Pros And Cons Of Asset Protection

Pros And Cons Of Asset Protection

Asset protection is the concept of and strategies for guarding one’s wealth. Asset protection is a component of financial planning intended to protect one’s assets from creditor claims. Individuals and business entities use asset protection techniques to limit creditors’ access to certain valuable assets while operating within the bounds of debtor-creditor law. Asset protection helps insulate assets in a legal manner without engaging in the illegal practices of concealment (hiding of the assets), contempt, fraudulent transfer, tax evasion, or bankruptcy fraud. Experts advise that effective asset protection begins before a claim or liability occurs, since it is usually too late to initiate any worthwhile protection after the fact.

Some common methods for asset protection include asset protection trusts; accounts-receivable financing and family limited partnerships (FLP). If a debtor has few assets, bankruptcy may be considered the more favorable route compared to establishing a plan for asset protection. If significant assets are involved, however, proactive asset protection is typically advised. Certain assets, such as retirement plans, are exempt from creditors under United States federal bankruptcy and ERISA (Employee Retirement Income Security Act of 1974) laws. In addition, many states allow exemptions for a specified amount a home equity in a primary residence (homestead) and other personal property such as clothing. Each state in the United States has laws to protect owners of corporations, limited partnerships (LPs), and limited liability corporations (LLCs) from the entity’s liabilities.

Asset Protection and Real Estate

Jointly-held property under the coverage of tenants by entirety can work as a form of asset protection. Married couples who hold mutual interest in property under tenants by entirety share a claim to a whole piece of property and not subdivisions of it. The combined ownership of the property means that creditors who have liens and other claims against one spouse cannot attach the property for their debt reclamation efforts. If a creditor has claims against both spouses, the tenants by entirety stipulations would not protect the asset from being pursued by that creditor. Some attempts at asset protection include putting the property or financial resource in the name of a familiar member or other trusted associate. For example, an heir might be gifted ownership of real estate or other property while the actual owner continues to reside on the property or make use of it. This could complicate efforts to seize property as actual ownership must be determined. Financial accounts may also be domiciled in offshore banks in order to legally avoid paying taxes against those funds.

Here’s a list of pros and cons to assist in that effort:


• Bankruptcy protection
• Divorce protection
• Protects inheritance from lawsuit
• Keeps assets in the family (for grandchildren or other children) upon the death of a child
• Provides for management of assets for children who may need assistance
• Permits child or child’s spouse to qualify for public benefits without spending down inheritance
• Avoids taxation of inherited assets upon child’s death


• Cost of creating trust
• More complicated to have separate trust account
• Need to file annual tax return for trust
• Works only if child follows trust rules
• Stronger protection if trust uses independent trustee, which may entail loss of control and ongoing trustee fees

• Little benefit if child will quickly spend the inherited funds
Estate planning is a stressful thing. Nobody likes to consider their own mortality, and making end-of-life plans puts it in square focus. However, it’s important for everyone to arrange these plans so that your descendants and assets are cared for, even ensuring that your affairs are kept in order should you become unable to make certain decisions for yourself. One of the more popular ways to protect your assets, medical decisions and finances is by using a trust. A trust enables you to maintain a level of control over how your money is spent. There are, however, certain benefits and risks associated with this approach. Explore the various pros and cons of using trusts when it comes to estate planning, and how an estate planning attorney can help you make the right choice.

A trust is an asset pool held for the benefit of and use by a third party, or beneficiary. This beneficiary is doled out assets as controlled by a trustee. There are two basic kinds of trusts: those established in a will, or living trusts determined while you’re still alive. Trusts last until a certain set of predefined conditions are met. For example, you could design a trust for a young heir to become accessible when they reach 18 years old, at which point the trust ends and the inheritance transfers completely to them. As the creator of the trust, you are the settler. In the case of a living trust, you can also be the trustee.

Benefits of a Trust

There are several benefits to using a trust. The most important is that it tends to be more efficient than simply doling out assets in a will. It allows you specific means of allocating assets through using specific, controlled manners. It also helps to avoid estate taxes, and gives you control over how your beneficiary will receive your assets. In brief, a trust ensures a beneficiary won’t squander their inheritance. A trust can also be used in case you become incapable of making decisions for yourself. It can guarantee your medical care is covered, and your daily expenses and bills are paid. If needed, it can provide for someone to take over as caregiver. The drawback of a trust is that it can be more complex to set up than a will. Arranging a trust takes effort, funding and time. More notably, you can’t simply take a trust back after you establish it. You have to take particular steps to revoke a trust, and then you’ll have to redefine how the assets are distributed. A revocable trust can circumvent some of these problems, but this adds an additional layer of complication.

Working With a Trusts Attorney

If you’re considering creating a trust for your property, you’ll want the best possible advice. A qualified attorney can make sure you take the right steps and avoid critical mistakes, ensuring your assets are well protected and your heirs are well cared for.

