Asset Protection Groups
All asset protection groups implicate income, transfer and property tax issues, and fraudulent transfer laws. An arm's-length cash sale is the best way to protect the residence (and the equity in the residence) because it is much easier to protect liquid assets (see discussion below) than real estate. Income producing assets are best protected through LLCs and limited partnerships. It is preferable to engage in asset protection groups before there is any need for it.
There are literally dozens of various asset protection groups in use today. The term "asset protection groups" is commonly misunderstood. Many believe that it refers to the techniques used to shield a debtor's assets from creditors' claims. While the charging order limitation is generally powerful, its usefulness may not extend to personal residences. Hiding assets is an ineffective means of shielding them from creditors because a debtor would usually have to disclose his assets in a debtor exam, under penalty of perjury.
Asset protection groups that work must be very practical. Engaging in after-the-fact asset protection groups may be deemed to be a fraudulent transfer allowing the creditor to set aside the planning. With this technique it is important to know the intelligence and the aggressiveness of the creditor. If the debtor owns assets through a corporation, the debtor’s creditor can seize the shares of stock of the corporation. Asset protection groups are based on the basic principle that any asset owned by a person (with some minor exceptions, like an ERISA-qualified retirement plan) can be reached by that person's creditor.