Who might benefit from an offshore investment or asset protection plan?
- Anyone with a moderately substantial net worth can benefit from offshore asset protection. This economic management approach will be of particular interest to individuals working in professions where there is a high risk of litigation, for example doctors, clinics, health care workers, psychiatrists and psychologists, attorneys, business owners, and/or financial planners.
- It is becoming increasingly apparent that many lawsuits are initiated where the defendant is sued not because of culpability or blameworthiness in the case, but because of the defendant’s ability to produce compensation if a judgment is found in a civil court. By this logic, any individual with a high net worth should take time to structure an asset protection plan and strongly consider offshore investment for some or all of their asset protection needs.
What is Asset Protection?
- Asset protection is a strategy of structuring wealth so that the risks of losing the wealth are decreased. The specifics of an asset protection plan should be tailored to your individual situation.
- Most of the time, an asset protection plan is most effective if it has multiple layers, or if the assets are hidden is such a way that the time , cost or effort for creditors to obtain access to the assets is larger than the amount of the assets themselves.
When is the right time to design and implement an asset protection plan?
- Whenever you think that the taxes in your country will increase, it might be a good idea to make your investment portfolio even more diverse. Asset protection is NOT tax evasion, however, there are many jurisdictions where your assets will realize substantially low or no taxes. Always perform due diligence and consult with professionals to make sure you are not breaking any laws.
- If you are at risk of being sued, you may want to consider implementing an asset protection plan. Oftentimes once the lawsuit begins, it is too late.
- Whenever you want increased diversity and protection for your funds.
Where is the proper location for an asset protection plan?
- The location of your asset protection plan depends on many factors. It is sometimes easier and more cost effective to set up a plan in your home country. On the other hand, and international asset protection plan can utilize laws and protections (particularly in ‘offshore’ jurisdictions) that might not be found in your country.
- There are many jurisdictions that are considered offshore, and each can have distinct advantages and disadvantages. You should perform due diligence on what type of entity you are trying to set up, and explore the history of successful cases where creditors were able to reclaim funds from that entity.
How does one design and implement an asset protection plan?
- How you structure your asset plan and how you put it into implementation is an issue best discussed with a professional. It may be as easy as setting up an LLC, or you may need an international asset protection plan with multiple layers and safeguards.
- One of the more popular international strategies is to use a Cook Island Irust and an IBC based in Nevis. It is important to note that no situation is the same, and you should consult with a professional to make sure that your assets are correctly structured so that the maximum level of protection is provided.
Why is protecting my assets so important?
- If you live in the USA, you live in a litigious society. It has been estimated that if you live fulltime in the United States, regardless of your job,your chances of being sued is 1 in 4. There are over 1 million lawyers in America. If you are being sued, lawyers are working day and night to discover what you own, how much you own, and how easy it would be for them to acquire through suit. Throw in the fact that many of these lawyers work with no retainer but can received 50% of recovered assets if successful, and you can see why it’s important to keep your assets protected.
- No matter what your job or occupation might be, you are still at risk for being sued for something. Lets say you throw a Superbowl party at your house, and a person who was attending drove drunk that night and killed the father of an infant child. You could now be liable for 18 years of that child’s education, clothing, food, etc. If you drive a car, if you own property, if your job includes the care of others, if you own a company that manufactures good or provides services you could be sued for something at some point.
- You may be thinking, “I already have insurance.” Insurance is a great start but you may want to explore how well you are actually covered.When’s the last time you read the small print on your insurance policy?
- If you have a business, it would most likely serve your best interests to have it registered as a corporation. If you own property (other than your primary residence) then you will want to have it in an LLC. You most likely don’t want to have your primary residence in a LLC because in most states you are protected under the Homestead Exemption.
- The homestead exemption is an important facet to address at this point. The homestead exemption basically means that if you get sued, creditors will not be able to take your home (sometimes up to a certain value) consult with a lawyer or check with state statutes to see what the protection is like where you live.
- If you run your own business you may want to set up a corporate entity such as an LLC, LLP or C -Corporation so that there is a corporate veil between your personal assets and liability and your businesses’ assets and liability. In almost every instance in the US, whenever you start a business it will be classified and taxed as a sole proprietorship unless you register as something else. A sole proprietorship is easy to maintain, but it is dangerous because legally there is no distinction between you and your business. Whereas, if you take the time and money to set up a corporation, you effectively distance your personal liability from the actions of your corporation.
