The Top 5 Mistakes in Asset Protection Planning

1.Not being prepared

Asset ProtectionOne too many people have had a frivolous lawsuit lobbied against them destroy their wealth and livelihood. If only they had spent a relatively small amount of time and money to create an asset protection plan, they would have saved their business, wealth and life.

For the wealthy, or those who have a risky profession with a possibility of a lawsuit resulting from their occupation, asset protection is a must. Asset protection is like insurance – you have to buy it before there is a disaster on your doorstep.

Particularly in America, lawsuits are commonplace, and often frivolous. Most litigation lawyers work for no upfront fees, but will receive a large portion of the judgment if they are successful. This forces them to search for cases where the defendant has assets. Therefore, lawyers will take on cases where the defendant is very rich, and their money is easily accessible if they win the lawsuit. If your money is harder to find, and harder to get to, you can actually deter lawsuits from even being filed.

2.Not running your business as a business

Co-mingling funds is one of the biggest mistakes one can make with an asset protection plan. If you have successfully created a structure which almost eliminates all risk through the use of corporate entities, and then you decide to dip into the bank accounts of one of these businesses, you have pierced the corporate veil, and blurred the line of distinction between YOU personally, and the actions of your business.

Courts could be able to seize all of your assets because of the actions of your corporate entity in the event this type of mismanagement. Other common mistakes in this arena include: not abiding to state or country laws regarding the corporate entity (not keeping minutes, not filing tax returns correctly, not having required meetings, etc.)

The same thing can be said for a trust. When you are a trustee, you cannot directly control the assets held within the trust, because you have signed over this privilege to the trustor (person who runs the trust). If a creditor can prove in a court of law that you did in fact have control of the assets held within the trust, then the trust may not offer you protection.

3.Domestic/international asset protection

Diversifying risk is integral to any asset protection plan. For some, a domestic asset protection plan may be adequate. For those who are involved in riskier activities, or have a substantially large net worth, an asset protection plan with an international perspective could be worthwhile. Different jurisdictions obviously have their own laws and statutes related to the business entities and trusts.

Using several jurisdictions for separate pieces of an asset protection plan is an asset protection strategy employed by the experts. Ask any professional what country is best suited for trust formation and it is likely they will mention the Cook Islands. This is because the laws here are very debtor friendly meaning that creditors will have a very hard time going to the Cook Islands with a charging order and obtaining the assets held in your trust. Combine this trust with a Swiss bank account and Nevis IBC, and you can see that your funds become increasingly difficult for creditors find and seize.

4.Professional planning

One of the most important things to consider when forming an asset protection plan is where you will be getting your advice. A ‘do it yourself’ asset protection plan is not advisable, neither is advice from scam artists who claim ‘bullet proof asset protection for only 19.95!’ There is no such thing as a sure thing, and there is no such thing as a free lunch. You pay for what you get, and having a experienced professional tailor your plan to your specific needs is a worthwhile endeavor.

At Global Wealth Protection, you will be getting advice from an expert on asset protection strategies, and can be assured that your asset protection plan is tailored to your specific needs, is viewed from an international perspective, and avoids fraudulent conveyance. Your asset protection planning puts into action tangible steps to decrease your risk, and protect your assets.

5.Fraudulent conveyance

Asset protection strategies can protect you in the case of a lawsuit, but only if the asset protection strategy is devised and implemented BEFORE you are sued. If you wait too long, courts could find you guilty of an act of fraudulent conveyance, and your assets would once again be up for grabs. There are a number of criteria to consider when identifying fraudulent conveyance, but all of which will have been avoided if you get help from a professional, BEFORE you need it.

We advise you to protect yourself before you encounter asset protection problems.

For your free 30-minute consultation or to receive more information about asset protection strategies, kindly fill out our form on the contact us page.

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