I work with a lot of doctors. Most of them are just too busy to pay close attention to their personal affairs. So wills, estate planning, insurance and other personal matters, as well as their business agreements, employee issues, etc... often get overlooked. Issues are addressed on a reactive, rather than a proactive basis. There is little planning and protection, but rather reaction to situations that have already arisen.
Here's a few things you should know:
1. ASSET PROTECTION DOESN'T WORK. Well, actually it does, but you cannot create an asset protection plan once litigation has begun or is on the horizon. It will be deemed a fraudulent transfer and you can be subject to both civil and criminal penalties. No legitimate attorney should even do it for you. By asset protection, I don't mean moving your assets offshore to Nevis or the Cayman Islands. Offshore asset planning may bring more scrutiny from various government agencies than you'd like to welcome.
2. YOU CAN WRITE A WILL ONCE YOUR DEAD. Of course you can't! Tax and estate planning is voluntary and should be done, and revisited on a regular basis, as soon as possible. Dying intestate (without a will) leaves a serious mess for your loved ones to clean up. Even a poorly written will leaves a big mess. Look at Anna Nicole Smith.
3. MONEY MAKES PROBLEMS GO AWAY. To the contrary, I've found that successful professionals often attract problems. Everyone and their grandmother brings "opportunities" your way and, suprisingly (I say that with jest), every deal looks good. That's called salesmanship. Don't substitute good due diligence for things that look good and good feelings you have for people (even if friends or relatives). Look at Bernie Madoff - blind trust was his key to the castle.
Best advice is to work with someone who advocates for your success and protection. Someone who has experience in negotiating deals, analyzing opportunities, protecting assets, and protecting your family.
We offer free, no obligation consultations, to any medical professionals who'd like to visit our office. We would also be happy to answer basic questions by email.
Showing posts with label asset protection. Show all posts
Showing posts with label asset protection. Show all posts
March 17, 2009
September 8, 2008
Protecting Your Assets from Creditors & Predators
I recently submitted this article to a dozen or so medical journals for publications. Although it is directed toward medical professionals, its concepts are appropriate for any person concerned about protecting their assets.
"Medical professionals alike, especially the high-income earners, are constantly concerned over being sued. In a world of constant litigation, the all look for strategies and methods to protect the assets they accumulate through their work: their home, investments, real estate, etc…
The topic of asset protection is always being written about. Some practitioners swear by methods of “bullet-proofing” your assets. Others claim that asset protection doesn’t really work. This article has been written to explore both extremes of this industry and to find a common ground of reasonable security for the medical professional who would like to take adequate steps to protect their assets without injecting too much complication into the way they manage their affairs.
First of all, can you “bullet-proof” your assets? If you perform a Google search for “asset protection” or “bullet proofing your assets”, you will uncover may sites which profess that with the right structure in place, and having done so with no potential law suits on the horizon, you can successfully protect your assets. The Asset Protection Consulting Group, http://www.apcg.com/, writes about asset protection and uses the O.J. Simpson case as an example:
“Essentially asset protection is a legal way to put your assets beyond the reach of those who would like to take them from you by filing a lawsuit. Here is an example you are likely familiar with that demonstrates its effectiveness and legality.
Remember the O.J. Simpson case? O.J. went to trial in 1995 and was acquitted of murder charges. His story is a perfect example of how and why asset protection works. Now there’s a whole criminal side to O.J.’s case. So let’s put aside the moral issues surrounding O.J. We’re just talking about asset protection here. The point here is that the nation was able to see for the first time how an alleged murderer was able to have a judgment entered against him and no one was able to collect any money. So let’s outline what happened here. By the way, do you know how O.J.’s doing now? Do you have any doubts he’s living all right?
What happened after he was acquitted from the criminal charges? The Goldmans sued him on a wrongful death case in civil court and obtained a judgment for $33.5 million. Yet have they collected anything? All they got was his Heisman trophy. The piano he said belonged to his mother. But what happened to his money? Well he was lucky. O.J. had pensions, or retirement plans through the NFL and the Screen Actor’s Guild (SAG), and both pensions were exempt from judgments by law in California.
