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Asset Protection

Asset Protection
“The most basic of all human needs is security”

Asset protection planning involves examining an individual’s position, and then determining and applying a lawful series of techniques to protect their assets, mainly from claims of future creditors, or even from a divorce settlement claim perhaps. The techniques generally make it as difficult as possible for future potential creditors to access, lay claim to or collect judgments against the protected person. Asset protection has been a part of estate planning for as long as the estate planning discipline has existed. Some of the assets which would typically come to mind when the concept of asset protection is discussed are, a person’s home, car, furniture, savings, investments and business.

Unfortunately, in this day and age of increased litigious action and behavior, where ‘no win no fee’ lawyers almost encourage the taking of legal action, anyone who has anything to protect – from their reputation to their wealth – needs to consider the real fact that at some point in the future, they could be the subject of a law suit.

There are people out there, who cleverly use our legal system to devise ways to find and seize your money and property, they are referred to as professional takers, they hunt down and corner people with unprotected assets.

If you want to engage in asset protection planning, you need to do so before you encounter any problems. For if you wait until you have problems, it will probably be too late. You can’t wait until you get the flu to be immunized!

When the subject of protection comes up, one of the first things that come to mind is insurance. Yes, having insurance is a great way of providing security, however, insurance, at its heart, has little to do with control and more to do with compensation after you have lost control.

Corporations have long been used as asset protection tools, however, “the corporate veil” alone may not be enough to keep your assets safe. Just as inheritance is “passed on”, so to can liability, sometimes referred to as “flow through liability”.

Historically, Trusts have been among the most regularly used and accepted asset protection tools when an individual wished to protect his assets from creditors. However, despite its many advantages, frequently we chose not to use a Trust, because we do not feel comfortable, giving the control over our assets to strangers (Trustees). A Private Foundation could serve as an excellent Asset Protection Tool, which effectively addresses the issue of giving control to third patty trustees. The Private Foundation offers ample opportunity to retain control, while obtaining all the Asset Protection benefits of a Trust.

Some of the issues to consider when preparing an Asset Protection Plan, might include:
1) the individual who requires protection;
2) to the assets needing protection;
3) to the jurisdiction (country) in which said individual resides and works;
4) where the assets are physically located;
5) who needs access to the assets; or
6) who perhaps derives an income from assets; and
7) where that income is received.

Because well-placed and structured Asset Protection plans usually take legal ownership of assets offshore, complexity is introduced by the very fact that one is dealing with the legal and regulatory systems in different jurisdictions (countries).

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