Okay, so if asset protection is so great, why do some attorneys tell you not to protect your assets? What are the asset protection pros and cons?
Don’t expect your attorney to jump up and down with excitement and tell you to set up an asset protection plan. He’ll be too worried about what the judge will think of him on the next 25 cases he brings before that judge. So, if you need asset protection, talk to somebody who specializes in asset protection from lawsuits.
In over three decades that our management has been in the asset protection business, we’ve trained our staff attorneys. Asset protection is not something they widely teach in law school. They don’t have a class called, “How To Keep Money Out of Attorney’s Pockets 101.” Now, we’re are the largest asset protection company in the country with tremendously experienced attorneys and consultants on staff. And that’s what most people want: someone experienced in the asset protection field.
Why You Need an Asset Protection Professional
After all, if you have a brain tumor who are you going to want to see? You’re going to see a brain surgeon; someone who specializes in neurology. You’re not going to want to go to someone who specializes in removing bunions from your feet. You want talk to someone who has experience taking the dang tumor out of your noggin. It’s the same with attorneys. Who do you want to hire for asset protection? That is, who do you want to help you protect your house, your cars, your bank account, your investments? Hey, this is your life savings we’re talking about here. You want to consult someone who specializes in asset protection, right?
Asset Protection Pros and Cons
On that note, let’s talk about the pros and cons of protecting your assets from lawsuits.
- You get to keep what you worked so hard for
- Peace of mind
- Protects you from having to file bankruptcy
- Divorce protection
- Can protect your inheritance from a lawsuit
- Maintains family wealth (for children, grandchildren) when you or a loved one dies
- Can help manage assets for children in the future
- A proper trust may permits you, your child or child’s spouse to qualify for public benefits without spending down inheritance
- A properly structured asset protection trust can help reduce estate taxes (A/B trust, for example)
- Asset protection cost
- Added complexity
- Possible need to file additional tax form(s)
- Strongest asset protection trusts use independent trustees. This may reduce control.
- Finally, when your opponent gets nothing, your opponent’s attorney will get “mad” at you.
We could go on and on and give a long list of asset protection pros and cons. But why? Ask yourself this. Can you can handle people being disappointed that they didn’t get your assets? That’s about the biggest downside that asset protection gives. When you protect your assets from lawsuits, YOU get to keep what you worked so hard to earn, not your opponent. You’ll be happy about it. But they won’t be happy about it.
For more “cons,” read below for the five most common reason some attorneys give for not protecting your assets.
5 Reasons Attorneys Give for NOT Protecting Your Assets
So, here are some of the reasons attorneys give for not protecting your assets.
1. He doesn’t understand asset protection.
Now, that would be from our experience about 99.5% of attorneys. As we said, they don’t typically teach asset protection in law school. In fact every attorney except for one who joined our staff, at first, had little clue how asset protection works and what to do. Management had to share my its 30+ years of experience. We teach them what we do and why what we do works. As a result, we now we have some of the top asset protection attorneys in the world right here on our staff. So, asking any old attorney about asset protection is as silly as asking your neighbor who just built a treehouse to build you a mansion or a skyscraper. Hire a specialist.
2. He’ll be worried about what the judge will think of him.
He’ll be far too worried about what the judge will think of him on the next 25 or so cases he brings before that judge. (She, if your attorney is a lady.) So, that’s not a concern about YOU. That’s concern about his own future career. After all, what if that attorney loses your case and you get a $5 million judgment? Your attorney is not going to whip out his checkbook and pay it for you. That’s going to be on YOU.
One attorney with our organization described it this way. The legal system feeds on taking money from the public…and feeding the legal machine. So, your money is what keeps the system going. So, what does taking your money away from you and putting it into the hands of your opponent’s attorney mean? It means that attorney keeps his job. Your attorney keeps his job. There are more cases, demand for more judges and job security for that judge. Thus, the system remains a well-oiled machine with all the insiders within their little system getting paid. We know we’re getting philosophical here…but that really is what goes on behind the curtain.
Two Expert Attorneys
That’s why you need to get real. You need to have one guy who specializes in fighting your case. And another guy who specializes in protecting you in the case the fist guy loses. You need an experienced asset protection attorney who doesn’t have to worry about seeing that same judge another 25 times. You need an asset protection professional.
