Protecting Your Bank and Brokerage Accounts – Legally Mine

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Thoughts from Legally Mine on protecting safe assets:

“Bank and brokerage accounts are among the safest assets you may own, and don’t produce a high degree of lawsuit risk by themselves. However, when these assets are discovered in your name, in an asset search or investigation, they can provide the incentive for an attorney to recommend pursuing you in a lawsuit. One key to an asset search or investigation is your name. By changing the name of the registered owner of a bank or brokerage account, you can cause that information to effectively “disappear” from your asset information. This is one of the reasons that many advisors recommend utilizing Limited Partnerships and other asset protection entities to protect your bank and brokerage accounts. Of course, if you have signature authority over these accounts, they may still be disclosed whenever someone does an asset search for your name. However, a creditor’s ability to reach the assets within a properly prepared asset protection entity can be extremely limited, if not entirely eliminated.

You should also remember that transferring bank and brokerage accounts to others may have very unintended consequences. For example, many people add a child, relative, or friend to a bank or brokerage account to enable that person to take over the account and pay bills in case of illness or disability. This may not always be a wise approach. When you add someone to a bank or brokerage account, that person becomes a co-owner, and has the right to withdraw and use all your funds. Also, if someone else is treated as a co-owner of your bank or brokerage account, your assets could be exposed to their creditors. Because creditors can take the assets from an account where you can withdraw funds on your own signature, you should be very careful about adding someone else to your accounts. Additionally, at death a joint owner of a bank or brokerage account owns everything in the account, regardless of any provisions in your trust or will. Thousands of wills and trusts are rendered effectively worthless each year because joint tenancy ownership supersedes both wills and trusts.”

Families that have a significant amount of liquid safe assets may consider a separate Limited Partnership for those assets. A family’s liquid safe assets should usually all be transferred into one or more Limited Partnerships. The “safe asset” Limited Partnership could contain the family’s savings accounts, brokerage accounts, stocks, bonds, artwork, coin collections, antiques, collectables, jewelry, family heirlooms, etc. In fact, anything of significant value to the family could be transferred to this particular Limited Partnership. (Note: The “safe asset” Limited Partnership should never hold dangerous assets like automobiles, firearms. motorcycles. airplanes, etc.) The business purpose of this partnership could be simply, “to manage investments.” Because the assets in the partnership are generally liquid by nature and not necessarily attached to any particular state, many advisers consider establishing a safe asset partnership in a state such as Nevada (or Utah or Alaska) that has very strong Limited Partnership charging order provisions and case histories.”

These thoughts have been taken from the Asset Protection Bible, of which Legally Mine has copyright permissions.

Of course it is important to remember that the Limited Partnerships should always be drafted by someone who has experience, and knows what they are doing.  Make sure to do your due diligence before ever hiring an attorney to protect you and what you have worked so hard to do.

Please feel free to comment below –

Matt, Legally Mine

Your Work, Your Life, Your Money - Your Peace of Mind
Your Work, Your Life, Your Money – Your Peace of Mind

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Your Work, Your Life, Your Money – Your Peace of Mind


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