How does a Private Retirement Plan (PRP) protect assets from bankruptcy and lawsuits? Does a PRP require a trust administrator? Are there tax benefits to a California PRP? Can you protect all your assets with a California Private Retirement Plan?
By James L. Cunningham Jr, Esq.
California offers its citizens plenty of legal and financial challenges; but we are also blessed by some special opportunities. One remarkable, but little-known law allows for the creation of a special financial vehicle called a California Private Retirement Plan to protect and grow assets.
How does a California PRP work?
A California PRP is much more than a financial plan. It is a program in which assets, distributions, and death benefits can generally be protected from lien and seizure. A PRP in California includes the creation of a Private Retirement Trust, careful retitling of assets, and a written actuarial plan to control it over time—even in the case of bankruptcy or a lawsuit.
Done properly, a PRP offers one of the best, safest, and most affordable wealth-preservation tools for Californians. It can make sense for anyone investing seriously in real estate, businesses, or other private equity–and can be a crucial piece of reliable personal finance management.
PRPs can also be an important part of a complete asset protection strategy to secure savings, property, and more. Along with this blog, you may want to watch the webinar on PRPs found on this page. We also invite you to read our full article on asset protection.
At the risk of oversimplification, using California Private Retirement Plan (PRP) asset protection, you carefully identify certain assets as “retirement assets,” after which you are allowed to build a sturdy legal wall around them, greatly improving protection from creditors and predators of many kinds. Indeed, the purpose of the law is to protect identified assets so they can be used in retirement.
Does a California PRP protect assets after I die?
A California Private Retirement Plan can protect assets both throughout your life and after you die. Death benefits and even distributions may be exempt from lien and seizure by a lawsuit or bankruptcy proceeding.
You can’t quite protect all of your assets, but a savvy lawyer, working with a specialized trust administrator, can help you safeguard your key investments, properties, and more—while keeping you in control of those assets, and benefitting from them over time.
Does a California PRP provide tax benefits?
If well-constructed, a California Private Retirement Plan can leverage a number of tax benefits, including tax deductions, deferrals, and credits—making them well worth the cost of implementation.
PRPs have been well-tested in Federal Court: if properly structured, they have proven solid indeed—and can often be designed to preserve Proposition 13 rights.
What are the requirements of a California PRP?
A number of rules must be kept in mind, and an experienced, specialized professional must be used to properly structure a Private Retirement Plan in California:
- The PRP requires an independent trustee and independent plan administrator
- The PRP must be created primarily for retirement, not to evade creditors
- The PRP must truly be a plan, with an actuarial basis for funding.
- Each participant requires a trust with a clear tax intent.
To work with a qualified attorney and learn how we can help you secure your future, contact CunninghamLegal Today.
How can I tell if a PRP makes sense for me?
CunninghamLegal works closely with its longtime partner, TRUST-CFO® to create highly effective Private Retirement Plans in California. We have the resources, experience, and expertise you need when creating this important strategy for your later years. We do the legal work, TRUST-CFO handles the administration, assists in tax planning, and more. We invite you to visit the TRUST-CFO website and use their Diagnostic Calculator to see exactly how a PRP might benefit you.
Or please contact us to learn more.
James Cunningham Jr., Esq.
We guide savvy, caring families in the protection and transfer of multi-generational wealth.