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A$$et Protection, What is it and how is it done?
A$$et protection is nothing more than the employment of
various legal and economic strategies designed to protect income
and properties from loss.
What types of possible loss do you have to fear?
This answer can be numerous as there are people. Most people
experience unnecessary loss in one of three major ways.
The solutions to these three problem areas often work to
minimize loss overall. Specifically, the three spheres of
potential loss are, civil lawsuit, divorce and unnecessary
taxes.
Incredible amounts of money and property/a$$ets change hands every year in these three areas. The consumers of wealth seem to be nearly unlimited in their creativity when it comes to moving property/a$$ets from the producers of wealth. Not only must a large part of your time and money be spent acquiring property/a$$ets, as much time and money must also be committed to the preservation and distribution of property/a$$ets as well. Failure to consider the ever present dangers of wealth confiscation often results in loss of property/a$$ets, or the inability to acquire significant amounts of property/a$$ets initially.
There is a lawsuit mania in America, and any fool who has the capacity to pick up a lawn mower and trim the lawn with it, will require your life savings when he mutilates himself in the process.
1) Did you sell him the mower? It's your fault! 2) Did you rent him the mower? It's your fault! 3) Did you loan him the mower? It's your fault! 4) Did you manufacture the mower? It's your fault!
It is never the fault of the fool. It is your fault for not restraining him, and what would happen if you did try to restrain him? You guessed it, another lawsuit for improper restraint of actions.
There is no end to the willingness of the courts and juries to award fools the life savings of those who produce the wealth, those who create the jobs, and those who provide the intellectual fuel that drives the civilized world.
Homeowners Insurance, Automobile Insurance, Umbrella Liability, Malpractice Insurance, Errors and Omissions, the list goes on endlessly. The bottom line is, you can't buy enough insurance, nor could you afford it if you could buy it. And even then, you cannot be assured the insurance company will honor your claim or even be in existence when your claim is filed.
Is there an answer? Is there any hope at all?
There is, but the tactics and strategies of a$$et protection
must be employed now, before the problem has developed. To
wait until after the fool has struck, is to risk the total loss
of a lifetime of savings and investments. A$$ets covered after
the commencement of a suit, or even in anticipation of a suit,
could be found in violation of the Fraudulent Conveyances Act,
thus your efforts would be fruitless, and YOUR property/a$$ets
confiscated. Worthington Group's advice: Acting before the
fact will almost certainly assure successful a$$et protection.
How is it done?
In a nutshell, a$$et protection requires the change/conveyance
of ownership of a$$ets from the name and control of a visible and
potentially liable owner (YOU), to the name and control of a low
profile or invisible and non-liable owner (THE TRUST). What you
own is subject to confiscation by the courts of this nation;
what you do not own is not.
Although the danger that is being avoided or the goal that is being sought will modify and direct the specifics in a$$et protection, there are basic steps that prove to be nearly universal in application.
Personal Ownership
Property/a$$ets are generally owned in the name of a person or
in joint tenancy with another person. Under this form of
ownership, the owner is at risk of loss of property. When any act
has been done which generates a liability, everything owned and
titled in your name is subject to seizure, to satisfy the claims
of the court. One should have no property/a$$ets titled in
their name. Everything should be owned by a Trust,
Partnership, Corporation, etc. Worthington Group believes that
the safest and best method is through a Trust. A person's
libelous acts and judgments resulting from those acts, are
generally not transferable to another person, actual or legal.
(Title NOTHING in your own name.)
Trusts
To avoid personal ownership of property the trust has proven
to be of unusual value. There are many kinds of trusts and
situations under consideration, individual situations dictate the
choice. A few to consider would be, Family Trusts, Children's
Trust, Crummy Trusts, Living Will Trusts and Business Trusts.
(Unincorporated Organizations)
By moving/conveying Real Estate, Savings Accounts, Checking Accounts, Automobiles and any other properties/a$$ets into one of these trusts, creditors often encounter insurmountable obstacles in obtaining access to property moved/conveyed.
The Unincorporated Organization (Business Trust) is particularly powerful and extremely useful to those who do not want to leave anything to chance. It can operate as a business. It is approved by the IRS. It has its own IRS ID Number. It is legal in every state. It is a contract endowed by the US Constitution. It can own property, personal and commercial and much more. It can lend and borrow. It can manage investments. It can own life insurance. It can pass a$$ets through to other Trusts, and to succeeding generations with little or no taxes and avoid probate completely.