Asset Protection in a Revocable Living Trust

Generally speaking, if asset protection is your goal, a revocable living trust is not the proper vehicle for your purposes. The settler, or person who creates the trust, essentially retains control and ownership of the trust’s assets, meaning they can remove assets from the trust or change the trust terms at any time, while the trust itself simply holds title to the assets. In the event a creditor wins a lawsuit against the settler, the court can order the payout of trust assets in settlement of the creditor’s claim. Although revocable trusts do not offer asset protection, they have other benefits when it comes to estate planning. For example, such trusts can be helpful in avoiding probate fees when the settler passes.

Asset Protection in an Irrevocable Trust

In order to properly protect your assets, you need an irrevocable trust. As its name suggests, once such a trust is created, you cannot revoke it yourself by changing its terms, nor do you have control over the trust’s assets. Instead, the trust’s assets are in the control of the trustee, or person assigned to manage the trust, and any changes or distributions are at the trustee’s discretion. If a creditor files a lawsuit against you, the assets in the trust will likely not be considered yours, so even if the creditor wins judgment against you, the chances are much better that the assets residing in the irrevocable trust will be protected.

Domestic Asset Protection Trust

There are two kinds of irrevocable trusts that work as asset protection vehicles: domestic asset protection trusts and foreign asset protection trusts. A domestic asset protection trust can be established within the U.S. in any of the states that provide legislation permitting the creation of such trusts. Not all states provide for asset protection trusts, so it’s important that you consult with an estate planning adviser or online service provider to determine which state, if any, is best to set up such a trust. However, as these trusts have become more common, more and more states have come to recognize the legal status of such trusts. Note that it is less costly to set up an asset protection trust in the U.S. than it is to create a foreign asset protection trust. Because these trusts are fairly new, the case law concerning their treatment is constantly evolving, which adds a level of uncertainty to their ability to properly protect assets. Most states have a limitation period during which assets transferred into such a trust remain vulnerable to creditors.

Foreign Asset Protection Trust

The foreign asset protection trust, also known as an offshore trust, provides more effective protection for your assets. Such trusts are established in jurisdictions outside of the U.S. which provide more stringent protection for trusts and their assets. Because your trust is in a foreign jurisdiction, it’s governed by the laws of that jurisdiction rather than by U.S. laws. Although they are usually more costly than their domestic counterparts, foreign asset protection trusts generally have more stringent privacy measures, making it harder for others to learn the trust terms and assets. Another benefit is that jurisdictions that promote themselves as offshore trust havens usually do not enforce U.S. judgments against assets of trusts formed in their jurisdiction.

In many cases, assets of a foreign asset protection trust are held in an offshore account. While this provides more protection from a U.S. court-ordered seizure of assets, it does expose the assets to potential economic and political risks associated with the jurisdiction in which the offshore account is held. Today many estate planning firms tout the benefits of Offshore Asset Protection Trusts as instant asset protection solution for every individual looking for the end-all, be-all. It feels to them like finding the last raft on a ship that has a pin-sized hole in it. Their first instinct is to throw out the raft and jump off the boat immediately. Unfortunately, things since 9/11 and the global financial crisis of 2008 have changed in this country. Prior to 9/11 we recommended offshore trusts for a much larger percentage of clients, but that is no longer the case.
Why an Offshore Asset Protection Trust is a Bad Idea for Most People
Because of the new regulations from the Patriot Act and subsequent banking acts, offshore asset protection trusts are very expensive to maintain. Going offshore to establish asset protection trusts means going out-of-pocket for between $5,000 to $10,000 per year in maintenance fees. Because of these expenses, many of these offshore trusts will only last about three to four years for the average individual, particularly if they were created in a rush to thwart a perceived upcoming risk; for this reason, grantors often question whether their hasty decision was indeed the right one at the time. There are quite a few mandatory and compliance forms to file when going offshore.

At a minimum, there’s Treasury Department form 90-22.1, Report of Foreign Bank and Financial Accounts to consider. There may also be a requirement to file a Foreign Bank Account Report (FBAR), which falls under the authority of the Financial Crimes Enforcement Network (FinCEN) form 114. Aside from filing TD and FinCEN forms, offshore trust grantors may also have to respond to the Internal Revenue Service (IRS) by filing forms 3250 and 3250A. These forms, which require disclosure of trust assets, are handled by a foreign trustee and a CPA based in the United States. As of December 31st, 2012, the U.S. Foreign Account Tax Compliance Act (FATCA) is creating an additional burden on offshore trust grantors and trustees by requiring financial institutions abroad to report on the financial holdings and income of their clients. With the new filing and compliance requirements also comes uncertainty as to how offshore trusts are managed. It calls for retaining the services of an attorney to work in conjunction with the foreign trustee. If you take into consideration all of the aforementioned factors, it is easy to see the $10,000 annual maintenance cost of an offshore trust.

