If you want the very best in asset protection, you need a SPA Trust and an Alaska LLC.
Alaska was the first state to pass legislation creating asset protection for a self-settled trust. Alaska has also pioneered improvements to their LLC law in an effort to prevent a creditor from foreclosing on an LLC interest. Other states, including Delaware, South Dakota, and Wyoming, have copied the Alaska LLC provisons in an effort to attract more asset protection business to their state. Wyoming LLCs are heavily marketed as the next great solution for asset protection.
Unfortunately, recent case law has turned all these plans upside down. In a case called Fairstar Resources Ltd. and Goldlaw Pty. Ltd. v. American Institutional Partners, LLC, AIP Lending, LLC, and Mark Robbins, Civil No. 080916464, a Utah court held that a state court can apply their own law and disregard the law of the state where an LLC is filed for purposes of charging order protection. In Litchfield Asset Management Corp. v. Howell, 2002.CT.0000339 (Conn.App. 06/04/2002), the court stated that "[w]hen the statutory privilege of doing business in the corporate [or limited liability company] form is employed as a cloak for the evasion of obligations, as a mask behind which to do injustice, or invoked to subvert equity, the separate personality of the corporation [or limited liability company] will be disregarded.'' This means that you can't necessarily rely on charging order protection, even if you file in a great asset protection state such as Alaska or Wyoming.
The purpose of the SPA Trust is to remove the LLC ownership from your personal financial statements so it cannot be discovered through a disclosure of your personal assets. If you get sued and you own an Alaska LLC, the creditor will easily discover the LLC and attempt to attack it through a broad charging order, a reverse piercing of the corporate veil, or a foreclosure and receivership process. On the other hand, if you put your ownership in a SPA Trust, it cannot be discovered through a disclosure of your personal assets. Isn't it better to completely avoid a lawsuit because you have zero ownership in the LLC than it is to spend years of stress and legal fees in defending your LLC?
The SPA Trust is the best asset protection strategy for the following reasons:
1. The first rule of asset protection is, “If you don’t own it, it can’t be taken away from you.” The SPA Trust removes assets from your personal ownership so they cannot be taken from you due to a lawsuit, bankruptcy, government action, or other liability.
2. The SPA Trust cannot be discovered through a disclosure of your assets or a search of public records under your name.
3. The SPA Trust is upheld by the laws of all 50 states and the federal bankruptcy code (See 11 U.S.C. 541(b)). It can protect assets of any kind and in any location.
4. The SPA Trust is trusted by distinguished law firms throughout the country because it relies on fundamental legal principles which have not changed for hundreds of years. There are many statutes and court cases supporting the SPA Trust and we have lots of experience defending it.
5. The SPA Trust is extremely flexible because the trustees and the terms of the trust can be changed in any manner at any time.
6. The SPA Trust is easy to set-up, maintain, or terminate. You can add or remove assets at any time without tax consequences.
7. The SPA Trust can be used in conjunction with an LLC in order to keep personal assets separate from business assets or to keep safe assets separate from risky assets.
If you would like to see a diagram and detailed explanation of the SPA Trust, please send me an email at
I am an asset protection attorney, a tax attorney, and a law school professor. I do asset protection planning that is ethical, professional, efficient, thoughtful, and eminently effective. I will provide ongoing support for any plan that I create. If you are interested in asset protection planning, call me at (801) 765-0279 or send me an email with a summary of your situation and I will send you a free proposal. To read more about asset protection, click here: 10-reasons-i-can-give-you-better-asset-protection