The most common Asset Protection Plans

Trusts are the choice when planning asset protection. Both domestic and offshore strategies are useful in protecting wealth.

7 Essentials for a good Asset Protection Plan

1. The plan must protect your entire wealth. If selected assets are not included in the plan they remain exposed. A good comprehensive plan should include future assets such as an inheritance, proceeds from copyrights, patents, and contracts. It should also afford protection to those who inherit your assets.
2. The plan must be legal.[box type=”info”]A common mistake is to conceal or hide assets. A correctly designed plan must be perfectly legal, and defensible in court. It is incorrect to say an offshore plan is to place investments in another country and hope they are not found if litigation arises.[/box]

   [box type=”note”]A good asset protection plan never relies on secrecy because a judgement creditor can make you disclose your assets. If you have investments in other countries and you answer untruthfully, it’s perjury. In an upcoming column we will discuss how keeping your offshore plans 100% legal will still not allow a creditor to seize assets you disclose.[/box]

3. The asset protection must mesh with your three other financial objectives: estate planning, investing, and tax planning. A good plan provides a superior estate plan by saving or deferring estate taxes, reduces income taxes, and allows easier foreign investments.
4. Your plan must be economical and not overly complicated. Costs for offshore asset protection vary with your wealth and the assets you need to protect. Realistic costs of basic plans start at about $5,000; additionally it can also cost $500 to several thousand dollars annually to maintain the asset protection structures.
5. Setting up and implementing the plan won’t cost you an arm and a leg. A good wealth preservation attorney won’t recommend an unnecessarily complicated or costly plan. You can frequently get a strong plan with little or no expense without an attorney. The most expensive plan isn’t necessarily the better plan.
6. You must be psychologically comfortable with your plan. An offshore protection agency should be knowledgeable in all phases of the plan and able to explain them to you so you understand them thoroughly. Familiarity breeds comfort. The agency should be able to answer all your questions about offshore structures, trusts, and IBCs. There are also several good books on offshore asset protection.
7. Your plan must work 100% of the time, in all cases. If there is a flaw in the plan it leaves an opening for litigants and attorneys to attack. Plans should be thorough. Good plans are very thorough. Models of good plans are readily available if you ask your offshore service provider.

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