Asset Protection Planning

Asset Protection Planning used to conjure up images of flying suitcases full of cash to stash away at an exotic tropical island. That concept is as outdated as the big chain video rental stores that rented movies with those cheesy plots.

“Asset Protection Planning” is simply the core concept of preserving your hard-earned wealth and protecting it for your lifetime and for future generations. Our focus at The Ballard Law Corporation is on protection from lawsuits, bogus legal claims, unexpected creditors, and various transfer taxes, such as estate and gift taxes. 

There are many non-attorney “consultants” who are ready to sell you a complex set of entities, whether you need them or not. However, insurance is the first line of defense before we even start evaluating entities, layering, equity reduction, and privacy. Unfortunately, there are many risks that aren't insurable, including breach of contract and allegations of fraud or misrepresentation. 

Often, your risks are greater than your insurance coverage. For example, a young person might have a disabling injury on your property and suffer lifetime damages over $5 million when you have $2 million of coverage. The insurance company might tender the policy limit and you are left with $3 million of exposure. You need to be protected from the excess. 

Don't get fooled by those who say a land trust or other form of revocable trust provides "asset protection." A revocable trust can provide "creditor deflection" by not connecting the asset with you in public records when you are not the trustee, like we do with our California Privacy Trust. However, if you see "revocable," the trust can be pierced. Limited liability companies, corporations and irrevocable trusts can shield the owner(s) from personal liability when properly formed and maintained. There are many facets of asset protection planning and they need to be tailored to each individual situation.

The variety of available tactics is as varied as the clients who seek them. Most asset protection strategies can be accomplished entirely “onshore” with United States-based entities, including Domestic Asset Protection Trusts (DAPT). However, offshore trusts remain viable and, I would argue, often more effective than domestic ones. An unexpected serendipity of offshore entities is that they can open a much larger range of international investments that aren’t available in the U.S.

Offshore tactics are sometimes promoted for approaches that become illegal tax evasion. This is especially true with non-attorney “consultants.” These promoters do not have a professional license at stake in their actions and are not accountable to any professional standards. Hence, one should be careful when dealing with them and investigate as much as possible before getting involved. 

None of this is to say that there is no longer any form of tax deferral or reduction from domestic and international “asset protection” approaches. It is only to say that those who sound too good to be true likely are.

Use our contact form to begin no-fee, no-obligation communications with our team. Or you may schedule a paid consultation to begin directly with an attorney.