The thing about lawsuits is you can never be 100% certain how they'll shake out. Even if you think your opponent has no legal standing and the court would be insane to side with them, lawsuit upsets can and do happen.
If you aren't careful, and if you don't protect your assets from legal threats beforehand, you could find yourself on the unlucky side of a court judgment that requires you to give up your money, property, and other assets.
As a high-net-worth individual, you need to know how to protect your assets from lawsuits with the right asset protection strategies. Let's take a closer look.
Why is Asset Protection from Lawsuits Important?
Simply put, asset protection from lawsuits is important if you're a high-net-worth individual because you are more vulnerable to lawsuits in the first place.
It's a little counterintuitive, but the more money you have, the more people want to take it. If you only have $100 to your name, no one will bother suing you, even if you are truly at fault for an injury, business mistake, or something else. It's simply not worth it when you consider legal fees, the time involved, etc.
The reverse is true if you have $10 million or more in net worth. Once you have that amount of money, anyone with a grievance against you will consider the court fees and the amount of money they might recover if they are fortunate in a legal battle and decide that suing you is worthwhile.
Therefore, you need to know how to defend not just your business assets but also your personal assets from lawsuits of all types.
Don’t assume that hiring a top-tier law firm to protect you from lawsuits is enough to defend your accumulated wealth! Again, even in the best circumstances, a lawsuit might not go your way, and you might be required by a court to pay fees or damages to lawsuit plaintiffs.
To really use your money effectively and protect it with foresight, it’s better to invest in asset protection. When you invest in asset protection, you safeguard those assets before you are sued in the first place. Then, even if a legal opponent is successful against you, they won’t be able to take the assets they so desperately want.
Think of it this way – asset protection lets you win legal battles before they even begin.
The Best Way to Protect Assets from Lawsuits
When it comes to defending your assets against all kinds of lawsuits, you’ll want to follow these critical steps.
Form an Asset Protection Plan
First and foremost, you should draw up an asset protection plan with knowledgeable financial and legal specialists at Dominion. An asset protection plan can be thought of as your guidelines or overall steps to achieve total, long-term asset defense against creditors, lawsuits, divorces, and much more.
An asset protection plan might incorporate one or several different investment vehicles, safeguarding accounts, and other tools. It all depends on your goals. For instance, if you just want to protect some assets against creditors, an asset protection trust (see more below) could be just the ticket. But if you also want to grow your wealth simultaneously, investing in a Dominion-style, offshore asset protection trust for wealth preservation might be ideal.
In any case, drawing up your plan with the right specialists will be easier than tackling all this by yourself. You have expertise in your business niche or profession, but you may not know all the loopholes, exploits, and minor details involved with trust setup and maintenance.
Dominion does. Specifically, our legal officers, financial advisors, and lawyers are all well-equipped and ready to help you draft the ideal asset protection strategy based on your income, your future beneficiaries, and your overarching goals. That's why we always start with a consultation and asset protection plan meeting with new clients.
Create an Offshore Asset Protection Trust
As touched on above, the cornerstone of your asset protection plan will be the formation of an offshore asset protection trust.
In a nutshell, an offshore asset protection trust is a special vehicle in which you place money, real estate, and other assets in some offshore jurisdiction. An offshore jurisdiction is any jurisdiction other than the US or your home country.
How Does an Offshore Asset Protection Trust Work?
When you create an offshore asset protection trust, you will become the grantor and appoint the following two entities of the trust:
- The trustee, who will oversee and administrate the trust. The trustee is important because they handle any distributions to yourself or beneficiaries.
Generally, the best offshore asset protection trusts have neutral third parties acting as trustees. That way, a court can't claim that you have undue influence over the trustee and can get them to access the assets for you if you are under a court order
- The beneficiaries, who receive distributions and other assets from the trust.
You can be a beneficiary of your offshore asset protection trust if you want to continue benefiting from the assets stored within without simultaneously owning the assets and leaving them vulnerable to creditor or court claims. Beneficiaries can also include your spouse, your children or grandchildren, etc.
An offshore asset protection trust works by removing ownership from your name to the trust itself. For instance, say that you put the deed to real estate in an offshore asset protection trust.
Then, even if you are successfully sued by a plaintiff, the plaintiff can't get that real estate to sell for damages. Why? You don't own it! The offshore asset protection trust owns it instead.
Why is an Offshore Asset Protection Trust Better Than a Domestic Trust?
An offshore asset protection trust is far superior to a domestic trust for one big reason: jurisdictional control.
