Frequently Asked Questions
Q. What does "protecting assets" actually mean?
A. "Protecting assets" means protecting assets from creditors and lawsuits. It's a simple matter of being responsible for your wealth. The alternative is to take the very real risk that a careless business decision or a traffic accident or someone filing a lawsuit against you for no valid reason will deprive you and your family of all the money you've spent a lifetime saving.
Q. Why should I fear a lawsuit?
A. American society has become a litigious one, a popular way not only for the people who file suits to become wealthy, but for their attorneys as well. Remember, lawyers work on a contingency whereby they collect one-third to one-half of the assets they get for their clients. This is a HUGE incentive for a lawyer to work very hard to get as much of YOUR money as possible in a lawsuit. Many wealthy individuals rank the fear of lawsuit as one of their biggest financial concerns.
Q. How does an individual, partnership, PA or corporation legally avoid this problem?
A. Through appropriate, knowledgeable asset protection planning which can effectively protect your assets from creditors and potential lawsuits.
Q. What is meant by appropriate asset protection planning?
A. Appropriate asset protection planning is the use of practical and sophisticated business and estate planning to place YOUR assets safely and securely out of the reach of others.
Q. Isn't this the same as hiding assets? Does it involve fraudulent secret bank accounts?
A. Absolutely NOT. It is a legitimate system of proven planning techniques that works completely within the law.
Q. Why don't I simply hide my assets in a Swiss bank account? Wouldn’t that protect me?
A. No! Wrong! Investing funds in any foreign account is not guranteed to be a worthwhile investment. Any asset protection plan that serves to hide assets or is dependent upon secrecy of any sort is not going to work. For one thing, it is illegal. All US taxpayers MUST report everything that he or she has a financial interest in, including but not limited to signature authority and foreign accounts. When you meet this requirement, a litigator can and will most likely obtain this information. And, when judgment issued against you, the court can order you to bring all of those funds back into the US, making these assets available to satisfy the judgment. If you decide to keep these assets hidden, you will be violating the law.
Q. I gifted all of my assets to my spouse so I have nothing to worry about, right?
A. Wrong! This is a temporary fix and a poor one as well. First, you lose control over your assets. Second, your spouse can be sued and lose, putting all of your assets at risk. Also, think about what would happen if there are judgments against you that cannot be collected because you have no assets, and suddenly your spouse dies and the money in your spouse's name is left to you? Suddenly, all of those judgments can be collected and you have lost a significant part, if not all, of your assets overnight. At that point there is nothing you can do about it. In addition, if you gift it to a creditor who is already after you, the transfer can be set aside by a court, unless you lie, which is committing perjury, and making it a crime.
Q. I carry a huge multi-million dollar liability insurance policy, so I have nothing to worry about, right?
A. Wrong! None of the policies we know of will cover you for intentional wrongdoing or for punitive damages. Yet, both of these are common results of lawsuits. Further, you may be sued for far more than the limit of your policy; and insurance companies have been known to go out of business. While these policies will help and may be part of your planning, they should not be looked at as a complete solution when it comes to asset protection. In addition, if you have a properly executed asset protection technique in place, you may realize a large savings in insurance coverage. Often, this is enough to cover your cost of setting up an asset protection plan. Some clients have saved thousands or even tens of thousands per year in liability and malpractice insurance because they now need only the minimum liability insurance once our asset protection system in place.
Also, no insurance policy can protect you if you have personally guaranteed a business loan and the business fails. And, insurance doesn't protect you if you are accused of gross negligence or recklessness. Plus, it doesn't protect you beyond the maximum limits of your coverage.
Q. I have a living trust, so I have nothing to worry about, right?
A. Wrong! The revocable living trust, when properly structured, certainly is a necessary part of proper estate planning. It will result in avoiding probate for the assets transferred to it. This does NOT protect you from your creditors, however. If you lose a lawsuit the court can and likely WILL issue an order to revoke your trust in order to pay the creditor.