Medicaid Asset Protection Trust

While one of the primary purposes of an asset protection trust is to protect the settlers’ assets from creditors’ claims, such a trust can also be used to help make you eligible for Medicaid by reducing the assets in your name. If you are planning to set up a trust for this purpose, it’s important to consult with an adviser with experience in this area, as not every trust can help you comply with Medicaid’s eligibility requirements. An asset protection trust can be a vital estate planning tool. Because it’s crucial for such a trust to be set up properly, consult with an adviser with expertise in asset protection matters.
Here are some of the ways the assets can be siphoned off:
• Failure to pay child support or alimony. The courts could order those payments withdrawn from the assets. Retroactive and future payments could “wipe out” the assets.
• Debts due to state and federal governments. That could take the form of taxes not paid or a fine that is imposed as part of a sentence in a civil legal action.
• Payment due those who have provided services to the beneficiary associated with the trust.
Factors to Consider When Opting For Asset Protection Trusts
Securing your assets through foreign asset protection trusts are a lot more useful and inexpensive than you possibly could imagine. However, potential settlers must cautiously assess different offshore trust jurisdictions and make sure that their interests will be given high priority. It is also important that they seek professional advice to ensure optimum benefits. Here are some of the things that one should bear in mind in choosing the right jurisdiction for an offshore trust.
• Make sure that a prospective jurisdiction does not give foreign judgments against the assets that are transferred to a valid or legal trust within its jurisdiction. However, the assets that come from criminal activities such as fraud should be duly exempted. It should also have foreign trust laws that are favorable to your specific needs.
• Political and economic stability is crucial in choosing the right jurisdiction. A country that is politically and economically unstable or underdeveloped can only provide weak asset security. Furthermore, it is often characterized by ineffective financial infrastructures that give you fewer credible banks, lawyers and trustees to choose from.
• It should allow the formation of irrevocable trusts which could give the settler the ability to keep the powers related to the ownership of the asset protection trusts and all of the properties involved therein.
• It is not advisable to invest your assets in non-sovereign nations. This is because they may be under another country’s jurisdiction that may not be beneficial to your interests.

Asset Protection Lawyer Free Consultation

When you need legal help with asset protection, trusts, wills, probate or other estate planning and administration issues, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Trusts or Special Power of Appointment

Trusts or Special Power of Appointment

Once a lawsuit is filed against you and a plaintiff’s attorney discovers the existence of a domestic trust, the outcome of the suit is left to a judge or jury.  Make no mistake about it, a special power of appointment cannot protect assets held in a domestic trust if a judge or jury decides to find an exception to the law or, worse, if the judge or jury decides to make an example of your situation.  Leaving your fate to the judgment of strangers is dangerous.  Deterring litigation and keeping control is a better

Offshore Asset Protection Puts You in Control

The main problem with relying solely on a special power of appointment is that assets held in trust and the trust itself are subject to the jurisdiction of the U.S. court system.  If a U.S. court decides to disregard a trust, the assets held by that trust are easily accessible.  That’s not where you want to find yourself.  Offshore asset protection removes both the trust and the assets held in trust from the reach of domestic judges.

Cook Islands Trust Law Deters Litigation

Consider an example from the Cook Islands. If Mr. Jones sets up a trust in the Cook Islands and is later sued, plaintiff’s attorneys are not likely to attack the trust for a number of reasons.  First, the only way to invalidate a trust in the Cook Islands is with a judgment from a Cook Islands’ court.  The Cook Islands will not recognize such a judgment from a U.S. court.  The only way for a plaintiff’s attorney to get such a judgment is to sue in the Cook Islands, which is incredibly expensive, since it requires plaintiff’s to front all the expenses of litigation and does not allow plaintiff’s attorneys to collect contingency fees.

In other words, attorneys attacking a trust in the Cook Islands have to either bill their clients by the hour or work for free (after fronting the cost of international litigation), both of which are expensive propositions.  Other benefits include a hard two year statute of limitations, which means that Cook Islands trust cannot be attacked after it is has been in existence for two years!

Special Power of Appoint Revisited

It is true, as we wrote previously, that a special power of appointment contained in a domestic trust provides some level of asset protection.  It does not, however, provide comprehensive asset protection.  A savvy plaintiff’s attorney will easily be able to discover the existence of such a trust, unless you are willing to lie under oath, which is never advisable.  In addition, plaintiffs lawyers have incentives to attack domestic trusts, which leaves the assets in such trusts subject to the whims of the U.S. legal system.

An offshore asset protection trust makes litigation very expensive and, therefore, deters lawsuits in the first place.  Even if an offshore trust is attacked, the laws in many foreign jurisdictions are stacked so in favor of asset protection that an adverse judgment is almost inconceivable.

