Protecting Your Inheritance

[Jeff Lipton]

This is a recent question I received which I thought I would post to the blog and forum:

Dear Jeff:

Q; I have an inheritance of $400,000 coming to me and I also have some stocks, I am planning to marry soon and want to insure that this money is outside of the marital assets and that I can safely pass these assets to any future generations.

Samuel


A; In regard to the $400,000 note that you should not try to hide the existence of the asset as that will involve an immediate element of distrust and in reality you would only be potentially perjuring yourself should you be discovered (in the legal sense of the word) in a subsequent litigious matter.

The use of either a declared asset protection trust or simple asset protection insurance, will allow for those assets (the inheritance and the stocks) to be placed into an asset protection structure.

They would be in normal cases outside of the ability of a court of Family Law courts to attach if the they were irrevocably transferred (which would include taxes being paid) and declared and the structure resides in another jurisdiction.

Asset protection insurance is a superior vehicle to protect them as those assets would have had to have been irrevocably transferred into the policy for the benefit of beneficiaries and domestic courts could not attach these assets.

The trust subjects itself to the risk of being what is termed a sham trust, and is not as flexible of a vehicle. Lastly, family courts would in fact try to do an even up of existing assets that exist within your domestic jurisdiction. Meaning that if there were $400,000 plus asset value in a house or a business the split would not be 50-50 on these assets and the judge may attempt to compensate the other spouse from those assets. That said, the goal is protect the $400,000 plus for the benefit of beneficiaries and in this regard no extraterritorial decree from a judge can affect the disposition or use of the $400,000 plus assets.

Many a spouse in this position will name the other spouse a beneficiary of the policy, thus difficult to say that the spouse has been disenfranchised, and yet the critical rational for protecting these assets is to insure that the original beneficiaries which may the couple?s children and the spouse, receive these assets and that they are not tampered with or their course of use altered if the spouse remarries. In many cases it?s more important to insure that those assets benefit the children and a subsequent marital event cannot alter their future use. If the other spouse is named as a beneficiary then it?s hard to argue that they have been disentitled-just the freedom for that spouse to choose has been limited and there may be some minimal even up on existing other assets. This works, we have deployed asset protection insurance and like scenarios to protect family assets.

[Jeff Lipton]

Originally Posted by Jeff Lipton

This is a recent question I received which I thought I would post to the blog and forum:

Dear Jeff:

Q; I have an inheritance of $400,000 coming to me and I also have some stocks, I am planning to marry soon and want to insure that this money is outside of the marital assets and that I can safely pass these assets to any future generations.

Samuel


A; In regard to the $400,000 note that you should not try to hide the existence of the asset as that will involve an immediate element of distrust and in reality you would only be potentially perjuring yourself should you be discovered (in the legal sense of the word) in a subsequent litigious matter.

The use of either a declared asset protection trust or simple asset protection insurance, will allow for those assets (the inheritance and the stocks) to be placed into an asset protection structure.

They would be in normal cases outside of the ability of a court of Family Law courts to attach if the they were irrevocably transferred (which would include taxes being paid) and declared and the structure resides in another jurisdiction.

Asset protection insurance is a superior vehicle to protect them as those assets would have had to have been irrevocably transferred into the policy for the benefit of beneficiaries and domestic courts could not attach these assets.

The trust subjects itself to the risk of being what is termed a sham trust, and is not as flexible of a vehicle. Lastly, family courts would in fact try to do an even up of existing assets that exist within your domestic jurisdiction. Meaning that if there were $400,000 plus asset value in a house or a business the split would not be 50-50 on these assets and the judge may attempt to compensate the other spouse from those assets. That said, the goal is protect the $400,000 plus for the benefit of beneficiaries and in this regard no extraterritorial decree from a judge can affect the disposition or use of the $400,000 plus assets.

Many a spouse in this position will name the other spouse a beneficiary of the policy, thus difficult to say that the spouse has been disenfranchised, and yet the critical rational for protecting these assets is to insure that the original beneficiaries which may the couple?s children and the spouse, receive these assets and that they are not tampered with or their course of use altered if the spouse remarries. In many cases it?s more important to insure that those assets benefit the children and a subsequent marital event cannot alter their future use. If the other spouse is named as a beneficiary then it?s hard to argue that they have been disentitled-just the freedom for that spouse to choose has been limited and there may be some minimal even up on existing other assets. This works, we have deployed asset protection insurance and like scenarios to protect family assets.

