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  Professional offshore incorporations and offshore banking services since 1996


ASSET PROTECTION

 

Frequently Asked Questions

 

Introduction to Asset Protection

Conventional asset protection is not hiding assets, defrauding creditors or evading income taxes. Asset protection is the positioning of assets to make them unattractive and legally unreachable by creditors, but available for financial goals and needs.

Sound asset protection does not encourage nor necessitate illegal acts such as perjury or concealment of assets in violation of law. The law itself recognizes asset protection as exampled by numerous provisions defining permitted and prohibited strategies. It is certainly possible to affect an asset protection plan legally. There is no need to violate any law or regulation.

Even those with ethical objections can still adopt an asset protection plan and then if a rightful claim later arises, surrender their assets.


Why Asset Protection

Asset protection has become a topic of great interest to professionals, executives, business owners, and developers. A fluctuating economy, a tough credit market, professional malpractice, toxic waste liability and increasing exposure to tort and contract claims have increased the focus on how to lawfully protect one's assets from creditors. However, asset protection planning is not just for high paid professions and executives.

Today's world is an environment filled with lawsuits, taxes, accidents and financial risks that can easily wipe out anyone's assets. No matter how safe you feel, you can never be certain that the wealth you have built up over a lifetime won't suddenly be taken from you tomorrow. Whatever your occupation or lifestyle, we all sail close to financial disaster and potential liability.

  • Even if you win a lawsuit, the winner still normally pays their own legal costs and fees. The legal system is often slow, ineffective and expensive. Even small nuisance lawsuits can result in tens of thousands of dollars in legal costs plus hundreds of hours in personal time.

  • There are many individuals who make it a career to file frivolous lawsuits knowing the tremendous expense of responding to even the most baseless legal action.

  • There is a litigation explosion, particularly in the United States. It is estimated that over 40 million lawsuits are filed each year.

  • Many people avoid jury duty because of the time required and the low economic reimbursement for jury service. This often results in a non-representative jury unfamiliar with sophisticated legal arguments and outrageous decisions and awards.

  • Insurance coverage is frequently inadequate. In many cases, the coverage amounts are so low that insurance companies will post the coverage and offer little effective defense.

  • There are a lot of people in search of blame. This results in a deep pocket mentality. Many individuals and companies are faced with frivolous lawsuits merely because they have exposed assets.


Situations That Create Danger

While there are many ways you can unexpectedly put your assets and financial security at stake, the following short list should be of particular concern:

  • High risk professions


High-risk professions include business owners, doctors, dentists, directors, officers, lawyers, tax practitioners, real estate brokers, financial planners, builders and developers.

  • Joint accounts


In many states, the creditor of one joint tenant to a bank account can seize the entire account balance to satisfy a debt. The theory is that since the debtor-joint tenant can take all the proceeds from the account, their creditor has similar rights.

  • Joint tax returns


The filing of a joint income tax return makes both parties jointly and severally liable for any subsequent tax deficiency.

  • Business failure

  • Unexpected medical bills and long-term catastrophic illness

  • Defective partnerships

  • Poorly operated corporations

  • Acting as an officer or director of a corporation

  • Employment taxes

  • Employee negligence

  • Breach of contract

  • Disputes with business partners

  • Automobile accidents

  • Libel and slander

  • Divorce


Source of Lawsuits

While the legal theories behind lawsuits grow increasingly more creative and outrageous, the following is a list of the more common sources of lawsuits:

  • Errors and omissions

  • Accidents and personal injury

  • Contractual disputes

  • Wrongful discharge of employees

  • Sexual harassment

  • Product liability

  • Spouses, children and pets

  • Employees and agents

  • Gender, racial and age discrimination

  • Personal guarantees

  • Business combinations and relationships

  • Neighbors

  • Environmental and toxic waste liability

  • Unpaid property, income, estate and gift taxes

  • Alimony

  • Child support

  • Marriage and living-together arrangements

  • Misrepresentations


Basic Protection Concepts

Asset protection has a variety of aspects. However, there are three basic protection concepts:

  • Insurance: Insurance achieves asset protection by sharing risk with other parties and risk management. However, coverage and availability vary and one must be sure that policies purchased cover the risks that you wish to protect yourself against.

