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  1. Asset Protection Strategies

Asset Protection Strategies

What is a Holding Company?

Generally, we believe there are six ways you can protect your assets and privacy. Depending on the value of your personal and business assets, it may be appropriate to employ more of these strategies than just an LLC and liability insurance.

Liability Insurance

Getting the right amount of coverage which covers the appropriate risks. We have a company we can recommend, but generally it's most convenient to work with your current insurance company to keep all your payments under one roof.


From anonymous LLCs to anonymous asset protection trusts, we can assist you with maintaining your privacy. Making your assets difficult to find makes you less of a target. You may think of it this way,

Separating Assets from One Another

Not holding or purchasing multiple assets in a single entity. Instead place each asset in a separate LLC and use holding companies to consolidate those interests.

Separating Companies from Owners

Forming an LLC and observing all formalities to ensure a court does not "pierce the veil" of the entity. This helps protect your personal assets from business creditors, and your business assets from personal creditors.

Equity Stripping

Removing excess equity from property: one example is a "cash out refinance" of a property with significant equity, another is reducing the contributions of members to an LLC and funding the LLC with loans secured by company assets.

Separating Ownership from Management

Assets by themselves typically create little liability, but the management of the assets does. Creating a management company LLC that is hired by the LLC's holding the assets can isolate liability in an entity with few assets.

Start Your Business

If you own or are a part-owner of an LLC, you should consider implementing one or more LLC asset protection strategies.

Forming a Limited Liability Company (LLC) allows you to separate the business from the owner or owners of the LLC. The separation provides an LLC owner with limited liability protection. If an LLC cannot pay off its business debts, creditors try to go after the bank account and other assets held by the LLC. The only financial risk to each owner of an LLC is the amount of money an owner puts into the LLC.

Manage an LLC as an Independent Business

They say you should never mix business with pleasure, and the same principle applies to an LLC when it comes to mixing business and personal assets. If a court discovers that you do not run your LLC as a separate business entity from your personal finances, the court might declare your personal assets fair game for liquidation to meet debt obligations. Running your LLC as an authentic independent business should protect your personal assets from legal scrutiny.

Purchase the Right Amount of Insurance

Just because your LLC enjoys limited liability protection does not mean you can cut cost corners by forgoing insurance. Every LLC benefits from purchasing the appropriate amount of insurance to protect both business and personal assets. An attorney who helps owners form and run an LLC can advise you on the type and amount of insurance you should purchase for your business. An industry or a professional association can also help you buy the right amount of insurance coverage for your LLC.

Designate Your LLC as a Corporation

When you form an LLC, the law allows you to organize the business as a partnership, corporation, or sole proprietorship. The IRS does not recognize an LLC as a federally taxed business structure. Selecting to operate as an S Corporation or a C Corporation helps protect your personal assets from the debt accumulated by your LLC, as well as any business liabilities such as unpaid business income and payroll taxes. Make sure to operates your LLC as a business entity that is independent of your personal transactions.

Obtain Credit for Your LLC

One of the most common reasons why LLC owners become legally liable for the financial commitments made by the company is making personal guarantees. If you sign a loan or lease, and then agree to make payments if the LLC cannot, then you can expect to be on the financial hook for the LLC’s financial issues. A lender might ask you to put up your home or another type of high-value asset to consummate a business deal.

Don’t do it! Establish credit for your LLC and use it to protect your personal assets.

Pull Money You Do Not Need Out of the LLC

If a creditor sues your LLC, the business assets, not your personal assets, are eligible for liquidation. To minimize the financial vulnerability of your LLC, pull out as much money as you can and pay the extra cash to each of the owners. However, you need to do this before you receive notice of a lawsuit filed against your LLC. Otherwise, the judicial system might declare the transfer of money out of your LLC as fraudulent. Never pull money out of your business that the business needs to remain viable. It is a fine line to walk, but you have to leave enough money in the business to take care of all financial obligations.

Learning which of the LLC asset protection strategies works best for you depends on the unique financial status of your business. Before you implement one or more of the strategies, meet with a business attorney like Cloud Peak Law Group to help you understand the laws that govern LLC asset protection.


The purpose of this page is to inform you of common asset protection strategies. The ultimate goal being to place as many barriers between your creditors and your assets as possible. Just remember, the more effort you put in the more they will need to and most creditors will prefer to go after low-hanging fruit, i.e. others who have not protected themselves as well and represent an easier pay day.