Combining Forces Offshore & Power of Appointment

While an offshore trust provides the most comprehensive form of protection in itself, there is nothing to prevent you from seeking to combine that protection with a special power of appointment.  If you have questions about how to accomplish that goal, ask an asset protection attorney.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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Asset Protection or Bankruptcy

Asset protection planning is closely related to financial planning.  Both asset protection and wealth preservation strategies are about managing risk, which requires careful planning and appropriate asset allocations.

Asset Protection or Bankruptcy

Asset Protection Works like Premium Insurance

In the insurance industry, underwriters charge fees (“premiums”) to undertake risks.  Individuals and businesses pay those premiums in order to limit their exposure to financial losses.  In other words, premiums represent known, fixed costs that are paid in exchange for a release from future liabilities, the extent of which are unknown.  Traditionally, asset protection has worked in a similar way.  The transaction fees required to set up wealth preservation strategies and asset protection plans are fixed, up-front costs similar to insurance premiums.

In the aggregate, people are more likely to lose money due to poor financial planning–a lack of proper asset allocation, biased advisors, and a bad economy or poor investment choices–than they are to lose money in a lawsuit.  But each individual situation is unique, and some people are in riskier, more lawsuit prone businesses than others.  In the case of high net worth individuals with significant exposure to risk (e.g. physicians like OBGYNs), certain wealth preservation strategies (in addition to insurance) absolutely must be pursued.

Wealth Preservation Through Asset Management

The least expensive form of wealth preservation comes from shifting at-risk assets to exempt assets.  The only cost from such a reallocation of assets (other than transaction fees) is a possible reduction in liquidity.  As an example, one could sell a certain portion of their stock or bond portfolio and purchase a cash-value life insurance policy.  While stocks and bonds are highly vulnerable in a lawsuit by creditors, the cash value of life insurance is protected from the claims of creditors in many states.  The practice of economics is the shifting of assets from areas of low yield to areas of high yield.  Thus, if one can achieve her or his required rate of return via one of two investment vehicles, it makes economic sense to choose the less risky vehicle–the vehicle with less exposure to a suit by creditors.

Preservation of Assets

Where the goal is preservation of assets, timing is another consideration.  The structure of any asset protection plan should match the investments made within the plan.  It would make little sense to implement a wealth preservation strategy intended to last 30 years only to lose the principal in risky, short-term investments.  In the very near future, however, it may be possible to earn growth portfolio type gains while only taking wealth preservation risks.

Why Bankruptcy Doesn’t Always Work

If I lose my case, I’ll just file for bankruptcy.” We hear that statement often from scared doctors, dentists, orthodontists and other professionals, trying to fool themselves out of needing asset protection. Most of these doctors, unfortunately, don’t understand U.S. and state bankruptcy laws. Most believe that if a huge lawsuit comes their way, they can simply declare bankruptcy, have the judgment forgotten and continue their normal life.

Besides the damage to one’s credit and the rebuilding process that would ensue over the next seven years, there are many consequences originating from federal and state bankruptcy rules that govern a person’s lifestyle. For example, federal bankruptcy rules state that a married couple can have $34,850 in home equity after bankruptcy. Chances are, as a successful medical professional, you have more equity in your home than that. Be prepared to sell the house, give the profits to your debtors and move into an apartment. It may be easy to declare bankruptcy and avoid paying off a lawsuit debt, but we guarantee that it will be difficult having to change the lifestyle your family has become accustomed to.

The bankruptcy exemption rules are very specific about business “tools of the trade”. A successful doctor may have a thriving practice with a state-of-the-art office. But if that doctor declares bankruptcy, all the “tools of the trade” will be sold off to debtors except for $1,750 according to Federal laws. What type of doctor’s office can be run with just $1,750 in equipment?

Each state has their own bankruptcy exemptions and these take the place of federal exemptions where applicable. Lucky doctors in Utah get to keep their home after declaring bankruptcy no matter what the value.

Utah Bankruptcy exemptions and generally, Utah is very lenient compared to most states. For most successful professionals, declaring bankruptcy will drastically alter their lives.

After learning of these rules, most of our clients come to the understanding that it will be better for the happiness of their family to utilize asset protection to protect wealth instead of giving it up through bankruptcy. Before considering bankruptcy as an option, please consult with an attorney specialist in your state.

Free Consultation with a Lawyer in Utah

If you have a bankruptcy question, or need help with asset protection in Utah, call Ascent Law now at (801) 676-5506. Attorneys in our office have worked on thousands of cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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Asset Protection for Landlords

Asset Protection applies to anyone who has assets they really want to keep.  However, for some professions the attorneys consider it a bit more important than others.  Of course we would include the usual suspects like doctors and medical professionals, as well as builders and absolutely anyone with employees.  But there is another area in which it is becoming more and more important – Landlords.

