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
High-risk professions include business owners, doctors, dentists, directors,
officers, lawyers, tax practitioners, real estate brokers, financial planners,
builders and developers.
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.
The filing of a joint income tax return makes both parties jointly and severally
liable for any subsequent tax deficiency.
Unexpected medical bills and long-term catastrophic illness
Poorly operated corporations
Acting as an officer or director of a corporation
Breach of contract
Disputes with business partners
Libel and slander
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
Errors and omissions
Accidents and personal injury
Wrongful discharge of employees
Spouses, children and pets
Employees and agents
Gender, racial and age discrimination
Business combinations and relationships
Environmental and toxic waste liability
Unpaid property, income, estate and gift taxes
Marriage and living-together arrangements
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:
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
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.
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:
Security and Commodity Trading
Offshore Bank and Trust Operations and Services
Invoicing and Re-invoicing
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
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
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
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.
The OffshoreSimple.com Organization offers a complete set of
services in the area of Estate Planning.
Contact us for More Information.
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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.