Fleeing Debtors-Exotic Hide-aways, Beware! January 9, 2009
Posted Today at 03:50 PM by Jeff Lipton | Category: Uncategorized

When a liability occurs there is little time to move into a structure to protect assets. Trusts and foundations can be easily formed and will require far less due diligence in order to set them up than an API? or asset protection policy. The days of the trust or foundation being set up in secret is a na?ve and fallacious belief, for the movement of the assets themselves will leave a trail. If the professionals involved are aware but choose to ignore an existing legal process that attaches to assets (a fleeing debtor) then the whole structure can be set aside as a fraudulent preference. There are still some jurisdictions in the world that are non OECD, (or the Organization for Economic and Cooperation and Development, compliant countries, check the list of OECD blacklisted countries http://en.wikipedia.org/wiki/OECD) where they have less fear of international sanctions. Despite this, suing in that jurisdiction will only reveal that their judiciary will still prefer to uphold the rule of law than be known as a jurisdictions that caters to international criminals, In addition you also have to ask yourself is this the kind of jurisdiction is that you would relay trust your assets to for any length of time? Jeffrey Lipton LL.b.,CFA, MBA
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Axioms Of Asset Protection-My Gift To You!
Posted 12-30-2008 at 10:36 AM by Jeff Lipton | Category: Uncategorized

Axioms of Asset Protection

December 30, 2008

As I am always asked and I am tired of repeating myself, additionally I am tired of all of the hucksters, fraud artists and usual hangers-on that make anything to do with asset protection or off shore planning sleazy and untoward.

I am angry that I try and convince people that you can no longer hide assets from economic predators (governments, partners, litigants, creditors, ex-spouses, family ect.) , and that it?s no longer difficult to find you or your money.

Thus, please find as my gift, to keep out of trouble and enjoy the protection afforded by real asset protection working effectively to disenfranchise economic predators, the following axioms of asset protection.

I will expound on each in days to come;
Axioms of Asset Protection;

a) Do not go offshore unless it?s for asset protection,

b) Asset protection requires a fully disclosed irrevocable disposition of assets in order to work effectively and legally, this means that the structure will be visible and thus defendable at law and yes taxable (remember you are doing this for asset protection not hide from the tax-man!).

All structures (trusts, foundations, asset protection insurance) require the aforementioned to be effective for legal asset protection to work.

Have a happy and a healthy, wealthy New Year! J
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Fallout from Madoff and asset protection December 18 2008
Posted 12-18-2008 at 11:36 AM by Jeff Lipton | Category: Uncategorized

The last thing anybody needed was further distrust in this current environment. As if fear of the unknown was not bad enough the fact that someone could hide such a Ponzi scheme for so very long and under the eyes of regulators only further emphasizes the fact that there is no free lunch and no wizards who are so incredibly bright that they can out-pace the market. When the market was falling and those Madoff investors were still seeing gains on essentially a covered call strategy what did they believe was happening? I will tell you, it?s another case of the fact that some people see hedge funds and their managers as these mystical brilliant masters of intellect who can defy all laws of probability with their cunning and guile. The answer is that hedge funds operate in an unregulated market place, and as masters such as Warren Buffet have proven for decades, you cannot out-think the market place consistently for any length of time. As Buffett has pointed out; buy the best in the industry, one that does not rely on the government or subsidy to earn its market share and hold. Yet there are many who felt that Madoff was smarter, the fact that he was unaccountable and mysterious added to the mythical proportions of this wizard from hell.
This is the similar in the world of asset protection, and there are some parallel axioms. Don?t move your assets into any structure (offshore trust, foundation ect.) that is not regulated and the partners (your banker, broker, trustee and custodian) are not regulated and transparent. Don?t trust some company in an offshore locale with your assets unless the aforementioned is true. It?s an old story, but hundreds are ripped off each year in offshore trust, foundation, or corporate schemes. Many are too embarrassed or its non declared money that gets ripped off or they are charged fees and can?t complain because of the non transparent or non declared nature of the assets. This was some of thinking behind asset protection insurance?, there was a need for a transparent way to insure assets against creditors and that all parties to the equation were regulated, licensed, and accountable. This is not the case with the majority of offshore trust or foundation providers, nor do you have the benefit of choice of their bank, broker or custodian (or even how and if they are regulated). Follow the lead of your smaller domestic life interests, if you don?t know or don?t understand, don?t do it. Especially in regard to asset protection strategies, go with regulated, licensed, accountable and transparent partners and products and declare the process or you may never be able to avail yourself of the ability to use the law to protect your assets when you need to.
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RE: Madoff
Posted 12-17-2008 at 10:58 AM by Jeff Lipton | Category: Uncategorized

RE: Madoff


I am always amazed at the hypocritical regulatory finger pointing when a fraud is not found as in Madoff but even angrier by the usual knee jerk reactions and the closing of the barn door after the horses are out.

