Asset Protection California - Fiduciary Is Not A Shop Along Rodeo Drive

October 25, 2004
By Katherine Curtis

A style onto it's own, asset protection California's way is stocked with high risk and nightmarish loopholes. California leads the trends in over-taxation and lawsuit abuse.

In spite protests, small businesses and personal property are subjected to unreasonable liabilities and limited exemptions.

Creditor-Friendly Is A Golden Trait.
Debtors are seriously vulnerable to predators and lawsuit abuse in the Golden State. In attempts to avoid the reach of lawsuit-happy customers, most companies are an LLC (Limited Liability Company), S Corporation, partnership or sole proprietorship. However, since a creditor's satisfaction is important in the eyes of a California asset protection court, even a LLC can be liquidated if necessary.

Another downfall of the court system is how lawyers are quick to attack small practices and wealthy proprietors through unfair competition laws. Creditors also tend to go after fiduciary assets. Thus, business and personal matters are carefully planned to keep these activities thoroughly recorded and separate.

Living On A Shoebox.
Even though California's state average income at around $40,000 per year is not the highest in the nation, housing prices are out of this world. The average value of a home is over $211,000. Surprisingly, a single person's homestead exemption in the state is only $50,000. A couple can claim up to $75,000. And Seniors (older than 65) can file for up to $125,000. Mentally disabled and 55-Plus individuals with lower income may qualify for up to $100,000.

California's Overtaxed and Over-regulated Businesses Eat Sour Grapes.
Starting a business in California could be one of the nation's worst asset protection strategies. The state's business environment is laden with the highest taxation in the United States. Often, alternative oversea investments are preferred. Only some business assets are state tax exempt, such as manufacturing machinery.

More often than not, double taxation burdens both a corporate and individual AMT (alternative minimum tax). Small businesses are treated like individuals to the highest taxes in the USA. Worst yet, petty lawsuits forced many businesses to cross the border to Nevada's much friendlier asset protection systems.