Attorney and legal columnist Deborah L. Jacobs promotes asset protection in the March 2005 issue of the Bloomberg Wealth Management Magazine. As she observes, “Once regarded as a shady practice, using asset-protection tools like offshore trusts to deter creditors is now considered essential to effective estate planning.”
Her article “Going Under Cover” details the uses of asset protection and goes over different strategies.
According to Jacobs, asset protection gets a bad reputation from “dead beats, scam artists, and tax evaders” even though it’s now a “mainstream” tool often used by hardworking individuals. Asset protection strategies serve these “honest folks” preserve wealth.
It protects against risks when their malpractice won’t, whether it’s from “errors-and-omissions” or items too “prohibitive to cover because of rising insurance costs.” In the case of one couple, it helped them survive a lawsuit stemming from their small business. She cites a couple putting almost a third of their income into offshore and domestic trusts. The trusts contained about $30 million in assets. A few years later they sold their business. Only a $300 million trade-secrets lawsuit caught them by surprise. As Jacobs writes,”With their asset-protection plan in place, they were able to settle for a nominal sum.”She describes limited liability companies as one of the “favored asset protection vehicles” – to use with their estate planning.
Offshore trusts are recommended as “the ultimate in asset protection.” They give a “tactical advantage.” Outside the border, these trusts are created in countries favorable to the individual, and not in countries that can take away their assets. Not being subjected to the United States jurisdiction provides a better opportunity to protect their assets in such a way.
She also points out the “mixed reviews” of offshore trusts in recent years. Jacobs explains, its “because of several notorious cases in which people who were already in legal trouble put assets offshore and basically thumbed their noses at the U.S. courts.” Yet she’s also quick to note some experts regard them as just a few “sleazy characters who made a bad impression on judges and gave offshore trusts a bad name.”Individuals looking into asset protection should proceed with caution. Jacobs advises being wary of strategies with alternative purposes, “whether it’s to save income or estate taxes or maximize opportunities.” For a practice once regarded as “shady,” Jacobs and Bloomberg Wealth Management magazine makes it clear, asset protection offers the doctor or businessman next door an honest and effective estate planning.
This Post Has 0 Comments