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Asset Protection Iron Triangle

Asset protection is not just for the wealthy any longer. When a middle class home can easily run a half million dollars in Florida, and over a million in New York or California, anyone can become a target of lawsuits, divorce courts, and the IRS.

You have to dig a well before you are thirsty, or in this case, build a legal fortress before invading barbarians reach your gate.

Your tools to protect your assets are:

* “no asset” corporation

* limited liability company (LLC)

* beneficiary controlled trust


A “no asset” C corporation will be the management company for your LLC. The two work together to protect your property from those who would take it from you.

You are employed by the C Corp, not the LLC. You can also be the sole shareholder and hold all of the officer positions. Your corporation owns nothing but a checkbook.

Your corporation can pay for:

– medical insurance for the officers

– life insurance ($50 thousand limit)

– retirement plan

As an officer, you can be reimbursed for out-of-pocket medical expenses through a medical expense reinbursement plan (MERP).

Entertainment expenses directly related to the business can include:

– training expenses

– travel

– meals

– computer expenses

– phone expenses

– business gifts up to $25 per recipient

Never let your corporation pay for personal items. Commingling of funds could pierce the corporate veil and make you personally liable for corporate debts in the event of a judgment against the corporation.

This is just a partial list of deductions for your corporation. Consult your CPA or tax advisor for the latest changes in allowable deductions.


Your limited liability company is where you earn your income. Your LLC should also own any vehicles, equipment, computers, copiers, printers, and real property.

You want your Operating Agreement to make your corporation the Manager of your LLC.

Your LLC should also pay the bulk of your operating expenses for your office, supplies, travel, fuel, utilities, phone, computers, and more.

Your interest in the LLC will be as a 99% member will be owned by the trust.

Beneficiary Controlled Trust:

A beneficiary controlled trust is the crown jewel of asset protection.

While I will not go into detail here, a BCT works like this:

Someone other than yourself establishes an irrevocable trust with you as the beneficiary and as the Investment Trustee. A second entity or person is required as the Distribution Trustee.

My company, Trustee and RA Services, Inc., can act as your Distribution Trustee if you want to keep your affairs private from your friends and relatives.

We are located in Coral Springs, Florida, and we usually situs the BCT in Florida to take advantage of Florida’s excellent trust laws, as well as no state income tax.

The Grantor can put up to $12,000 per year into the trust without gift tax considerations, and you have an immediate right to withdraw the money as it is a Crummey defective grantor trust.

It’s complicated, but the idea is to leave the assets in the trust and use the trust to own the LLC and to take care of your needs.

The trust can purchase property, pay for your education and medical expenses, and take care of your physical well-being. You have full control over the trust assets without actually owning anything.

As the Investment Trustee, you control how the assets are used, and you can replace the Distribution Trustee at any time.

We often refer to this as the CakeTrust, as in “have your cake and eat it too”.


You are now isolated from lawsuits, creditors, judgments, ex-spouses, and the IRS.

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