You Are Here:Home » Personal Finance » Don’t Let Them Get Your Money! Where to Hide Money from Lawsuits, Creditors, and the IRS
Published or updated by Miranda
Are you worried that someone might be coming for your money?
Whether it’s a potential lawsuit, or even if it’s the IRS or a creditor, you probably want to protect your assets.
If you want to protect your assets, you need to know where to hide your money, and know how to properly structure certain accounts in order to avoid having someone drain your financial well dry.
Here are some places that you can hide your money:
Retirement Account
One of the best places to hide your money is an ERISA-qualified retirement plan.
Not only can you keep some of your money safe, but you can also earn a tax-advantaged return on the money. The money in your retirement account is protected from liability lawsuits. Additionally, your retirement account might have some protection from bankruptcy and creditors (not always, though).
Even the IRS is reluctant to levy against your retirement account.
The IRS does have the ability to access any money that you have access to (so if you can’t withdraw from your account for whatever reason, the IRS can’t require the assets in the account), but in many cases officers are slow to move against your retirement account, even if they could.
Transfer of Assets
Consider transferring some of your assets.
One place to hide your money is in a business — just make sure that you set everything up properly. If you keep assets in your business, they can be protected from liability lawsuits, and they even might be protected from different creditors.
Your can also use your business as a shield for other assets. Guru Robert Kiyosaki did this not too long ago. One of his many business declared bankruptcy as a result of a lawsuit, but that business only represented a small fraction of his assets. His personal fortune remained unaffected.
You can transfer ownerships of your assets to someone else, or even transfer ownership to a trust. That way, you no longer own the assets, and it is harder for others to come after your money.
The Use of Trusts
If you really want to figure out where to hide your money, you can make use of certain types of trusts.
You can use different asset protection trusts to help you protect your money from lawsuits, creditors, and even from the IRS. However, if you hide your money in a trust, you need to be aware of some of the downsides.
First of all, the kind of trust that is most likely to protect your assets is an irrevocable trust. Now, you no longer own the assets; the trust does. The trust can use the money for the benefit of your beneficiaries (including yourself). However, you lose a measure of control over your money when you put it in a trust like this. The reason that your money is protected to some degree — aside from the fact that it is no longer technically yours — is that you don’t have ready access to it in many cases. Even with the IRS, the rule is that you have to be able to access your money. If you can’t get at it, neither can the IRS. Of course, the downside to this setup is that you don’t always have the right to access your own money.
Be Careful of How You Proceed
As always, you need to be careful of how you proceed. Whether you are organizing a business, setting up a trust, or transferring assets in some other way, you should consult a knowledgeable estate planner or attorney. Make sure you understand the process, as well as the restrictions related to your money.
Also, realize that putting all of your money into these types of accounts as a response to an impending problem is not an acceptable solution.
Creating a trust after the creditors come calling, or after you are served with a lawsuit, can negate the effects of the operation. You need to be making asset transfers and retirement contributionsbefore someone comes after your assets. Figuring out where to hide your money is more about long-term planning and asset protection than it is about stop-gap measures when an emergency presents itself.
Have you ever had to hide your money? How did you do it?
About Miranda
Miranda is a freelance writer and professional blogger specializing in financial topics. Her work appears on numerous financial sites, including Wise Bread and Huffington Post. Miranda's blog is Planting Money Seeds.
Reader Interactions
Comments
In general, this sort of thing leaves a bad taste in my mouth. Just pay what you owe.
That said, my in-laws lost their house and had to move in with us. They were living on my MIL’s disability: $1,100 a month. Yet they were still making payments on their credit card and keeping their cell phone! I told them to knock it off. So what if they’re hit with an early termination fee? Their income is protected from creditors.
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Tim Moore saysI agree most people are in debt because they choose not to change their lifestyles. If you are in debt and have a negative cash flow every month you need professional help, that’s the bottom line.
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- Chandra says
You know I use to think just like you. I’m very ambitious and resourceful. I always find a way to make money and I’m strong good character honest. But I realized everyone does not have my drive and ambition. I would try to push others to be like me and I realized that they can’t. For different reasons because I realized everyone is different and everyone’s situation is different. Some of no fault of there own. Mentally physically academically (not because they didn’t go to school) maybe they struggled and couldn’t finish.aybe dialectic or a brush with the law (falsely accused) and given a break but not with income that they can support themselves on. I like people we are all different from different backgrounds and lifestyle and personalities and abilities. That is what makes us human. So instead of putting people down because there not like us let’s help them. But not to be us but to be the best them they can be.
