Like the right clothing for the right occasion, good asset protection planning typically consists of different recommendations for different clients, depending on their particular circumstances – one size definitely does not fit all. An asset protection plan might involve an offshore trust or entity, or a domestic trust in another U.S. state. It might involve an LLC or other business structures, or even a post-marital agreement.
We consider all of these options, as well as all of the ethical issues associated with asset protection planning. We guide each client through the process of ensuring there is no fraudulent transfer, selecting the best jurisdiction for the plan, and avoiding unwanted tax consequences. We also consider control issues, retention of benefits where feasible, and consideration of existing or projected family plans.
To develop such a plan, we conduct a thorough review of a client’s existing financial and personal circumstances to assess and comment on the client’s exposure and vulnerability to potential creditors. We then develop, recommend, and help implement an asset protection plan, domestic, international, or both, being careful to coordinate the same with the client’s estate plan. We maintain high ethical practices in all our asset protection engagements, including a careful due diligence process to prevent any fraudulent transfers.
- Offshore Trusts and Protective Structures – Many international jurisdictions cater to asset protection clients by offering unique trust laws, non-charitable private foundations, and business structures that all limit the access of future creditors. Over a long period of practice in this area, our firm has developed a strong knowledge of the pros and cons of various jurisdictions. We have formed key relationships with fiduciaries in several countries. Additionally, we offer creative planning to balance all of a client’s goals, including maximum protection, income and transfer tax planning, ease of administration, ongoing local asset management or foreign asset management, and family involvement.
- Domestic Asset Protection Trusts – For clients who prefer to form an asset protection trust in the U.S., many states offer protective trust laws. Although it is generally agreed that offshore plans offer stronger protection, a domestic asset protection trust can provide cost-effective peace of mind. We conduct a thorough review of a client’s existing financial and personal circumstances to assess and comment on the client’s exposure and vulnerability to potential creditors. We then develop, recommend, and implement a plan, being careful to coordinate the same with the client’s estate plan.
- LLCs and Business Structures – In addition to advising private clients regarding asset protection, we advise business owners and businesses regarding their risks and planning opportunities. We advise individuals and business owners on the effective use of limited liability companies to separate certain assets or groups of assets from other, riskier assets. Also, we advise businesses on ownership structures and reinvestment strategies to limit the company’s exposure to future creditors.
- Post-Marital Agreements – One often overlooked asset protection tool is a postnuptial agreement. These agreements were recently recognized by the highest court in Massachusetts. Like a prenuptial agreement, a post-marital agreement can also be used to protect a spouse’s inheritance. Additionally, although there is little law on this issue, we believe these agreements can be used to transfer property to a spouse, and the transfer may remove such property from the reach of third party creditors of the transferor. This can be a useful tool in a situation where one spouse has a job that has a high risk of creditor liability (such as an entrepreneur, doctor, or attorney). If asset protection is a goal for you and your spouse, we will work with you to determine whether this tool is a viable option.