In this case people have been saying for years before and after the Long Term Capital that hedge funds must be regulated a lot closer. In fact having worked offshore for many years I can tell you that its harder to open up a bank account in Barbados than New York, Paris or London, or set up a trust or purchase asset protection insurance. You would need a passport, two utility bills three letters of reference (one from a bank) all notarized. But yet billions go unnoticed in the surreal institutional world.

Even more amazing is the fact that there not only several intuitions but competitors who actually complained of the fact that Madoff was involved in a Ponzi scheme early on, but yet nothing. All of the fund business adheres to the regulatory world except hedge funds that are offshore funds and ?not as closely regulated??

This is not true all of the offshore funds, our clients buy a lot offshore funds but they are regulated very closely. Hedge funds are essentially private funds and are not regulated and the issue of the audit and supporting documentation must be scrutinized, what kind of lax double standards these institutions that look down their noses at everyone have.

Truth is all of Madoff?s clients are guilty of the greater fool theory and maybe now we will get disclosure in an industry (hedge funds) that has proven once again that it must be more closely regulated and monitored.

Lastly, let?s all stop with that foolish belief that anyone is that much smarter than the market (and thus not scrutinized because we apparently cannot understand what they do so why bother?).

Or that they can get consistent double digit returns over years and without risk, for its this foolishness that makes Ponzi schemers flourish, lets regulate this industry so that it plays on the same filed as all other funds and institutions.

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Protecting Your Inheritance
Posted 12-17-2008 at 10:53 AM by Jeff Lipton | Category: Uncategorized

This is a recent question I received which I thought I would post to the blog:

Dear Jeff:

Q; I have an inheritance of $400,000 coming to me and I also have some stocks, I am planning to marry soon and want to insure that this money is outside of the marital assets and that I can safely pass these assets to any future generations.

Samuel


A; In regard to the $400,000 note that you should not try to hide the existence of the asset as that will involve an immediate element of distrust and in reality you would only be potentially perjuring yourself should you be discovered (in the legal sense of the word) in a subsequent litigious matter.

The use of either a declared asset protection trust or simple asset protection insurance, will allow for those assets (the inheritance and the stocks) to be placed into an asset protection structure.

They would be in normal cases outside of the ability of a court of Family Law courts to attach if the they were irrevocably transferred (which would include taxes being paid) and declared and the structure resides in another jurisdiction.

Asset protection insurance is a superior vehicle to protect them as those assets would have had to have been irrevocably transferred into the policy for the benefit of beneficiaries and domestic courts could not attach these assets.

The trust subjects itself to the risk of being what is termed a sham trust, and is not as flexible of a vehicle. Lastly, family courts would in fact try to do an even up of existing assets that exist within your domestic jurisdiction. Meaning that if there were $400,000 plus asset value in a house or a business the split would not be 50-50 on these assets and the judge may attempt to compensate the other spouse from those assets. That said, the goal is protect the $400,000 plus for the benefit of beneficiaries and in this regard no extraterritorial decree from a judge can affect the disposition or use of the $400,000 plus assets.

Many a spouse in this position will name the other spouse a beneficiary of the policy, thus difficult to say that the spouse has been disenfranchised, and yet the critical rational for protecting these assets is to insure that the original beneficiaries which may the couple?s children and the spouse, receive these assets and that they are not tampered with or their course of use altered if the spouse remarries. In many cases it?s more important to insure that those assets benefit the children and a subsequent marital event cannot alter their future use. If the other spouse is named as a beneficiary then it?s hard to argue that they have been disentitled-just the freedom for that spouse to choose has been limited and there may be some minimal even up on existing other assets. This works, we have deployed asset protection insurance and like scenarios to protect family assets.