Does it Work?
Asset Protection Planning has found its home in today’s legal society after years of development. So far this area of practice has created a permanent footprint and is here to stay. The American Bar Association has an Asset Protection Subcommittee. Asset protection legislation has spread to over 20 countries and 4 of our states. Yes, Asset Protection and Estate Planning is here to stay. Wealth Planning Professionals and Estate Planning Attorney now agree that in today’s world, Asset Protection concepts, tools and knowledge is a necessary component to providing professional services in the area of planning.
Estate Planning and Asset Protection are coming together, which they should. Planning the wealth preservation for the lifetime, or thereafter, for individuals. Most of Estate Planning was performed to handle an individual’s wealth at the time of death. Taxation, probate and the transferring property were the key issues that were planned for. This evolution has resulted in the Estate and Asset Protection Planning arena to find their relationship and where we are now is that a practice called Integrated Estate Planning has formed. This is the union between Asset Protection and Estate Planning, with a focus on Asset Protection.
There are examples of “asset protection plans” that have failed, poor strategy, design and implementation of the tools and concepts, which have lead to some areas of practice looking down at Asset Protection. A properly structured and implemented asset protection plan will deliver a much more favorable result, than without, should you need to protect your assets. There are many factors that contribute to various outcomes in these cases, such as; an individual’s net worth, the assets being encompassed in the plan, the timing of the transfer of assets, and asset protection plan’s quality. The type of asset protection tools, legal structures and the skill in which they are used to defend one’s assets all come into play.
Definition of Asset Protection Planning
Organizing an individual’s wealth in advance to safeguard against risks that they may be subject to. Asset Protection planning can be used to protect any kind of asset. Planning for the protection of one’s wealth is not a new concept by any means. Asset protection plans are based on implementing concepts and organizing assets prior to any risk. In today’s legal arena, litigation is the primary risk to one’s accumulated wealth. Asset protection planning, puts a defensive layer between a litigious legal opponent and assets, before there is a need. Simply participating in a lawsuit is a form of defeat, the goal is to deter legal action. If the plan fails to deter litigation, the next layer should provide incentive for a quick and very small settlement. This is an initiative that gives the client the ability to level the playing field while affording them the position to be flexible and play the legal game and ultimately, win the game.
There is no silver bullet in Asset Protection. There is no universal method or plan that can be used to protect every case. This means that your Asset Protection Planner needs to be well versed in the legal tools and concepts and when and how they are used to create a well designed and implemented Asset Protection Plan that you are comfortable with. This means that understanding the entire spectrum of protecting assets from giving a gift to offshore asset protection trusts and when each is necessary. The strengths, weaknesses, benefits and affects of each asset protection vehicle needs to be clear when choosing components of a solid plan.
The true test of asset protection planning is when a legal storm arrises and with the absence of a plan, even the slightest of measures, the outcome is greatly changed in favor of the client.