By: Michael Ioane
Your assets may be in the form of cash. Take note that this is very easy to target and is therefore easily lost. If you think that keeping money in the bank provides enough protection then you are mistaken. The Internal Revenue Service (IRS) can “request” that your funds be turned over by the bank. This is possible because of the fine print in the agreement you signed when you opened your bank account.
Not only are banks unlikely to fight the IRS for you, they also are poor custodians of privacy. Not only do they require you to give personal and financial information, they also monitor the activities made through your account. A single withdrawal worth $10,000 would trigger a report for such activity. Even multiple withdrawals per day are tagged as “suspicious”. Banks are not immune to prying. Anyone who knows how it works and has the right connections can extract your information.
However, banks remain a convenient way to conduct day-to-day transactions. You can take advantage of “protected banking” to retain the convenience of a bank account without suffering the risk of losing your money. To do this, you need to set up a checking account and a line of credit for overdraft protection. Typically, the line of credit that would be extended to you would be worth around a few thousand dollars. What you need to do is to place a minimal amount of money in the checking account and charge your bills against it. Say, if you put $50 in the account and run bills of up to $2,500 against it, your overdraft protection provides credit for the $2,450 excess. You then pay off the balance regularly to keep the line of credit clear. Notice how you’ve kept the convenience of paying bills through your account and yet keep no more than $50 in the bank. The bank would never turn over the balance of your line of credit to the IRS because it’s their money. All the money that would be at risk on your end would be $50.
As mentioned many times in this site, a Limited Liability Company (LLC) is your best friend. Even the “protected banking” method explained above can be improved upon by increasing protection and privacy via an LLC. If you have an LLC run by a Privacy Trust, the trustee can sign all the documents for you, maintaining your privacy. Beyond that, the LLC protects your assets by keeping them under its name, not yours. Should you encounter legal problems, your money cannot be taken because – well, it’s no longer “your” money – it’s the LLC’s.
Another way to protect your liquid assets is to use a brokerage account or to invest in precious metals. These are always valuable and don’t decrease in value as much as paper money. There are many ways to protect your hard-earned money and these are just examples. Order the “Asset Protection Manual” by Michael S Ioane and find out how you can better defend your liquidity.