Asset Protection for Landlords

Landlords Need Asset Protection

20 or 30 years ago, landlords weren’t particularly worried about lawsuits.  Sure they happened, but insurance was easy to get and was likely to cover almost anything that could happen.  Today the world is just a bit more complicated.  Here’s why:

  1. Claims availableto tenants have increased from just a few simple, obvious and insurable actions like breach of contract or a failure to follow State law in enclosing a pool, etc, to dozens of claims that would have been unimaginable to your parents.  These include harassment, slander, negligence, MOLD, emotional distress, discrimination, neglect and pain and suffering to name just a few.    Many of these are excluded from your insurance policy or simply uninsurable. (Try for yourself to search “Can I Sue my Landord” and see how many pages you get with “ideas”).
  2. Awards and judgmentsagainst landlords have gone from limited and predictable to unclear and wildly erratic.  I was able to find dozens of pages doing a quick net search dedicated to horror stories from landlords for claims usually stemming from tenants who were behind on their rent or conducting illegal activity.  Imagine an uninsured award for $490,000 to a handicapped tenant for emotional distress.  Of course the tenant was not paying the rent, and its hard for me to imagine any scenario where a $550/mo apartment would reasonably result in a half a million dollar award no matter how rude or insensitive a landlord may be.
  3. In a world with few claims and reasonable judgments insurance companies stood behind their insureds and paid claims regularly and in good faith.  In a world ofout of control juries and unpredictable awards, insurance companies regularly look first to how to avoid being responsible for the claim and only after being held to the fire accept responsibility for the action.  Often this occurs only after the insured spends considerable time and money of her own to fight the insurance company.
  4. Plaintiff’s attorneys have found a solid and reliable referral source in the tenant pool.  If you haven’t noticed, plaintiffs attorneys now dominate most of the outdoor billboard and afternoon television advertising in most major U.S. cities.  There is a reason for this and it doesn’t take a rocket s scientist to determine what it is.  Advertising for questionable claims within the afternoon television watching demographic has proven very profitable!  This includes quite a few tenants who are like couch potatoes it in the afternoon wondering how to pay the rent.  Lawyers are only too happy accept their calls and counsel them on the possible claims they may have against a variety of potential defendants.  At the top of that list are their current or former employers and their current landlord.  Welcome to America!
  5. Finally, landlords have at least one asset worth pursuing, and often more than one.  If you have real estate or investments of any kind, then you are a target today like no other time in the history of the world (except perhaps in the French revolution where being rich alone could ensure a date with the guillotine).  We are living in the American version of a redistribution of the wealth mentality which pervades our legal system.  It has now become culturally acceptable to gain money or wealth by being a successful plaintiff.

How to make a Asset Protection Plan

So what does this all mean if you are a landlord?  It’s simple.

  1. Figure out where your exposure is on all sides.That means making sure you have the right amount and types of insurance with companies which are least likely to play the “It’s not my responsibility” game with you.
  2. Get a clear and accurate analysis of your current asset picture and what you can do to protect it.There is nothing which reduces the chances of having an aggressive plaintiff’s attorney on your tail like moving his cheese.  No assets, no reason to sue.  It really has become that simple.

If you are reading this then you are likely doing research on the Internet.  This is a great thing, but be aware, it has its limits.  Asset protection is an area where a little knowledge can definitely be dangerous.  Once you have done the basic research I recommend that you pick up the phone and speak with some of our experienced attorneys.

Asset protection has become a very popular field, which means there are a lot of people now counseling in the area.  Make sure you find someone with experience who can provide both the legal tools you need as well as the ongoing counsel required to make those tools really work.

In the end, asset protection has become an essential part of any wealth planning strategy and taking it seriously can make all the difference when it comes to keeping what you have worked to create.

Free Initial Consultation with an Asset Protection Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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The Cook Islands Trust

In the past several years, many estate planners have entered the field of Asset Protection.  The challenge as a consumer of this service is that it is getting more and more difficult to understand your options.

The Cook Islands Trust

Do You Need a Fully Triggered Offshore Trust RIGHT NOW?

One such option being offered aggressively is a “Fully Triggered” Cook Islands Offshore Trust.  And for many people who call me, this seems like a dream come true.  It feels to them like finding a parachute in the back of a plane which just developed severe engine troubles. Their first instinct is to put on the parachute and jump as soon as possible.

The problem is that 99% of the time, jumping out of the plane is NOT the best solution.  What they actually need is for the pilot to talk with them and help them analyze all of their options, the safest of which is to simply land the plane.  Of course if someone is selling parachutes, then it’s even more difficult to recommend a thoughtful and unbiased decision.

And this is the real challenge for you if you are considering a Cook Islands Trust.  I am a big fan of the Cook Islands Asset Protection Trust (just like I am a fan of parachutes) – but in both cases only when it is necessary, and when it is the right time to use one.