Corporate Ownership
The corporation is minimally necessary to the businessman in
minimizing personal liability. If properly structured, it can be
quite useful in holding ownership to property as well as moving
income out of high tax districts to low tax districts, through a
method known as "up streaming."
In terms of property ownership, one of the biggest and most serious mistakes a businessman can make, is to place property under the ownership of a corporation that has employees or is doing business with the public. If the corporation were to be sued, the property owned by the corporation is subject to seizure. On the other hand, a corporation that does not do business with the public, does not have employees and does not have any apparent contact with the public can be a very effective owner of property.
Many states require more than one officer to serve on a corporation. This often results in the legal advisor placing the husband as president or treasurer, and the wife as vice-president and secretary. This results in the existence of two lightening rods if the corporation gets into trouble. The litigant can go after the a$$ets of both husband and wife, a very serious and very common problem. However, some states, such as Nevada, do not require two corporate officers, and by incorporating in these states and working in your home state as a foreign (out of state) corporation this problem can be eliminated.
Limited Partnership
The Limited Partnership is another entity in the area of a$$et
protection. The main consideration here is that it is exceedingly
rare for a court to penetrate a limited partnership in a lawsuit.
In fact, even the IRS has problems breaking open a limited
partnership. What often happens, is the creditor is given a
"charging order" (Usually from a court). This means
that if and when property is distributed by the partnership, then
the person holding the charging order is paid. However, if the
partnership never disburses the funds, then the creditor has no
right or authority to break into the partnership and collect on
the judgment.
You might question the value of a partnership that never disperses its assets. However, under the very unusual situation as described above, where a charging order exists against one of the partners, it is very important that there be provisions in the partnership that do not require the general partner to disburse these properties, for if the assets are disbursed, then they will by law pass to the creditor or holder of the charging order. Instead, what you want under this unusual situation is for the general partner to have the capacity and legal right not to disburse partnership assets.
Additionally, you want a special clause in the partnership that will "indemnify and hold harmless" the general partner for any bad investments or business decisions that would cause loss, partial or in whole, to the partnership. With this clause in effect, the general partner can systematically move the assets out of the partnership, through bad investments and other poor business decisions, to the point of totally decapitalizing the partnership and closing it down. The result will be a charging order that goes uncollected and is uncollectible. The partnership assets are thereby moved into another legal entity which is controlled by the same partners.
This illustration demonstrates a very fundamental aspect of a$$et protection. It is not the use of specific tools that define a$$et protection, but the specific application with forethought, of how these common tools can be used to protect a person's property/a$$ets in a hostile environment.
It is visualizing the threat to the property/a$$ets and putting in place methods and tools, all legally viable, for protection against the hostile efforts of those who have no moral claim to YOUR property/a$$ets.
Asset Protection Presupposes The Best By Preparing For The Worst.
Offshore Planning
Offshore a$$et protection is considered by knowledgeable
businessmen and entrepreneurs as one of the safest and most
effective methods of all available. Through the use of many of
the tools mentioned above, and in an offshore (out of the United
States) jurisdiction, maximum protection is afforded the client.
Where the courts of the U.S. do not have authority, the
confiscation or re-titling of property by these courts is an
impossibility. In addition, offshore banking relationships will
always prove to be very private, by the maintaining of cash and
investment instruments far from the hands and knowledge of the
insatiably greedy.
The offshore Trust and International Business Corporation, (IBC) properly structured is an incredible tool in the growth of capital, protection of property/a$$ets, as well as being unhampered by U.S. regulations and taxes. (That is when structured in the proper foreign domicile, tax FREE.)
Worthington Group advises that prior to an offshore Trust and International Business Corporation (IBC) being formed, a domestic entity first be formed. This allows for the use of Business and Capital Unit Trusts as transfer agents into the offshore protection veil.
All property/a$$ets in offshore Trusts and International Business Corporations, (IBC) can be passed to heirs estate-tax free, when properly structured. (The same applies to Domestic Trusts, NO Death Taxes or Probate). Safe deposit boxes, foreign exchange accounts, managed investment accounts, common savings and checking accounts can all be maintained offshore away from those enquiring minds that want to know-- but never will.
Remember, investment that grow tax free in a 33% tax bracket, in effect have a growth rate equal to 1/3 more than the base rate of return. In other words, a 9% nominal rate is really a 12% return with the tax factored out. Over the years this makes an incredible difference in any investment program.
However, if YOUR a$$ets have not been properly protected, any return may be negated by having YOUR a$$ets confiscated or seized, it happens somewhere each and everyday.
Write Protected 95, and Future Worthington Group