Wealth can take many forms. Precious metals including gold and silver have held great value for thousands of years. In the 21st century, gold continues to be a robust form of investment, fortified against the tides of inflation and deflation and more stable than many currencies.
Gold can offer shelter from the storm of geopolitical and economic instability when used as a form of wealth preservation, value storage, portfolio diversification, or hedging against currency fluctuation. Precious metals may take the form of gold bouillon, jewelry, or family heirlooms.
Despite the stability and security of tangible property like gold and precious metals, you must still take steps to protect these types of assets from liability. Otherwise, these items can be seized or liquidated by lawsuits or creditors trying to satisfy judgments or debt repayments against you. This is where a strong asset protection plan comes into play.
What is asset protection? Liability is a reality for everyone. Unfortunately, the greater the wealth attached to your name, the more you have to lose. Asset protection helps legally separate you from your assets to put your wealth beyond the reach of lawsuits and creditors.
- If you’re a licensed professional with a practice, a successful malpractice lawsuit could seize your assets to pay the settlement or judgment.
- If you own a business that gets sued, courts could “pierce the corporate veil” to hold you personally liable for losses and damages.
- Any wealth you own can be fair game for your future ex-spouse to target in a divorce.
- A lawsuit based on negligence could liquidate your assets to pay for the damages.
When it comes to courts or governments seizing assets, it doesn’t matter whether those assets take the form of cash, gold, or precious metals. As long as these valuable items are in your legal possession, they remain exposed to any legal risk you take on by simply living your life or doing business. A solid asset protection strategy helps shield your fortune from these risks.
The purpose of asset protection is not to evade taxes or engage in illegal activity. Asset protection – whether you choose to protect your assets domestically or offshore – is a legitimate and legal way to shield your fortune from the daily risks of life.
How Do You Protect Your Wealth From a Lawsuit?
If you lose a lawsuit, that could significantly impact any unprotected wealth that you own.
Depending on the final settlement or judgment in your case, you may owe thousands or even millions of dollars. Plaintiffs or creditors could try to get this money by asking the courts to seize or liquidate your assets to pay for your debts, damages, or legal fees. You could lose your home, your car, the money in your bank account, and other valuables like gold.
Asset protection works by separating you legally from your wealth. With the help of an asset protection attorney, you can create a new legal entity, usually an asset protection trust, and transfer ownership of your assets to that trust. You designate yourself or your heirs as the trust’s beneficiary so that you continue benefiting from your fortune.
Once you transfer your assets to an asset protection trust, the trustee takes over management. While you may not like the thought of giving up direct control or ownership of your assets, you can still ensure that your assets are handled according to your wishes by:
- Clearly articulating your wishes in the Deed of Trust,
- Assigning a trustee you trust to manage your assets properly, and
- Designating a trust protector to step in if the trustee goes off script.
- Controlling your assets through an underlying entity.
With an effective asset protection plan, you put any assets you want to protect beyond the reach of creditors, plaintiffs, authorities, or courts. If you become the subject of a lawsuit with most of your wealth protected, you’ll end up risking a much smaller proportion of your fortune.
You can use this strategy to protect assets like gold and precious metals just like you can protect cash, stocks, and other types of property. However, because gold, precious metals, family heirlooms, and other valuable items are tangible assets, you must make extra considerations and take additional steps to ensure that they’re legitimately secure.
When it comes to protecting gold and precious metals in particular:
- When accepting gold into a trust, the financial institution will most likely require due diligence such as a receipt of purchase or proof of ownership in your name.
- If your gold and precious metals are held under your name by a depository or financial institution, your attorney can discuss retitling those accounts to the trust.
- If the accounts cannot be retitled but you want to stay with the same financial institution, your attorney can help you open a new account in the trust’s name.
- If you keep your gold and precious metals at your house or in a safe, you can often retain possession even after the trustee accepts the assets into the trust. These assets are usually subject to indemnities – i.e., the trust won’t be responsible if anything happens to the assets while they’re still in your possession. This might be appropriate for personal items like watches made with gold, diamonds, and other precious metals.
- If you don’t care to keep possession of the assets, you can open a reputable and secure vault account that can store the assets on behalf of the trust.
The key to successful asset protection is setting up and executing your plan ahead of time – before your assets are threatened by liability. If you’re already facing a lawsuit and you try to transfer your assets to a trust, the transfer may be contested. The sooner you get started, the more robust your asset protection will be.
With so much on the line, you want to make sure you get your asset protection plan right. That’s why it’s absolutely critical to work with an experienced and reputable asset protection attorney who can take all the necessary steps for an airtight strategy.
Domestic Asset Protection for Gold and Precious Metals
More than a dozen states in the U.S. offer asset protection trusts with protections against creditors. If you live in the United States, these types of domestic asset protection trusts (DAPTs) offer an affordable and increasingly popular alternative to taking your wealth offshore.
Even if your state doesn’t offer a domestic asset protection framework, you can choose to go across state lines and create an asset protection trust in a state that does. These trusts offer strong privacy policies and a level of protection from creditors, lawsuits, and other claims.
However, domestic asset protection trusts have some drawbacks. Even with an asset protection trust, U.S. courts may be able to reach your protected assets for alimony or child support payments. Your trust may have to pay taxes on certain assets or types of income.
Because the law around these types of trust is so new in the United States, you may not have as much luck upholding your asset protection in state or federal court. The last thing you want is to find out your asset protection strategy doesn’t stand when you’ve got everything on the line. This is why many people choose offshore asset protection for even greater defense.
Offshore Asset Protection for Gold and Precious Metals
If you’re looking for truly ironclad asset protection for your gold, silver, and other precious metals, talk to your attorney about offshore asset protection trusts.
Countries that offer the best terms for asset protection also tend to offer the strongest protections. Even U.S. courts cannot reach assets properly transferred to trusts in countries like Belize, the Cook Islands, or Nevis. Many of these jurisdictions have robust trust protection laws that have been in place for decades, with strict privacy controls and defendant-friendly court systems to back up offshore investors. If your creditors want to go after your offshore assets, they face an expensive uphill battle. Meanwhile, your trust doesn’t have to pay local estate tax, gift tax, inheritance tax, income tax, or capital gains tax, however, U.S. taxes would still apply.
Many gold and precious metal investors use LLCs to hold title to these assets. While this can certainly offer a degree of asset protection, courts can and do “pierce the corporate veil” to go after a business owner’s personal assets when they deem it appropriate.
If you do hold your precious metals in an LLC, you can also transfer ownership of that company to your offshore asset protection trust, adding an additional level of security and privacy.
International asset protection is one of the most secure ways to hold valuable assets. Even if you choose to keep your assets in your possession, you can create an asset protection strategy to shield you when you need it the most. At Blake Harris Law, we can help. Contact us now to get started on protecting your gold and precious metals.