How to Protect and Hide Assets

June, 2013

There are many ways to legally hide money and assets, as well as some methods for which the legality depends on your intent. Chapter Eight of A Survival Guide for Interesting Times, part of the Secrets Package, looks at the best of these ideas. The following is an excerpt from that chapter. Here are a few ways to protect assets, including how to hide them. They are legal means that are ethical if used for ethical purposes.

Using Corporations and LLCs

Corporations have been used for a long time to protect assets. More recently LLCs have been the legal vehicle of choice, because they are simple to set up and inexpensive to maintain. We had our tax preparer set one up for us for $130, and it costs just $10 annually to file the annual report online (which involves just answering a few questions). You can also get the do-it-yourself kits at bookstores for about $30, and the filing fee in many states is $75 or less. (Note: We now live in Florida, and the annual fee is around $135.)

For asset protection, the idea with either an LLC or a corporation is that your liabilities are limited to the assets in that legal structure. So if you have an apartment building, you would have it alone in an LLC. That way if you are sued for something related to it and lose the case, the plaintiff can't come after any other assets, like your home, personal bank accounts or other LLCs. In other words, if you have many and varied assets they should be in several different corporations or LLCs to limit the damage.

By the way, an LLC can be the owner of another LLC. This and other techniques can be used to keep your ownership more private, if that is your goal. For more on how to do this, ask an attorney who is familiar with this area of law.

Reverse Money Laundering

(The next ten paragraphs of the book are not shown here. They suggest questionable a technique which is covered in the book for informational purposes, but for this article I don't want to suggest or explain anything that might not be legal.)

To Be Married or Not?

Marriage means different things to different people, and why most people feel they need the permission of a government or religious authority to be together is beyond me (although my wife and I did have our own reasons). But for our purposes we will consider only the financial issues. Advantages? Marriage allows one to get social security benefits when his or her spouse dies. Being covered by an insurance policy is another advantage of being married.

On the other hand, suppose you have $400,000 in assets between you and your spouse, and one of you loses a half-million dollar lawsuit against you? You will be wiped out. Had you been spending your lives together unmarried and with $200,000 each in assets, you would still have at least $200,000, or more if you anticipated trouble and shifted some assets while it was still legal to do so (it can be illegal if done to defraud).

Married individuals are legally responsible for all the liabilities and debts incurred by their spouses. That's a dangerous position to be in. So if you each have your own health benefits through your employers, and you don't place a lot of importance on that piece of paper which licenses your love, you may want to consider leaving things as they are.

In fact, if you can anticipate financial troubles coming and are married, getting a divorce is not always a bad idea. But do it before you are sued or incur large liabilities or a court may rule that your divorce and splitting of assets was for fraudulent purposes. Of course, all of this assumes that you are in a relationship where you can truly and completely trust each other. I may be called an optimist for saying so, but I think this is often possible.

This is a complicated subject. Once your assets get beyond the level where they are exempt from inheritance taxes, for example, you may want to consider marriage in order to avoid having a large chunk of your estate go to the government, since upon your death your assets can pass to your spouse (who already owns them) without taxation. So a lifetime of living together, followed by some assets protection measures and then a marriage may be the way to go.

Secret Stashes

There may come a time when the banks fail and the Government cannot return everyone's money immediately. In fact, such times have already come. During the Savings and Loan Crisis of the later 1980s and early 1990s 745 savings and loan associations (also known as "thrifts") failed, and some depositors had to wait months to get their money returned.

One preventative measure worth considering then, is to stash some cash just in case. A safe deposit box is one possible place to do this. They generally are accessible (or at least have been) even when banks are closed due to failure.

But it is nice to have some cash available at or near home, in case all else fails. Most of the places that come to mind for these secret stashes are common knowledge to criminals, so get creative and disperse your money among several locations for maximum safety. You may also want to consider stashes of gold, silver or silver coins as security against the risk of a currency failure.

Buried Stashes

It can be risky to bury cash or valuables away from your home, because you cannot monitor the stash. A storm might dislodge it if it is near a stream, or animals could dig it up, or humans could recognize the tell-tale signs of a buried treasure. On the other hand, burglars most often target your house, so having some money buried out in the woods or hills might not be such a bad idea.

Burying a stash shallowly under a rock is one way to keep the evidence of digging hidden. Move a heavy rock, dig a hole underneath, placing the dirt carefully onto a garbage bag or tarp. Place a peanut butter jar or screw-top vitamin bottle full of cash or silver or gems in the hole, and fill it in. Dirt that doesn't fit back in should be carefully carried away and disposed of elsewhere, and the rock should be replaced exactly how it was.

You need to be able to remember where you bury such a stash, but marking trees in the area can give away the location to others. Instead, choose a location that is near an easily recognized landmark, like an unusual rock formation or three trees growing together. You can also mark the coordinates using a GPS unit, but disguise the numbers you write down in some way so others won't recognize them as coordinates.

A hole underneath an old stump can work as well, but be careful to leave no obvious traces of your digging. Be sure it is a stump that will be there for at least a few years to come. Throw some loose leaves around the base to further hide any signs that you dug there.

Small containers are best, because a smaller hole will be needed to hide them securely. $500 in folded $50 bills fits easily into a vitamin bottle. I once found a dollar hidden in a plastic pop bottle in a pile of rocks, with the plastic getting very brittle from exposure to the sun. It was a lesson on the importance of burying thin plastic containers very well if you want them to last.

Burying some cash or cash equivalents (gold, silver, gems) in your yard is another option. This makes your treasure easier to monitor and access and remember the location of. Be sure that you are not seen in the act of burying the stash.

Other Cities

It can be useful to have money stashed in other cities, for a couple reasons. First, if there is another city that you visit frequently, you will have some cash in case on an emergency. Second, if there is a city that you plan to go to if and when all hell breaks loose, you don't have to risk carrying large amounts of cash with you as you travel there.

Again, you have the options mentioned, ranging from buried stashes to safe deposit boxes. You might also consider hiding some money in the homes of family members if you are certain they will not be moving any time soon.

In and Around Your Home

Hiding money under the bed in a fire-safe that can be carried is an obvious place and only just barely better than leaving the money on a shelf in the closet. The fire-safe is a good idea, but the small ones are easily carried off, so it is important that you keep them in hard-to-find places, like buried under the home or hidden under attic insulation just out of easy reach.

Where else can you hide a stash in and around your home? Garages, sheds, and other outbuildings are natural ideas. Just be aware that if you ever tell anyone you have hidden money around the home, these stashes can be found relatively easily.

None of the secret hiding places you choose are likely to be unfamiliar to criminals. This is one of the reasons it may be best to keep the money in your house. Most criminals are opportunists who avoid confrontations. They may sneak into a barn to look for things to steal, but hesitate to enter your home -especially if you are in it.

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