EXECUTIVES & OWNERS - PROTECT YOUR ASSETS:
Techniques to protect assets from director and officer lawsuits and other liabilities

     Lawsuits are out of control in today's world. Lawyers are advertising and educating the public to sue and "get what they deserve", which to a lawyer means everything they can get from the defendant. You, as a defendant are at a disadvantage because you have to pay your own defense while the plaintiff does not pay one dime. The lawyer gets paid on a percent basis, usually 30 - 40 percent of the award.

     Aside from carrying liability insurance, the best defense is to get assets out of your name or your spouse's name. It is the owner who risks their assets. If you own a lot of assets in your name, lawsuit attorneys call you a "deep pocket" and that is who they are looking for to collect their fee.

     Doctors learned this important strategy years ago in California when they could not get malpractice insurance. All the insurers had pulled out of California and the doctors were fully at risk. Financial advisors and attorneys taught the doctors how to "go bare" and not own assets. This principle applies today because of all the lawyers advertising and teaching people to sue. Lawsuits are now called the new "lottery" and those of us with assets could become a victim of this trend. Once a lawsuit has been initiated in court, the statute of frauds can apply and it may be too late to do anything. Establishing an asset protection plan now can give you peace of mind for the rest of your life. It is well worth the effort and cost to restructure the way you own assets or control assets. Doctors, directors, officers and business owners should consider setting up an asset protection plan. Then ask for four free 25 page booklet on asset protection (click here).

     Most legal, tax and financial advisors have not addressed asset protection strategies with their clients. Jay Mitton, J.D. an asset protection attorney has been on national television programs and radio stations telling the nation that we should all consider asset protection strategies. Even some broker dealers are telling their representatives about the need to encourage asset protection and privacy planning. Nevada consulting companies have been established to help wealthy people protect assets from liabilities. It is the writers opinion that anyone with wealth, whether they have a large amount of stock options, own a farm, own a business or have a large amount of investments, asset protection is an important part of the estate and business planning.

     Some of the tools often used to protect assets are to have separate living trusts for each spouse, family limited partnerships, Charitable Remainder Trusts (CRTs) or other similar trusts, S Corporation, Limited Liability Company, Business Trust, Family Foundation, Nevada limited partnership and living trust, generation skipping strategies or even international planning. There are legitimate and legal opportunities for the wealthy regarding international planning, especially when you have non-US family members living in another country. For example, John Templeton, founder of the Templeton funds, expatriated and lives in the Bahamas. If we assume his estate is worth $100 million dollars, he has saved over $55 million dollars for his heirs by avoiding all federal and state estate or inheritance taxes. International planning becomes a consideration when the family wealth rises above $10 million in assets. Keep in mind that you do not need all your eggs in one basket as you structure your complete asset protection plan. You will normally use several strategies to keep "Uncle Sam'' and lawyers out of your pocket. You don't always need to buy large insurance policies to avoid your estate tax problems because other planning strategies will avoid the tax liability and give you other benefits such as complete privacy, reduce income taxes and protect assets from lawsuits and other liabilities. You can often accomplish more than just estate tax reduction for less cost using legal entities in the state where you live.

     There are many ways to protect your hard earned assets and the tools you use is up to you. The first thing you need to do is to understand all the tools available by taking advantage of a no cost consultation (click here). Some of these asset protection tools will also avoid or defer 100 percent of the capital gains upon the sale of an appreciated asset. Other strategies can immediately eliminate estate taxes for large estates. Certain strategies can even restructure income to reduce income taxes using income-splitting strategies with family members. When Ms. Jacqueline Kennedy died, her "public" estate was estimated at $20 million dollars. Her "public" estate was auctioned off to pay the $5 million plus in estate taxes. Sources estimated her exempt "private" estate to be well over $200,000,000! In fact, when the young Kennedy son died recently during a skiing accident, he was operating a Kennedy foundation as his career. It isn't difficult to figure why the estate was structured using business trusts and foundations. The foundation is a non-exempt foundation that contributes five percent (5%) of its net income to 501 ( c ) (3) charities and allows the family wealth to continue growing so long as they can earn more than five percent (5%) on the foundation investments. The family, as trustees, continue to run the foundation, draw big salaries that are usual and customary for foundation trustees and later generations are trained to do the same. This is all done with tax free money because the more foundations finance the social needs of America, the less government has to finance social costs.

     It is also important to realize that the wealthy families have made certain the law and tax code protects them. There is nothing illegal or sinister about what they do.

     Wealthy families have paved the way to help you also protect your estate under the same laws they use for their families. These wealthy families have the clout to help make the laws. The problem with getting help to review all the alternatives discussed in this article is that most attorneys, CPAs and financial advisors are not familiar with all these tools. Until recently most of the more sophisticated planning tools were for the very rich and were kept in the private halls of large law firms in the major US cities. For the past 30-plus years the author of this article has learned how to get the right kind of advice on these sophisticated matters. Many advisors will use scare tactics to keep people from learning more in order to retain their client. They fear they will lose you as a client if you work with another expert. Sometimes they put on a front using "fear tactics" to cover the fact that they do not really know anything about the subject. It is only the specialist who specializes in these techniques who really know how to use these sophisticated strategies.

     This information has been educational and no advice is intended. We take the issue of helping people protect their assets seriously and in no way can we give or imply any advice on such an important topic. The area of asset protection requires the services of several advisors. If you want free reading information on any of these topics, you may contact the ICA for information (click here). There is no cost or obligation. If you want a free consultation by one of our volunteer advisors you may make your request by contacting ICA. Since this type of planning requires specialists, any implementation you would wish to make could involve an experienced attorney, CPA, and may require the services of more than one advisor. We simply assist you in learning as a participating employee of this educational service. Should you wish to receive a free EAFP consultation, the volunteer advisor would help refer you to the right professional should you wish to implement any of the asset protection alternatives.

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