This forum is a vast resource for any man, and what we're about to discuss is something we all might have to consider at some point. Asset protection is the act of protecting your wealth and investments from creditors, divorce, inheritence taxes and the like.
This thread is a discussion of:
This is NOT a discussion of:
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I'll start off the discussion by describing a hypothetical situation to get the thoughts flowing.
Bob is a 29 year old single man. He has a full time job in which he makes $100,000 per year. This is his first income stream, but he also runs a small company (LLC) on the side, netting him about $50,000 per year on average. He lives in a rented apartment in a European city, drives a car he owns fully and pays himself from his company in the form of dividends.
Bob has a desire to at some point have children. He realises that at he may have to get married in order to make that happen, but is worried that his wife might some day divorce him and take a substantial amount of his assets with her.
To protect his assets, he decides to establish a Panamanian Private Interest Foundation (PIF). The PIF is its own legal person. It can be founded by any person or company regardless of their nationality and can even be founded by a local legal firm in Panama. The Founder of the PIF has full authority regarding the foundation, but he needs to be named publicly.
The Founder however, can name a Protector of the PIF. The protector does not have to be named publically anywhere and Panamanian secrecy laws prevent his identity from being made public against his will. The Protector has full authority over the foundation.
In order to establish the PIF, a minimum capital of $10,000 USD must be invested.
My information about the PIF was taken from this tax advice firm. Please be warned that this is only one source and they definitely have a product to sell.
Keeping the above information in mind, Bob decides to have a Panamanian legal firm found a PIF and name him the Protector. He structures his assets in such a way that the PIF owns all his major assets and rents them out to him. This applies to his cars, a house he purchases and his business. As a person, he owns nothing of great importance and his influence over the PIF is not by any means obvious.
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Fast forward to the future, Bob is now 45 years old. He has a wife, a 15 year old daughter, and a 13 year old son. His wife is "unhappy" and decides she can do better. She files for divorce and would like to take as much of Bob's assets as possible.
In Bob's ideal situation, there is now very little assets to take. She can not prove that she or Bob owns the house (because they don't) and she can't prove that his business,which now pays dividends of up to $150,000 per year to the PIF, is owned by either of them.
How do you think the divorce would play out? What would Bob be liable for? How could Bob protect himself better?
Some members of this forum have substantial legal knowledge in various areas around the world. I would like to hear your input on this if possible. I have an EU flag, but the North Americans and those living on other continents shouldn't feel unwelcome to the thread. I'm using the USD as a currency because it's well understood by everyone and it's very close in value to the Euro at the moment. While solutions may have to be slightly different in some parts of the world, the topic of discussion is a global one.
This thread is a discussion of:
- Protecting wealth from divorce
- Protecting wealth from inhertience tax, lawsuits, etc.
- The different strategies to accomplish the above and how well they work realistically and legally in your country or the country discussed
This is NOT a discussion of:
- Tax evasion (the illegal one)
- Tax avoidance (the legal one)
- Whether or not to get married (beyond the scope of protecting your assets)
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I'll start off the discussion by describing a hypothetical situation to get the thoughts flowing.
Bob is a 29 year old single man. He has a full time job in which he makes $100,000 per year. This is his first income stream, but he also runs a small company (LLC) on the side, netting him about $50,000 per year on average. He lives in a rented apartment in a European city, drives a car he owns fully and pays himself from his company in the form of dividends.
Bob has a desire to at some point have children. He realises that at he may have to get married in order to make that happen, but is worried that his wife might some day divorce him and take a substantial amount of his assets with her.
To protect his assets, he decides to establish a Panamanian Private Interest Foundation (PIF). The PIF is its own legal person. It can be founded by any person or company regardless of their nationality and can even be founded by a local legal firm in Panama. The Founder of the PIF has full authority regarding the foundation, but he needs to be named publicly.
The Founder however, can name a Protector of the PIF. The protector does not have to be named publically anywhere and Panamanian secrecy laws prevent his identity from being made public against his will. The Protector has full authority over the foundation.
In order to establish the PIF, a minimum capital of $10,000 USD must be invested.
My information about the PIF was taken from this tax advice firm. Please be warned that this is only one source and they definitely have a product to sell.
Keeping the above information in mind, Bob decides to have a Panamanian legal firm found a PIF and name him the Protector. He structures his assets in such a way that the PIF owns all his major assets and rents them out to him. This applies to his cars, a house he purchases and his business. As a person, he owns nothing of great importance and his influence over the PIF is not by any means obvious.
--------------------------------
Fast forward to the future, Bob is now 45 years old. He has a wife, a 15 year old daughter, and a 13 year old son. His wife is "unhappy" and decides she can do better. She files for divorce and would like to take as much of Bob's assets as possible.
In Bob's ideal situation, there is now very little assets to take. She can not prove that she or Bob owns the house (because they don't) and she can't prove that his business,which now pays dividends of up to $150,000 per year to the PIF, is owned by either of them.
How do you think the divorce would play out? What would Bob be liable for? How could Bob protect himself better?
Some members of this forum have substantial legal knowledge in various areas around the world. I would like to hear your input on this if possible. I have an EU flag, but the North Americans and those living on other continents shouldn't feel unwelcome to the thread. I'm using the USD as a currency because it's well understood by everyone and it's very close in value to the Euro at the moment. While solutions may have to be slightly different in some parts of the world, the topic of discussion is a global one.
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