Asset protection is a pretty hotly discussed topic of late because it provides you with a playbook of legal techniques to protect both your assets and business entities from creditor claims.
The Perils of Civil Litigation, Cons, Trolls, and Plain Thievery
Let’s face it – when you have a lot of money, everyone wants a piece of the pie. Even Uncle Sam is licking his chops every April 15th.
And the threats can come from unexpected quarters.
So, why get blindsided and take on more liability than you have to?
For instance, you might face civil litigation at some point and a bogus negligence claim. If the jury doesn’t rule in your favor, they could award the plaintiff with an obscenely generous amount of money even though you didn’t go anything wrong.
Jury awards are admittedly an inexact science. You could face millions in liability and damages, and the normal laws of justice and fairness seem entirely suspended in some of these cases.
There’s a concept called “anchoring” in jury awards where the plaintiff’s lawyer will spitball an unbelievably high amount… and that becomes the new “anchor” for what you have to pay. If that sounds crazy, that’s because it is!
Asset protection also safeguards your hard-earned assets from frivolous cases intended to bring you to your knees, if only from the headache and paperwork of it all, and force a settlement.
There’s a whole cottage industry of patent trolls where shady companies game the patent and trademark system to essentially shakedown established companies (extortion in all but name) with the threat of unending litigation. Sad but true.
Sometimes the schemes aren’t as elaborate. Cyber thieves and con artists can imperil a substantial amount of your wealth.
Simply having a good deal of wealth can garner you the wrong kind of attention and attract all kinds of parasites: All the more reason to embrace asset protection planning, especially the kind that includes an offshore structure like a limited liability company and potentially an offshore trust as well.
If you do create a trust or foundation, you should really consider storing physical gold outside the banking system to mitigate the liabilities inherent in the event of frivolous suits etc. and the banking system and issuer risk while hedging against inflation with a safe haven asset.
Your Retirement Assets Should be Safe. For Everything Else You Need Offshore Asset Protection!
Asset protection, which frequently goes by the shorthand “debtor-creditor law,” insulates most of your valuable assets from the clutches of creditors without putting you at risk of tax evasion, concealment, or any kind of bankruptcy fraud.
In fact, asset protection is a perfectly legal and even recommend way for well-off people to protect their assets.
That said, you shouldn’t have to lose sleep over creditors seizing your retirement plan(s) and leaving you totally destitute: The Employee Retirement Income Security Act protects your retirement savings from creditors.
Aside from retirement protection, a lot of wealthier people want to know if offshore asset protection is actually some kind of fraudulent transfer that will prove problematic.
The answer is a categorical “no” when asset protection is done correctly. The 1984 Uniform Fraudulent Transfer Act is the gold standard for this kind of thing, and asset protection is not therein considered a fraudulent transfer.
Creating an Offshore Trust in Panama
An offshore trust is a trust that you can create in a foreign yet extremely stable jurisdiction like Panama to easily realize amazing tax benefits (estate, income, and gifts) for yourself and your heirs.
How It Works
An offshore trust works like a traditional trust where you have three parties: the settler who transfers your assets, the trustee who manages the trust, and you the beneficiary.
Foreign trusts can provide tax advantages, privacy, and essentially impregnable defense against annoying creditors, unwarranted jury awards, and unique asset protection advantages compared to U.S. law.
A foreign trust can be created in one day and in many jurisdictions profoundly protects your confidentiality.
In Panama, disclosing the name of a trust’s beneficiary in the absence of a court order can come with a penalty of six months in prison. The time fits the crime.
The trustee in an offshore trust can also act as a backup quarterback, if you will, in terms of making routine, or even emergency, discretionary distributions.
Alternatively, you as the beneficiary can tell the trustee to withhold all payments for a specified period of time until the storm passes.
With offshore asset protection you truly shield your money against fraud, cons, and civil judgments (sometimes not all that different from each other) since a court in the United States wouldn’t have jurisdiction with an offshore trustee in a place like Panama.
The ultimate and safest hedge and diversification strategy is storing physical gold in an offshore trust: It’s rock-solid protection against civil judgments and financial instability.