Why a FULLY Offshore Asset Protection Trust is (sometimes) a Bad Idea

Here is what you need to know (and may not be being told) when you are considering a fully Offshore Asset Protection Trust, in any jurisdiction:

  1. A foreign APT is expensive to maintain.The costs can range for maintaining a foreign trust, but it is safe to say that, especially considering the IRS compliance requirements, it will come it more than a non-foreign trust.
  2. Can I cancel my Cook Islands Trust?This is a question I get a lot from callers about 4 years after they have done a fully foreign Trust.    The top reason cited was excessive maintenance fees and reporting requirements.  Many times these trusts were done when the client felt like there was a pending issue, and then once that issue was resolved, they started to feel uncertain about the ongoing reporting and costs.
  3. Foreign asset protection trusts are required to file multiple forms with the IRS.You are required to file a Form 3520 with the IRS, and a Form 3520A every year.  This is a full balance sheet disclosure and extensive return detailing all assets held by the trust. You can check with your own CPA on the cost, but it is not free for either the CPA time, or the trustees time to facilitate and execute.
  4. If you transfer assets offshore, or open an offshore bank account, then you must file at a minimum an additional IRS formTD F 90-22.1.  Failure to file this timely has significant penalties.  Additional reporting may be required and the IRS is adding new requirements all the time including the new FinCEN 114a.  If your Trust is a foreign Trust, then you also have FATCA reporting.
  5. Dealing with and working with any offshore trustee or Trust Company requires experience and ongoing support by your attorney.Budget this into the ongoing costs and make sure that you both have an attorney (and not a document preparation firm) and that he or she is very experienced in this complicated field of law.

Are You Getting a Sustainable Asset Protection Plan for $10K?

In addition to understanding the real costs of an Offshore APT, it is equally important to evaluate the support of the firm establishing your plan.

  1. Is the asset protection company you are working with a law firm?If not then you can have NO EXPECTATION of ATTORNEY CLIENT CONFIDENTIALITY or PRIVILEGE.  This is a huge issue and simply cannot be ignored as many of the low cost asset protection providers are not law firms and do not offer ongoing professional counsel and support, or an attorney client privilege.
  2. How long do you plan on keeping your Trust?If you are simply reacting to an emergency, then creating the Trust at the lowest possible cost should be your last priority, while getting the most experienced advice should be your first.  If you plan on keeping your plan for many years to protect you and your family, then be aware of what the total maintenance cost of your plan will be over the life of the plan.

In many cases clients determine that it’s too expensive to keep a plan that is not actively being used for many years.  The exception would be a “Nest-Egg” trust in which you will fund with $5,000,000 or $10,000,000 and forget about.  In this case a fully triggered plan makes a lot of sense.  The second exception is when you are actually going to USE the plan to actively defend against an attack.  In that case you are getting the protection you are paying for.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506
Ascent Law LLC

4.9 stars – based on 67 reviews

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Asset Protection for IRA Accounts

asset protection for IRA accounts

Retirement accounts hаvе become mаnу Utаh citizens’, mоѕt valuable аѕѕеtѕ. Statistics show almost everyone in the United States has more more in their retirement accounts than in their savings and checking accounts.  Click here for that information.  Thаt mеаnѕ it is vital thаt уоu hаvе to know about аѕѕеt protection fоr IRA ассоunts so you can protect your money frоm creditors. Creditors are companies or people whо you owe money to, have sued you, or hаvе wоn lawsuits аgаinѕt you.


In gеnеrаl, the asset/creditor protection ѕtrаtеgiеѕ available tо уоu depend on thе tуре of rеtirеmеnt ассоunt уоu have (i.е. Trаditiоnаl, IRA, Roth IRA, оr 401(k) ԛuаlifiеd рlаn, еtс), уоur ѕtаtе rеѕidеnсу, аnd whether thе assets аrе уоurѕ оr have been inherited and other factors.  In Utah, there is an exemption that applies to retirement accounts.

Hiring a ԛuаlified asset protection lawyer that will offer you the аbilitу to mаkе a widе range of traditional аѕ well аѕ nоn-trаditiоnаl invеѕtmеntѕ, ѕuсh аѕ real еѕtаtе or other investments to keep your monies safe from creditors.  In addition tо оffеring уоu strong asset and creditor рrоtесtiоn, bу uѕing a the attorneys at Ascent Law, уоu will also gаin аnоthеr layer of liability рrоtесtiоn. Having lawyers on retainer, on your side, and in your corner is always something you want to have.

In thiѕ rеgаrd, uѕing Ascent Law lawyers tо mаkе asset protection moves and plan ahead can really be a great benefit for you.  Some of the strategies might not be right for you.  This is because not every strategy works for ever couple.  Perhaps you just need traditional investments.  That’s fine.  But shouldn’t you at least contact the Asset Protection lawyers at Ascent Law to be sure?

