Asset Protection Scams & Schemes Why Can't You Just Hide Your Assets? A common assumption about protecting your assets from judgment creditors is that you can somehow just hide your assets somewhere. First of all, that clearly won't work for immovable assets such as your home, your business, your pension plan and any investment real estate. Secondly, if you attempt to hide movable assets such as cash, stocks, bonds or other securities, you will have to commit perjury under oath. The judgment creditor will be able to engage in a fact finding process (which includes taking a deposition, reviewing any financial statements and even looking at your tax returns) to identify and locate your assets. If you have reported the interest, dividends, royalties or related tax deductions for any movable assets on your tax return, it will show up and you will be asked what happened to the assets. The creditor will also ask for any financial statements you have used to secure credit - and those statements may disclose the existence of the assets you are trying to hide. Basically, you have to be prepared to convincingly lie under oath, and to be able to cover your tracks through all of the various paperwork that may identify any assets you have ever owned.
Asset Protection With a Living Trust There are some uninformed individuals who will suggest to you that a revocable living trust can be used to protect your assets from your creditors. Don't believe it. A living trust is an alternative to probate and serves to transfer assets to others via the trust - upon your death. Until then, you are the owner of everything in the trust, even though the property is titled in the name of the trust. If you are sued, your judgment creditor can get the court to require you to transfer any assets in your living trust to your judgment creditor. A revocable living trust will not protect your assets from your creditors.
The Pure Trust or Contractual Trust and Others The are a number of promoters of trust packages who are claiming that you can set up a special type of trust that will protect your assets from all creditors (including the IRS), virtually eliminate all income taxes and eliminate all estate or gift taxes. In addition, the promoter promises that if you establish one of these trust arrangements, you will have complete control over the investment of the funds and the use of the funds. These trust arrangements go by a mind-boggling variety of names as the inventive promoters attempt to make their trust packages appear to be unique. A common sales pitch for these trust arrangements is that the promoter has somehow uncovered the "secrets" of the trusts used by the Rockefellers, Mellons, Kennedy's and other wealthy families who have ostensibly been able to avoid income and estate taxes with their "secret" trusts.