motivation of your creditors, lenders, and lawsuit plaintiffs.
If they are motivated enough, they could accuse you of fraudulent conveyance. And if a court finds you guilty, you’ll not only be forced to pay the original bill or loan; you’ll also be forced to pay an additional fee on top of that for fraudulent conveyance.
Let us reiterate: the only way for you to open a bank account that no creditor can touch and to ensure that bank account is effective is to do so well ahead of when you need it. We’re talking months at a minimum, but preferably years. In other words, the best time to get started is right now.
What About “Exempt” Bank Accounts?
So-called exempt bank accounts are special accounts that are not subject to wage garnishment or creditor claims. There are some states in situations where exempt bank accounts are possible.
For example, in Florida, if you jointly own a bank account with your spouse as “tenants by entireties”, the money in that account will be exempt from garnishment by judgment creditors that move against either you or your spouse.
Unfortunately, exempt bank accounts don’t cover every possibility or eventuality. In the same example above, an exempt bank account in Florida doesn’t protect your money from creditors going against you and your spouse at the same time. Because of this, your best bet is actually to open an offshore bank account with the right bank, not to rely on an exempt bank account based in the US.
First, Set up an Asset Protection Plan
So, let's break down how to open a bank account that no creditor can touch. Your first step doesn't deal with a bank account at all; it involves talking to the advisors at Dominion, who can help you set up an asset protection plan.
Think of an asset protection plan as the encompassing defensive strategy for your money and any other assets you may need to protect. If you're a high-net-worth individual like an entrepreneur, you already know that the big numbers in your bank account sometimes serve as targets for legal opponents.
If you feel the proverbial target on your back getting bigger and heavier, you need to get in touch with us right away.
With our legal expertise and our infrastructure, we can help you draw up an excellent asset protection plan for anything you need to defend, including liquid capital, real estate, business assets, and anything in between.
In many cases, that asset protection plan will indeed involve opening up a secure bank account. But other elements might be included in the plan as well, like setting up an asset protection trust (APT) or something else.
Next, Find the Right Jurisdiction for an Offshore Bank Account
If your asset protection plan does call for opening a bank account, it’s time to start looking for the ideal jurisdiction for your defensive needs.
The jurisdiction is simply the legal rules or framework that a bank account has to abide by. The jurisdiction is based on the country; as an example, American bank accounts have to abide by financial and legal rules in the US jurisdiction.
Different national jurisdictions have different rules and interact differently with each other. The US cannot simply demand that a French bank, for instance, open a bank account for no good reason.
Therefore, if you set up an offshore bank account in the right jurisdiction, you can either heavily delay interdictions against your stored funds or, even better, prevent the creditor, court, or any other party from successfully getting access to your funds under any circumstances.
You might already have some ideas, having heard about countries like Switzerland, the Bahamas, or other places that are supposedly very secure for offshore bank accounts. While these areas might work for you, it’s all highly context-dependent. At Dominion, we don’t default to a single country or solution for all of our clients.
Every situation is different, so we’ll do the heavy lifting and necessary research to ensure that you choose the right jurisdiction for your secure bank account.
Finding the Right Bank is Also Key
Of course, you also can’t forget that the specific bank matters just as much as the country in which you plan to store your money. You store your money with a bank, not a federal government.
In many cases, the best banks for money and asset protection have two key attributes:
- They aren’t overly advertised. In fact, in a lot of situations, if you’ve heard of the bank before talking to Dominion, the bank isn’t worth your time. Many of the best banks for asset protection are known based on their reputation, not because of TV advertisements
- They don’t have branches or other forms of controllers that are based in countries where you have any legal risk exposure. Put in simpler terms, the bank shouldn’t have a lot of subsidiary branches in different countries. Every branch in another country is a potential threat vector you have to account for
For instance, if you open a bank account in Switzerland, but that bank has a branch in the US, it’s possible that a judge or motivated creditor could still get access to your account and the funds within through the US branch.
Once more, Dominion's advisors and experts can help you ensure that you choose the perfect bank for your needs and for long-term protection. We've seen every trick in the book, and we've made our reputation by protecting the assets of our clients against all kinds of legal inquests.
Then, Open the Bank Account with Legal Experts
Once you find the right jurisdiction and bank, you should open up your bank account with legal experts at your side. As we stated earlier, you should do this several months before legal or financial trouble, but sooner is always better than later.
In fact, the best time to open a bank account that no creditor can touch is before any trouble is on your radar whatsoever. If business is going smoothly and there’s not even a whisper of a lawsuit or a bill due, open up your secure bank account right now.
When you do this, you'll be able to avoid accusations of fraudulent conveyance. No judge will be able to logically accuse you of making a fraudulent transaction or somehow predicting a lawsuit that takes place years in the future.
Using the Bank Account After Opening It
If you set up your bank account properly, you can still use the bank account in a limited fashion. For example, the bank account might provide you with regular, limited payments. Understanding exactly how your bank account works and whether you can access the funds within is yet another reason to talk to Dominion.
If you compromise your bank account, modify it, or dip into the funds too often, this could serve as legal justification to force you to take money out of that account if a creditor comes knocking with a big bill and a court order. Work with your legal team to make sure you use and maintain the bank account wisely to keep your protection ironclad.
Get in Touch with Dominion Today
In the end, we know how to open a bank account that no creditor can touch, now and for years to come. There's no reason to pursue half-measures when it comes to protecting your money, especially if you have a very sizable sum of tens of millions of dollars.
With our help, your bank account will be safe and secure against all manner of legal hazards and potential threat vectors. Contact us today, and let us get to work for you ASAP.