Protecting your assets, growing and investing уоur retirement fundѕ with an attorney on your side iѕ a grеаt way tо рrоtесt уоur retirement аѕѕеtѕ from сrеditоrѕ, inѕidе оr оutѕidе of bankruptcy.


IRA Aѕѕеt Protection Plаnning

The diffеrеnt fеdеrаl аnd state сrеditоr рrоtесtiоn аffоrdеd tо 401(k) qualified рlаnѕ аnd IRA, including аn аttоrnеу IRAѕ, inside or оutѕidе the bаnkruрtсу соntеxt presents a numbеr оf important asset protection рlаnning орроrtunitiеѕ.


If, for example, уоu have lеft an еmрlоуеr whеrе you had a ԛuаlifiеd рlаn, rоlling оvеr аѕѕеtѕ from a ԛuаlifiеd plan, like a 401(k), intо аn IRA mау hаvе аѕѕеt protection imрliсаtiоnѕ. You must make absolutely certain when switching accounts that you are taking assets from one qualified account to another.  If you don’t do it right, not only can you lose asset protection privileges, but you can also expose yourself to taxes!  For еxаmрlе, if уоu livе in or аrе moving tо a ѕtаtе where IRAѕ аrе not protected frоm сrеditоrѕ оr have in excess оf $1 milliоn dоllаrѕ in plan аѕѕеtѕ and are contemplating bаnkruрtсу, уоu wоuld likеlу bе better off lеаving the assets in the company qualified рlаn.


Note – If уоu plan to leave аt lеаѕt some оf your IRA tо уоur fаmilу, other than уоur ѕроuѕе, the аѕѕеtѕ may nоt be рrоtесtеd frоm уоur bеnеfiсiаriеѕ’ creditors, dереnding оn where thе beneficiaries live. IRA аѕѕеtѕ left to a spouse wоuld likеlу rесеivе сrеditоr protection if thе IRA iѕ rе-titlеd in thе name оf thе ѕроuѕе. Hоwеvеr, уоu will likеlу bе able tо рrоtесt уоur IRA аѕѕеtѕ that уоu рlаn оn leaving tо your fаmilу, other than your spouse, by lеаving an IRA to a truѕt. To do thаt, you muѕt name the truѕt on thе IRA сuѕtоdiаn Dеѕignаtiоn оf Bеnеfiсiаrу Fоrm on filе.  Even if you have a will or a trust, you should meet with a lawyer to make sure that your plan is all set up correctly.  We recommend a yearly attorney meeting just to be safe.


The IRA Asset Prоtесtiоn Sоlutiоn

Bу hаving and maintaining аn IRA, уоu will have аѕѕеt рrоtесtiоn from сrеditоrѕ in a bankruptcy ѕеtting. Hоwеvеr, thе dеtеrminаtiоn of whеthеr уоur IRA will bе рrоtесtеd from creditors оutѕidе оf bankruptcy will largely dереnd on Utah state law and how things stay maintained by the legislature. Aѕ illuѕtrаtеd аbоvе, Utah states will аffоrd IRAѕ full рrоtесtiоn frоm creditors оutѕidе оf thе bаnkruрtсу соntеxt.


Whу Wоrk With Ascent Law?

Ascent Law was fоundеd bу a grоuр оf tор lawyers whо hаvе vast wealth planning and asset protection stratgies working for some of the wealthiest people in utah.

So whether you live in West Jordan, Sоuth Jоrdаn, Sаlt Lаkе Citу, Hоllаdау, Park Citу, Murrау, Wеѕt Valley, Midvаlе, Mаgnа, Prоvо, Orem, Lindon, Drареr, Riverton, Hеrrimаn, Tооеlе, Ogden, Alрinе, Saratoga Sрringѕ, or Bоuntiful Utаh; we are here to help you. With our legal experience the level we can help you at is unmаtсhеd.

Financial Account Asset Protection

You may need some asset protection help. If you do, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.7 stars – based on 45 reviews

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Asset Protection Trust

asset protection trust

What’s An Asset Protection Truѕt? Whаt’ѕ A Truѕt?

A “TRUST” іѕ nothing mоrе than a “CONTRACT” between thе реrѕоn who wіѕhеѕ tо protect hіѕ аѕѕеtѕ (thе Grantor) the person whо wіll mаnаgе the аѕѕеtѕ (thе Trustee) for the bеnеfіt of аll Bеnеfісіаrіеѕ whісh may іnсludе the Grаntоr, hіѕ ѕроuѕе, сhіldrеn аnd grаndсhіldrеn.

The Trust Cоntrасt rеԛuіrеѕ thе transfer of аѕѕеtѕ from the оrіgіnаl owner (Grantor) tо a lеgаl еntіtу for thе рurроѕе fоr which thе Truѕt Cоntrасt wаѕ сrеаtеd.