  • Asset placement: Involves gifts and transfers to other persons and entities. Gifts can be made to spouses, family members and charities. Legal entities such as corporations and trusts can be used to hold title to assets or operate a business. Such entities are often stacked or tiered creating a layering effect. In some cases, assets are even transferred outside the United States.

  • Statutory protections: The federal government and the states provided a number of statutory protections. Certain assets are exempt from creditors both in and out of bankruptcy. Homesteads are available in most states. Retirement plans are frequently exempt from attachment by creditors, though this is not guaranteed for the future.


Types of Creditors

In understanding asset protection and fraudulent transfers, creditors can be divided into three basic categories:

  • Current creditors

  • Future (sometimes known as later or subsequent) creditors

  • Future potential creditors


Asset Protection Goals

Of course, the primary goal of asset protection is to legally shield assets from the reach of creditors. However, this primary goal can have a number of component objectives, including the ability to:

  • Minimize risk of loss

  • Create artificial poverty

  • Establish asset anonymity

  • Prevent future lawsuits

  • Create incentives for dispute settlement

  • Make work for any opponent

  • Increase litigation odds in your favor

  • Protect your economic and social lifestyle

  • Maintain planning flexibility

  • Preserve financial security

  • Secure privacy

  • Keep peace of mind


Asset protection planning requires compromises and trade-offs. The more control one has over an asset the greater the risk of a creditor obtaining it. Many people are uncomfortable giving up any significant degree of control. A balance between control and safety must be structured.

Tax and financial planning are also part of asset protection. An asset protection plan may increase your tax and reporting burden. Many entities require additional accounting fees, legal costs, forms and returns. Liquidity and return on investment may also be affected.

Company Administration

We can incorporate and manage companies for clients, anywhere in the world. This not only includes jurisdictions where we have our own office, but also in such places such as the BVI, Belize and the Seychelles. We provide incorporation services in all major international financial centers including the Bahamas, Cayman Islands, Liechtenstein, Luxembourg, Netherland Antilles, Panama, Switzerland, and more.

In providing these services, we can furnish directors and officers and manage the day-to-day affairs of the company consistent with the policies of the owner. We maintain the books of account and prepare annual financial statements. We provide this service for a variety of business activities such as:

  • Holding Companies

  • Security and Commodity Trading

  • Real Estate

  • Insurance Operations

  • Offshore Bank and Trust Operations and Services

  • Shipping Companies

  • Invoicing and Re-invoicing

  • Import/Export Trading

  • Consulting Companies

  • Royalty and Patent Operations

  • Offshore Mutual Funds and Unit Trusts


Certain of our correspondents can also supply a lesser service limited to providing and maintaining the registered office only, where the clients themselves provide directors and officers and maintain the books of account.

Personal Asset Protection

Estate planning and asset protection are procedures for structuring wealth. "Structuring" is the term used in the industry to mean the process of placing a legal barrier between one’s wealth and those who would try to seize it. Wealth does not specifically refer to great sums, indeed it can mean whatever a person has worked for or earned. That is to say, estate planning and asset protection, contrary to popular belief, are not reserved for the most affluent. Rather, they are becoming popular among those of modest means. The assets which people typically seek most to protect are cash, securities and homes.

Estate planning can be described as an exercise to ensure that the disbursement of one’s assets post-mortem is accomplished quickly and easily, with a minimum of dispute and difficulty. This encompasses not only to whom and under what circumstances the assets shall be disbursed, but also attempts to make the movement efficient. Further, estate planning affords individuals the opportunity to structure their assets in a manner which is advantageous from a tax standpoint. Common estate planning tools may include wills, trusts and family limited partnerships.

Asset protection is a related pursuit which involves structuring an estate for one’s benefit while living. The structuring involves the re-organization of estate assets so that they are protected from seizure. To provide a rudimentary description of how this is accomplished, personal asset protection is achieved by establishing entities such as Trusts or Partnerships to hold one’s assets. Held through these kinds of entities, assets enjoy a greater degree of protection under the law because the individual has divested himself of some interests in, or control of, the property in question. Creditors and litigants cannot so easily attack assets which are not held by an individual personally.

