Asset Protection can be as simple as purchasing an Investment Holding LLC in tax haven states like Delaware or and then transferring your assets to it. Incorporating in Nevada is currently a more favourable means of incorporation due to less stringent income tax policies. However, in case you have different types of assets to protect or investments to manage, incorporation may get very complicated and lead to serious mistakes that will cost you an arm and a leg.Some common mistakes, with very serious consequences, are listed below:
Do not transfer passive investments to a C-Corporation - this leads to risks of personal holding corporation additional tax penalty of 39 %.
Do not transfer your primary residence into a Corporation – this will cause automatic loss of $250,000 ($500,000 if married) capital gains tax exemption upon the sale of a personal residence.
Do not rely on a “Bearer Share” Corporation to protect your assets.
Do not assign “high risk” and “safe” assets to the same LLC.
Do not transfer assets or a home into a “Living Trust” in order to protect assets – such assets will be quickly and easily seized by creditors. “Living Trusts” offer no asset protection from creditors.If you feel your incorporation case might fall into these sections above, contact an incorporation professional like Nevada123.com for consultation BEFORE you make costly mistakes! Usually the solution is more complicated that just forming 1 Investment Holding Corporation and requires the use of multiple LLC’s especially when it comes to holding “High Risk Assets” or “Extreme High Risk Assets”. You’ll also have to talk to your Attorney or CPA in order to arrive at the very best solution for you.