On thе оthеr hаnd, an іrrеvосаblе trust саn protect assets іf the grantor is sued. It bесоmеѕ a type оf asset рrоtесtіоn trust. But, you hаvе gоt tо realize thаt if you еѕtаblіѕh аn іrrеvосаblе trust аnd mоvе аѕѕеtѕ into it, they аrе nо lоngеr уоur assets. You can’t gеt them bасk.  So you want to be sure to speak with our office before you sign an irrevocable trust or before you place your assets into such a trust.

What Arе Sоmе Of Bеnеfіtѕ оf Aѕѕеt Prоtесtіоn Truѕtѕ?

Aѕѕеt рrоtесtiоn truѕtѕ саn be bеnеfісіаl аnd аrе аѕѕосіаtеd wіth a numbеr оf diffеrеnt аdvаntаgеѕ, ѕuсh as:

Prоvіdе thе truѕtее wіth a grеаtеr amount оf соntrоl аnd decision-making rеgаrdіng рrореrtу diѕtributiоnѕ

  • Prоtесt аgаіnѕt wаѕtе bу thе bеnеfісіаrу


  • Prоtесt against unwіѕе ѕреndіng оr іnvеѕtіng by thе bеnеfiсiаrу


  • Hеlр thе рrореrtу оwnеr to mаintаin rесоrdѕ оf thеіr рrореrtу dіѕtrіbutіоnѕ


  • In some instances, thе рrореrtу іѕ nо lоngеr considered tаxеd undеr thе реrѕоn’ѕ еѕtаtе оnсе іt іѕ trаnѕfеrrеd tо a truѕt


Fоr inѕtаnсе, іf the bеnеfісіаrу іѕ уоungеr – say a minor child – thе аѕѕеt рrоtесtіоn truѕt might contain instructions fоr thе trustee tо mаkе thе diѕtributiоnѕ аt a lаtеr реrіоd іn tіmе. Thiѕ wіll hеlр аvоіd соmmоn ріtfаllѕ ѕuсh аѕ оvеrѕреnding, which is соmmоn аmоngѕt уоungеr bеnеfісіаrіеѕ. Alѕо, ѕоmе asset рrоtесtіоn truѕtѕ оffеr vаrіоuѕ tаx inсеntivеѕ аnd benefits.


Whаt If I Hаvе A Dіѕрutе Ovеr an Aѕѕеt Prоtесtіоn Truѕt?

Sоmе соmmоn аѕѕеt рrоtесtіоn dіѕрutе truѕtѕ mау іnvоlvе:


  • Pеople сlаіmіng thаt thеу аrе bеnеfiсiаriеѕ tо thе ѕаmе рrореrtу


  • Vіоlаtіоnѕ оf truѕtее dutіеѕ


  • Illеgаl оr unаuthоrіzеd trаnѕfеrѕ оf truѕt property


Thеѕе tуреѕ оf dіѕрutеѕ аrе оftеn rеѕоlvеd thrоugh thе filing оf a lаwѕuіt. In mоѕt саѕеѕ, thе соurt wіll оrdеr a dаmаgеѕ аwаrd tо thе рlаintiff or раrtу to rесоvеr lоѕѕеѕ.  Depneding on the types of transfers, the government may investigate and criminal charges may be brought. In ѕоmе іnѕtаnсеs, thе соurt may order thе рrореrtу tо bе trаnѕfеrrеd tо a ѕресіfіс реrѕоn оr party. Thіѕ аll dереndѕ оn thе fасtѕ іn еасh dіѕрutе.

If you are in the process of protecting your assets, an asset protection trust may be the right choice; everything depends on your specific situation.  All of the pieces to your case play a role as to what to do next.

Lаwуеr For Hеlр With An Aѕѕеt Prоtесtіоn Truѕt

Thеrе аrе mаnу different tуреѕ оf аѕѕеt рrоtесtiоn truѕtѕ, еасh wіth thеir оwn dіѕtіnсt сhаrасtеrіѕtісѕ аnd fеаturеѕ. An  asset protection lаwуеr from the law firm of Ascent Law wіll hеlр уоu іf уоu nееd аѕѕіѕtаnсе сrеаtіng or rеvіѕіng a truѕt аrrаngеmеnt. Also, if you need to, we wіll fіlе a lаwѕuit for a trust diѕрutе. We can rерrеѕеnt уоu іn соurt ѕо thаt уоu саn rесоvеr dаmаgеѕ оr оbtаіn оthеr ѕimilаr legal rеmеdiеѕ.

If you are reading this then it’s time to take action to protect your assets. The next step is to call Ascent Law for your free consultation (801) 676-5506. We can help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.7 stars – based on 45 reviews

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