Domestic estate planning and asset protection are limited in their effectiveness in that citizens of a jurisdiction may only enjoy those alternatives permitted to them by the law of that jurisdiction. Where a government is not friendly toward such activity there is generally little a person can do. For example, estate taxes are designed to prevent accrual of family wealth over generations. It follows logically, therefore, that the government which is opposed to generational wealth accrual, would not create legal methods to avoid estate taxes. That is, there will simply not be effective means for families to pass on their wealth in a jurisdiction which is so opposed to wealth accrual.

Therefore the most effective way in which to structure an estate or protect assets, is to take such activities to another jurisdiction which provides greater flexibility and protection. When your assets are structured properly in another country, those assets become subject to the laws of that country—not to the laws of the country in which you reside. When estate planning and asset protection are implemented in a tax haven, clients no longer have to rely on the minimal protection offered by a less than generous government. Tax haven jurisdictions enact legislation specifically to serve individuals from nations where it is difficult, if not impossible, to safely earn, accrue and pass wealth. Properly structured, it is impossible for authorities from another country to seize assets which have been secured in a tax haven jurisdiction.

Such offshore estate planning should be done with the aid of competent, experienced professionals, as there are many misconceptions and great misinformation on the subject of offshore. Accomplished properly, all of your goals may be realized, but poor implementation can render useless all of your time, energy and expense invested in becoming structured offshore. At The OffshoreSimple.com Organization, our team of professionals can assist you with your estate planning and asset protection in a manner which will offer absolute protection and the strictest confidentiality in a jurisdiction which welcomes the opportunity to protect foreigners seeking the protection of a tax haven.

Offshore Retirement Plans

In addition to the array of asset protection services we provide, OffshoreSimple.com can also help you establish a wealth base for your retirement years. We assist clients in the establishment of new retirement accounts as well as in the structuring of existing retirement accounts. We can help you open a retirement account offshore which will function to your great benefit, as well as to that of your beneficiaries, because its funds will grow in a tax exempt jurisdiction. Further, we have strategies to move existing domestic retirement plans offshore. If you have a Rollover IRA, we can show you how those funds may be moved offshore legally, where they may be invested internationally with greater flexibility. If you are interested in establishing a retirement account, or in moving an existing pension plan, please Contact us .

Commercial Asset Protection

Operating businesses face the same kinds of threats and tax liability as individuals. Therefore, commercial activities require the same kind of treatment that an individual does in order to protect against lawsuits or to minimize tax liability. Contrary to what many may think, protecting a business may be done not only quickly, but inexpensively.

We can provide protection to your business and minimize its tax liability by structuring your business activities offshore. In many instances this will require no substantial change in the daily operations of your business and will in fact be a natural expansion of your business activities. The re-structure will be legal. You will never be placed in a position of having to conceal your activities or your offshore business relationships.

From a liability perspective, we can help you re-organize your business in a manner which will protect you from frivolous lawsuits. Just as important, we can accomplish this without stripping you of all responsibility and control of the business. You may continue to operate your business and enjoy its success, but with significantly less concern about lawsuits.

Tax planning for your business often involves forming relationships with foreign service providers. We can assist you in locating the international corporations which are best suited to serve you and your particular business interests. Tax planning may also involve re-directing purchases through a tax-lenient jurisdiction. In this re-invoicing scenario, rather than have the principal business purchase goods from outside its jurisdiction and sell them within its own country, a third party corporation from a tax haven jurisdiction is inserted. In this way, the entity in the tax haven realizes most of the profits and the principal business is spared some tax liability.

At the OffshoreSimple.com Organization we have helped clients structure their businesses offshore, whether they are corporations, partnerships, sole proprietorships or limited liability companies. We are prepared to custom structure your business activities offshore.

Estate Planning

The OffshoreSimple.com Organization offers a complete set of services in the area of Estate Planning.

Please Contact us for More Information.

 


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Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.


Please go to our Uses of offshore Companies Page where you will find interesting information on the benefits of using offshore companies and trusts for business and personal use, links to information on other locations and details of our products and services.

 

 

 

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