Asset protection as a basic concept is very simple to understand: it is the protection of anything that you value.
However, the term ‘asset protection’ in legal phrasing is used nowadays to specifically relate to techniques used for the protection of the assets of individuals and business entities, particularly from civil money judgments and financial litigation.
Asset protection is also intrinsically linked to the offshore business and financial marketplace, because there are those who utilise the different legal structures available around the world to protect their own or their client’s assets by means of ‘clever’ positioning of the ownership of certain assets. The likes of trust entities, offshore corporations and partnerships can be used to hold legal title to an individual’s assets for example, thus making it more difficult for any potential creditor to go after said assets.
For you, perhaps as an expatriate with physical assets dotted around the world, or who perhaps works in a public facing role, who works in a position of trust, or who is a high net worth individual, an asset protection strategy could be well worth considering.
A Word of Warning Before We Proceed…
Naturally, every individual’s personal and financial position in life is different, so no one asset protection strategy ‘fits all.’ Therefore, before we go further and explore what the concept of asset protection could potentially mean for any given individual, it is necessary to state that if you are considering positioning your assets out of the reach of potential creditors or out of the reach of litigious action, you need to take professional and personalised advice before embarking upon any action.
Not only could you inadvertently embark upon a path that is not legal for you if you are not correctly advised based on your current position in life, and which could open you up to serious criminal charges, you could lay yourself wide open for those who are in the business of scamming and stealing from people searching for a legitimate offshore solution. Added to this is the fact that if you do not take professional advice, you could end up with a worthless but expensive strategy in place that has not protected you or your assets at all.
If Asset Protection Schemes Are Potentially So Risky, Why Would Anyone Consider One?
Unfortunately, in this day and age of increased litigious action and behaviour, where ‘no win no fee’ lawyers almost encourage the taking of risky and ill advised legal action, anyone who has anything to protect – from their reputation to their wealth for example – needs to consider the real fact that at some point in the future, they could be the subject of a law suit.
The more you acquire in life – in terms of assets or even your position as a professional – the greater at risk you potentially are. Those who work in a public facing role such as a teacher or an adviser, as well as those in the medical profession from doctors to dentists, are all sitting ducks and weak targets for anyone who feels in some way aggrieved.
Therefore, asset protection planning is an important consideration for increasing numbers of people. What’s more, done properly under the guidance of expert legal help, risk is greatly reduced from any asset protection plan put in place.
What is Asset Protection Planning?
Asset protection planning involves examining an individual’s position, and then determining and applying a lawful series of techniques to protect their assets, mainly from claims of future creditors, or even from a divorce settlement claim perhaps. Techniques utilised are basically designed to deter potential creditors from laying a claim against the individual in the first place, and frustrating any potential creditor sufficiently that they drop their action if they do initially initiate a claim.
The techniques generally make it as difficult as possible for future potential creditors to access, lay claim to, value or view an individual’s assets, or collect judgments against the protected person.
Retrospective Asset Protection is Illegal!
It’s very important to note and know that trying to apply an asset protection plan to secure yourself from any claim that has already been levelled against you is illegal. You cannot ‘hide’ assets from a claimant once a lawsuit or claim has been brought – therefore, if you believe that you’re in a vulnerable position when it comes to potential claims from creditors in the future, from an angry spouse or because of your position in life or your wealth, the sooner you get your assets protected the better.
You can leave it too late when it comes to the protection of that which you value – so don’t.
Why You Need Qualified Advice Every Step of the Way
As stated, there are serious criminal offences related to the retrospective protection of assets, and should doubt exist as to whether you knew a claim was going to potentially be brought against you before you moved your assets, you could be entering a grey area of the law if you have acted without counsel in shielding your assets. This is a risk no one can afford to take.
Anyone who is simply at a point in their life where they have worked hard to achieve their position and their wealth, and who is well aware of the way society is going in terms of people taking zero responsibility and suing whenever a perceived wrong has been done against them, will want to take the right, careful steps towards securing that which they value.
Because well-placed and structured asset protection plans usually take legal ownership of assets offshore, complexity is introduced by the very fact that one is dealing with the legal and regulatory systems in different jurisdictions. It is therefore highly recommended that anyone embarking upon an asset protection strategy does so with the expert legal assistance of one who not only understands the law in all jurisdictions, but who understands what can and cannot be legitimately achieved.
Consideration has to be given to the individual who requires protection, to the assets needing protection, to the jurisdiction in which said individual resides and works, where assets are physically located, who needs access to the assets or who perhaps derives an income from assets and where that income is received. Further consideration needs to be given to where legal action could be brought against the protected person. With all facts detailed, an expert is then required to assess the facts and choose the best, most protected and applicable path.
As you can imagine, getting the right path in place every time, taking into account all the legal structures that can be used – from offshore trusts to international business corporations to partnerships – and taking into account an individual’s entire and complex personal situation, requires skill and professional experience. Do not attempt to buy an ‘off the shelf’ asset protection plan, and know that you will require personal advice to find the right path.
There are very real and very legitimate reasons for anyone to want to protect their assets and their position in life. The reasons are increasing all the time. Those who are high net worth, who perhaps have assets in more than one country, who live or work overseas and who are therefore exposed to the legal systems in more than one country, or who believe that because of who they are, what they do or what they own could face an attack from a potential creditor in the future, may well consider getting an asset protection plan and strategy in place.
Legitimate and effective plans and structures exist – but they are bespoke and honed to suit the individual. What’s more, they are often complex legal, layered structures. For these reasons, it is a fact that anyone considering protecting their assets should seek qualified, legal expert and professional assistance.
Escape From America Magazine recommends Offshore Companies House as your first stop for asset protection advice and services.
About the author: Susan Beverley is a writer and editor for Escape From America Magazine and also writes for and maintains Expat Daily News – the expat news blog for EscapeArtist.com. She traveled extensively before becoming an expat herself having found a place to call home in South America where she has lived since 2005. She understands the concerns, needs and difficulties that expats face from first-hand experience and is dedicated to supporting and encouraging anyone who is looking for a new nation to call home.