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Asset-protection plans and your divorce: What to know

| Jul 31, 2020 | Asset Division

Think that your spouse wouldn’t dream of hiding their wealth and trying to cheat you out of a fair share of your marital assets in a divorce? Don’t bet on it. There’s an entire asset protection industry out there that is willing to help.

Asset protection services and plans are commonly used by wealthy individuals to prevent that wealth from being lost through bad business dealings, to creditors and — of course — to their divorcing spouses. Here’s a peek into what they offer:

  • Offshore business entities: Using limited liability companies and corporations that are created in specific “havens” for this kind of activity (like the Cook Islands), asset protection companies will craft a legal distinction between the assets being held in the company and its owner. The idea is to make those assets “immune” from a spouse’s claims.
  • Offshore trusts: These are used frequently to hide money when a divorce is imminent. Even though it’s considered a fraudulent transfer to suddenly pour money out of the family accounts and into a trust to avoid sharing the wealth (and the asset protection companies know this), getting that money back out of a trust that’s operating overseas can be rough.
  • Multi-entity asset protection structures: Sometimes asset protection companies combine tactics, using a combo of both offshore trusts and businesses to hide a client’s money from their spouse.

Keep in mind that your spouse doesn’t have to be financially or legally savvy to pull this kind of thing off — the asset protection company will do it for them. They know all of the tricks that exist to help wealthy people hold onto their money.

If you’re headed to a high-asset divorce, make sure that your attorney understands what’s at stake and knows how to help you look for hidden assets.

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