So both are needed; someone to defend you and someone to protect your assets. Moreover, one should not cross over and start telling you not to do things that the specialist knows you need to do. Just our opinion from what we’ve personally observed in our management’s 30+ years of experience.
3. That the judge will get mad and “throw the book” at you.
We’ll first of all, the fact that you have a trust at all usually comes out in asset discovery. That is, it would typically come out during a debtor’s exam, after the person already has a judgment against you, not before. Even if it does, perchance, come out beforehand, it rarely has bearings on the merits of the case, itself. It should not typically affect whether you win or lose. Plus, we have found that you are 10 times more likely to have your opponent drop the case altogether if they know they’re not going to get anything.
Which brings us to #4…
4. The attorney is worried you won’t need him or her anymore.
If your assets are protected and your opponent drops the case…POOF. There goes your attorney’s paycheck. Income from you comes to a halt. Win or lose, your attorney only gets paid from YOU if the case keeps going. They say a good attorney can make a case drag on for a couple of years. A GREAT attorney can make it last even longer. They have to put food on the table just like you do. I mean think about it. Honestly. Do you honestly think that doesn’t happen where attorneys make cases drag on longer than they need to so they can keep getting paid? I mean honestly.
5. They talk about fraudulent conveyance or fraudulent transfer.
They talk about a fraudulent transfer, fraudulent conveyance  (same thing). It is now called a voidable transaction. This is when someone transfers or converts a non-exempt asset, such as cash, stock or real estate, with intent to delay or hinder collection by a creditor.
-The important thing to know that fraudulent conveyance is this is generally a civil remedy only. It is by and large not a crime. And as the largest asset protection company in the nation we have not heard of clients consistently going to jail for it.
Fraudulent Transfer, Like a “Barking Dog In a Cage”
So a client says, “But hey might accuse me of fraudulent transfer.” We say…”ok so???” And w can almost see the wheels turning. You see, fraudulent conveyance is almost like a barking dog in a cage. They wave their bony finger and say “fraudulent transfer.” Then when your assets are properly protect, there’s nothing they can do in most cases to back it up.
The creditor’s only remedy in most instances, and this has been established by many appellate decisions, is to undo or reverse the fraudulent transfer. This means that the debtor is in the same position he was before he made the transfer.
We’ve been in the asset protection business for over 30 years and we believe we are the largest asset protection company nationally. We have tens of thousands of clients and have must have done literally millions of pages of corporate and trust filings. And whereas a handful of states have added this to their criminal code, it typically deals with a very specific intent.
Domestic vs. Offshore Asset Protection and Fraudulent Conveyance
Because of fraudulent transfer laws, many domestic or US-based asset protection trusts do not tend to work very well. This is because a judge can easily undo the transfer. Whereas an offshore trust is outside of the local court’s jurisdiction. Thus, your local courts do not have the right to issue court orders to foreign trustees. (Our foreign trustee is our offshore law firm/group of attorneys.)
So, the term fraudulent conveyance sounds scarier than it really is. It is simply a civil matter not typically a criminal one. So, in our experience and opinion, it’s usually better to do it. We have seen in work better to make them fight for it, than it is to just roll over like a dead dog and leave the asset laying out in the open. Nothing said here is legal advice. This is just our opinion. Put up fight. Make them work harder to take your assets than you had to work to earn them in the first place.
Fraudulent Transfer Laws
Fraudulent transfer laws are statutory, meaning they are written in the law books. And our local fraudulent transfer laws to not provide for criminal remedies. They do not give the ability to assess additional damages or fees against the debtor.
Fraudulent Transfer Warnings
Now, there are certain drawbacks to attempting fraudulent conveyances that involve friends or family members. These people will often end up in fraudulent transfer lawsuits. So what a person ends up doing is dragging loved ones into their problems. That is, they pull people in who tried to help them by receiving their assets. Therefore, they get stuck with huge legal bills. That will not be a happy conversation on Thanksgiving day. So, don’t transfer to friends or loved ones. Don’t transfer to your spouse – dragging your wife into a lawsuit does not boost the romance. Instead, set up your own asset protection trust.
Asset Protection Pros and Cons Summary
So, those are the main asset protection pros and cons. Those are also the top 5 reasons why an attorney who does not specialize specifically in asset protection will tell you not to protect your assets from lawsuits. If you need help, please reach to to us at 1-954-400-1050 or fill out a free consultation form.