Q. My understanding is that, if I protect my assets, there is less of a chance that I will be sued in the first place. Is that true?
A. Absolutely! Many people mistakenly think that insurance is the best thing to protect them in a lawsuit. In fact, knowing that you have insurance coverage actually encourages people to file lawsuits against you, because it lets them know that you will be able to pay them lots of money if they win in court. On the other hand, proper protection of your assets usually prevents anyone from filing a lawsuit in the first place. When a lawyer examines your case and sees that the chances of collecting are slim, even if a judgment is awarded, the lawyer probably won't even accept the case. Collecting the judgment is the only way the lawyer can get paid. No collection equals no fee, which equals no case. Protecting your assets results in you being seen as a very unattractive defendant. Ironically, liability insurance can often be more expensive than the cost of protecting your assets. Protecting your assets can even permit you to reduce or eliminate your liability insurance coverage.
Q. What is involved in asset protection? Is it really cheaper and better than the alternative? If so, why doesn't everybody protect their assets?
A. Quite simply, most people just do not know how to go about protecting their assets. There are a number of methods of protecting assets from creditors and lawsuits. The simplest and most effective method is to establish an offshore trust. An offshore trust can be set up to work just like a checking account. When someone opens an offshore trust, naming themselves as beneficiary, the assets stay safely tucked inside a local United States bank and the beneficiary can conveniently write checks or make deposits for any amount at any time. However, the trust is subject to another country's laws. These laws make it virtually impossible to collect debts from the trust or successfully sue the beneficiary.
In order to attempt to get their hands on the assets protected by the trust, someone would have to hire a lawyer in the country in which the trust is established (where it is illegal for the lawyer to work on a contingency fee). They must then convince a court in that country that it has the authority to hear the case, even though the case involves conduct that occurred in the United States. Even if they somehow succeed and the case proceeds, the person who filed the lawsuit will still have to contend with a law which forbids the court from awarding any of the money in the trust. Because it is so difficult, if not impossible to get this money, very few people bother to try. Most will simply go after someone else instead and accept even the smallest settlement offer.
Generally, the only way an offshore trust can fail to protect assets is if the beneficiary waits until after someone is already going after the money to set up the trust. As long as the trust is set up well in advance of any such dispute, then the trust beneficiary's assets will be protected.
Q. Why would I want someone else controlling my money?
A. YOU are in full control of your money! YOU make the financial decisions, and YOU write the checks. You have absolute power to remove and replace trustees, without cause. You have total power to veto any action of the trustee. Nothing can happen without your signature.
Q. Are there any tax consequences of this arrangement?
A. Nothing changes. Your income, estate, and gift tax situation remain exactly as they were before.
Q. Can this ever be considered illegal?
A. No. As long as this is done in advance of any legal situation it is completely legal. Once creditors are after you, once a suit has been filed, it can be too late to protect your assets.
Q. Where will my assets be located?
A. The assets themselves can be anywhere. They can stay right where they are now, even in your local bank. It is only the trust itself that is domiciled in an offshore nation. It is very important to ensure that the country selected has a strong economic environment, along with favorable laws, modern means of communication, and a stable political arena. That is why a large percentage of our firm is designated to fully investigate all options and ensure our clients that the best location is always selected.
Q. I am currently being sued. Is it too late to protect my assets?
A. It is always best to plan in advance. The strongest protection can be afforded before creditors are on your heals. However, we have helped many clients after litigation has begun.
Q. How do I begin?
A. Call the law firm of Josh N. Bennett at 954-779-1661 to set up an appointment so that the best asset protection can be planned for your particular situation.
While Josh Bennett can provide protection from most future judgment creditors, no amount of asset planning can guarantee protection from all creditors under all circumstances. In particular, if a creditor has already obtained a judgment against you, or if you have been notified that you are about to be sued, then federal and state laws prohibiting fraudulent conveyance may be applicable. Additional present or future laws may apply to your asset planning as well, and you should therefore consult an experienced attorney. The information available from this web site is not a substitute for legal representation.