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- Don says
The problem as presented is, as working folk your at a disadvantage and being preyed upon by the irs whereas people with money pay insignificant amounts 14% and lower if any at all!
whereas the working class has no access to the deductions loopholes etc etc.
working class people pay 27% and upward and still have to pay some one else to figure and file the return. The other problem is where you take your taxes to be figured the person doing them gets paid by how many returns he files. So again you get taken by the system. The fear the IRS holds over us is criminal. their freehand at dealing out punishment without providing constititional rights and redress is un-american…Reply
- Laura Beth says
I enjoyed the article. These are some good tips. Being proactive and changing your lifestyle and paying your taxes would go a long way to preventing this kind of situation in the first place.
See Also13 Best Mint Alternatives to Better Your Finances10 Tips to Thrive on One Income - The Irish Twins MommaWarren Buffett has 78% of his portfolio in these 5 stocks12 investing books to read if you want to get richJust my thoughts.
Thanks for the informative post!Laura Beth
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- Kevin McMillan says
I get agree when someone says read the fine print and the duh, but it is great advice. I get irritated when someone says pay your bills, you created them you owe them! Those people don’t always know the circ*mstances even though they know everything! What if that person was injured on the job, the workers comp. Claim was denied, savings exhausted, interested and late fees piled up, the financial institutions only wait so long! It took 2 years to open my claim!
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- B Guzzo says
People dont know others circ*mstances. Some of the people who wrote in are wrong. Some us get financially destroyed by divorces, theft by lawyers, and theft by corrupt judges especially here in NY. They put us in debt that we would have not had otherwise.
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- Megan Sorenson says
YEEESSSS. My husband is dealing with family court now and they have thrown him in over $100,000 arrearages.
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- John says
Very true!!! I’ve ALWAYS paid all my debts even if they are old debt from years ago!! I just believe that’s the right thing to do. But now I’m being financially destroyed because of a previous business associate that owes me over $1 million and purposely didn’t pay me!!! I’ve sued him but the courts have never taken my lawsuit seriously!! EVEN WORSE the crooked judge denied my lawsuit from being heard in court and actually dismissed the ring-leader crook from the lawsuit!!!
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- Stella says
I need some advice…found this site. I am in early 60s….and a loser (NOT really, but had a lot of tragedies in life). I also have a felony conviction…..anyone know how that affects your ability to find work. Not to mention that I am now old.
Due to not being able to find work…I live in USA…had to apply for many benefits…yes government benefits..It is a dichotomy…they charged me with felony …received probation only which I am still on, no former criminal record.
My issue…I am having to re-apply for all kinds of benefits…heating, electricity, snap (foods stamps), even a tax abatement (property taxes).
However,,,I inherited some money last summer..wont say how much, but if not careful it will of course run out. So its not that much for today’s standards.
I am re-applying for those same benefits and going to move money from bank…l..
Thoughts of where to hide money…not in the bank that is just too blatant.
I do not feel like being charged with welfare fraud….BUT I am looking out for myself because no one ever did.
Please do not judge as you do not know my story…..I have no husband or family or retirement….
I am thinking about moving out of country but I am too old…and just applied for Soc. Sec benefits which I will report…just not the inheritance…
I also have health problems…
ThanksReply
- Christy says
I hope it went well for you and you’re doing ok.
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- Sonja says
Call a fiduciary and ask for advice
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- Giggles says
You can get gift cards to hide & save some of the money,. You can get them as Visa, Mastercard & AMEX, they work like a debit card difference is that you will only be able to spend the money you put on the card, there is a small purchase fee (usually $3 -$8). And with gift cards there are usually no other fees. IRS doesn’t know the you have them because you don’t use your social security # or anything that could identify you. This is just a suggestion hoping it may help you in your situation.
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- James says
Screw the IRS. Taxation is theft! Hide your money any way you can! Definitely not in US bank accounts. Buy art, jewels and metals.
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- F.Y. says
Invest in precious metals of all kind. Silver, gold, palladium, copper and brass.
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- maha168 says
Thanks for finally writing about >Where to Hide Your Money from Lawsuits,
Creditors, and the IRS <Loved it!Reply
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