Protecting Your Assets
The attorneys at Gillespie, Shields, Durrant & Goldfarb have 30 years of experience in creating effective estate plans. As part of any well-rounded estate plan, asset protection keeps your assets safe from civil money judgments. To maintain protection, there are a number of exemptions strategies that can be implemented, some of which are state specific to Arizona.
Though there are several statutory exemptions that apply automatically to Arizona residents, most of these cannot be procured unless the debtor files for bankruptcy. Since filing for bankruptcy is not something that people typically want to do, consider using an attorney’s expertise to find other strategies to protect your assets.
There are myriad strategies that can apply to any individual looking for asset protection. It is up to your attorney to listen to your needs and come up with the strategy that works best on your behalf. A good strategy will shield your assets from every angle without resulting in tax evasion or concealment. Strategies can include increasing personal liability insurance, separating assets, and reviewing joint accounts. Most commonly, asset protection is achieved by forming business entities, such as LLCs and/or irrevocable trusts.
Forming an LLC
Limited Liability Corporations protect the owner’s assets from creditors who would otherwise seize and sell off assets to pay back a personal debt. In some states, however, creditors can take over an LLC to collect money owed from the debtor by foreclosing on the LLC’s interest or ordering the LLC to be dissolved. Fortunately, Arizona is a “debtor-friendly” state and only allows creditors one remedy to debt: a charging order. Charging orders are essentially a court order that demands the debtor pay back debt using income that would normally go to them.
However, it does not give the creditor control over distributions, and a charging order without control over distributions is relatively useless. Often times, creditors don’t even bother trying to acquire a charging order. In many states, LLCs that only have one member (SMLLCs) have to abide by different laws when it comes to creditors. Arizona makes no distinction between LLCs and SMLLCs, so it is possible to form an LLC with just one member. However, to maximize limited liability benefits, it’s always best to have at least two members. Our attorneys at Gillespie, Shields, Durrant & Goldfarb can help you decide if forming an LLC is an appropriate strategy for protecting your assets.
Keep in mind that neither creating a will and trust nor developing an asset protection strategy constitutes an estate plan on its own. Neither can stand without the other. A will and trust are used to allocate property and assets to family members after you die, and asset protection strategies protect those funds now and in the future. An experienced attorney will be able to bring together all the components of estate planning to build you a comprehensive and effective plan for the future of your finances and your family.
Based out of Phoenix, AZ, the law offices of Gillespie, Shields, Durrant & Goldfarb have been serving Maricopa County since 1985. Our practice focuses on family law and estate planning, though we also have experience in several other practice areas. Our AVVO ratings and badges range from excellent to superb, and two of our team attorneys have received Martindale-Hubbell client recognition awards.
Our collaborative team of attorneys works hard for you to find solutions to even the most complex issues. We are committed to providing effective representation and undeniable value to our clients. We hope that you will contact us for your legal needs.