When you set up a good offshore asset protection trust with Dominion’s help, US courts will not have jurisdiction over that trust. Even better, so long as you choose the right bank, a US court or creditor won’t be able to access the bank and your trust via a subsidiary branch (e.g., a minor branch of your trust’s bank that happens to be located in the US).
Of course, this is all contingent on you setting up your trust in the right jurisdiction, with the right people, and with the right legal language. Dominion can help you with all of those elements and more.
We specialize in offshore asset protection trust formation for our clients, and we can help connect you to dozens of different banks and jurisdictions depending on your unique needs and the potential legal threats you might face.
Appoint the Right Trustee
Your trust will only be effective if you appoint the right trustee, as well. Remember, the trustee is arguably the most important entity in your trust overall. They are the one responsible for managing distributions, responding to court or creditor claims, and overall managing the trust according to your original stipulations.
When you work with Dominion, one of our trust lawyers will handle trust administration in perpetuity. You can trust our lawyers to get the job done according to your exact instructions, plus defend your assets against possible lawsuit threats.
Our trustees are also highly skilled at preserving and growing your wealth over time. By investing your assets in the right opportunities, any money you put into your asset protection trust won’t just keep pace with inflation. It will also build upon itself so your money works for you.
Continue Your Business/Professional Operations
Once your offshore asset protection trust is set up, all you have to do is let it run and continue your business operations or professional path. That’s it!
That’s because you won’t be the trustee of your trust. If you were, it would negate the entire point of this protective vehicle. Instead, you’ll receive regular checkups and maintenance reports on your offshore asset protection trust from the trustee and from Dominion.
These reports will let you see how the trust is performing, how your assets are generating money, and so on. If your trust is drafted with the right language, you’ll be able to make modifications or alterations to the trust in regard to its management or investments if necessary (though the trust will be technically irrevocable or unchangeable by default).
In any case, once your assets are in the trust, you'll have peace of mind and can rest assured those assets are protected against all potential threat vectors.
How Long Will an Offshore Asset Protection Trust Safeguard Your Assets?
As long as you like! As we noted above, an offshore asset protection trust is irrevocable, meaning it’s not meant to be changed at any point until its dissolution.
That might sound risky – for example, what if you end up wanting to change the trust or add another beneficiary to the list? – but if you work with the right experts, you’ll set up your trust to account for all of these contingencies and include clauses so you never have to make changes in the first place.
Indeed, a properly set up, Dominion-style asset protection trust will protect your assets for decades into the future. We already provide this kind of service for any of our clients, and our trustees continue to manage their assets capably and competently.
If you like, you can set up a single offshore asset protection trust to keep your assets safe from lawsuits until the day you die. Then, you can transfer those assets to beneficiaries, put them in different trusts, or do whatever else you have in mind. Offshore asset protection trusts can be very valuable estate planning tools, just like they can be fantastic defensive shields.
Dominion can even help you with estate planning for after you pass away. It's one of the things we will talk to you about when you contact us for an initial consultation.
Ancillary Asset Protection Strategies
In addition to setting up an offshore asset protection trust with Dominion, you could employ alternative or additional asset protection strategies depending on the exact shape of your estate and your preferences. Here are some examples.
For example, you can purchase insurance policies that protect you against the most likely lawsuit types depending on your field or industry. As another example, say you are a surgeon or some other medical practitioner. You probably already have malpractice insurance, which protects you against lawsuits that arise from your practice.
However, you can also purchase umbrella insurance policies that combine several different types of insurance coverage at once. These could be cost-effective options if you need multiple insurance policies given your station, business industry, etc.
In any case, insurance policies safeguard your assets by footing the bill for expensive legal fees and damages you may be forced to pay if a lawsuit against you is successful. Still, all insurance policies have limits, and it's far better to have your assets tucked away inside a safe asset protection trust than to have them even 1% at risk of being taken from you because of an unlucky lawsuit outcome.
You can also work with Dominion to set up offshore bank accounts. Properly “hidden” offshore bank accounts are effective means to preserve wealth by simply making it harder for your legal opponents to know about that money.
Just like offshore trusts, offshore bank accounts are 100% legal and are ideal tools for high-net-worth individuals who want to keep their cash safe for a long time to come.
Contact Dominion Today
Ultimately, working with Dominion is the best way to protect your assets from lawsuits in perpetuity. That’s because the offshore asset protection trust we can set up for you will defend your assets against any and all lawsuits coming from individuals in the US.
And if you have other potential opponents in other countries, rest assured we can select the right jurisdiction and bank to set up your trust as a shield against those opponents, too. There’s nothing we can’t help you protect, so get in touch with one of our representatives today to learn more.