What about his house? He had a nice home near Beverly Hills. What happened there? The house was worth $3.5 million. He had a first mortgage for $1.5 million. The question everyone asked was what happened to the rest of the equity? Why didn’t they take it? Well, he had what are called equity stripping mortgage liens placed on it. By the time they got to the house all the equity was encumbered in favor of his attorneys. His home was leveraged to the hilt so by the time the Goldmans got to it there was nothing left for them to take.
Other groups ward against these techniques and quote various court cases and legal decisions that demonstrate their point. Almost all reported cases are those whereby the debtors had transferred or attempted to transfer their assets into an asset protection structure once litigation or potential litigation is on the horizon. Of course, the logical course of events are such that with arrangements that work, litigants will settle and often for pennies on the dollar.
This article is about creating structures that add “layers” to your assets, making it more difficult and costly for litigants and creditors to attach them with a judgment from a court of competent jurisdiction. By creating entities such as corporations and limited liability companies in different states and even foreign jurisdictions, it becomes difficult for a judgment creditor to attach assets since judgments cannot be obtained and enforced within statute of limitation time limits. Also, suing and enforcing judgments in multiple jurisdictions becomes very costly to do so. Remember however, your “structure” must have a legitimate business purpose beyond just that of avoiding creditors.
Here’s an example:
Dr. J establishes a Delaware “Series” Limited Liability Company. This type of entity allows you to segregate assets, for liability purposes, from each other within the same entity. The sole member of the LLC is a Nevada Corporation which is filed blindly as allowed under Nevada law using a nominee appointed for such purpose. Therefore, Dr. J’s information remains out of the public record. All stock in the Nevada Corporation (which can be issued as “bearer” certificates) is owned by another limited liability company created in the jurisdiction of Nevis, in the British Virgin Islands. Created in 1995, Nevis past legislation that allows for the creation of an LLC without public filings and a statute of limitations on judgments of only six months. The Nevis LLC could be owned by an asset protection trust in the Cook Islands located in the Pacific Ocean enroute to Australia.
Now, this is an extreme example and probably includes more “layers” than would be necessary in most situations. Probably a Delaware Series LLC would suffice or a Nevada entity could be used if the professional wishes to file blindly. As an alternate, off-shore jurisdictions could be used where it is suspect as to whether a foreign court would even enforce a US-obtained judgment.
The point in these examples are this: given a complex and costly structure, most litigants will think twice about instituting suit. Generally, a good litigation attorney would first conduct an asset search to determine if the prospective defendant had anything worth pursuing and the suit might end there or insurance settlement offers may be accepted.
There is one important key to creating an effective structure: putting it in place well before any problems arise. So called “rainy day” planning should be completed as soon as possible. Whenever working with new clients, we seek to create an asset protection strategy, as part of the doctor’s estate plan, that contemplates the accumulation of assets over time. In almost all cases where defendants have lost and forfeited assets that they were trying to protect, the persons had transferred assets at a time when the potential litigation had already reared its ugly head. Fraud and fraudulent transfers never work, no matter how complex the structure.
Also, remember this: never use a structure, especially off-shore arrangements, to avoid the payment of federal income taxes. The IRS can always access assets and you can be liable for criminal charges as well."
"Medical professionals alike, especially the high-income earners, are constantly concerned over being sued. In a world of constant litigation, the all look for strategies and methods to protect the assets they accumulate through their work: their home, investments, real estate, etc…
The topic of asset protection is always being written about. Some practitioners swear by methods of “bullet-proofing” your assets. Others claim that asset protection doesn’t really work. This article has been written to explore both extremes of this industry and to find a common ground of reasonable security for the medical professional who would like to take adequate steps to protect their assets without injecting too much complication into the way they manage their affairs.
First of all, can you “bullet-proof” your assets? If you perform a Google search for “asset protection” or “bullet proofing your assets”, you will uncover may sites which profess that with the right structure in place, and having done so with no potential law suits on the horizon, you can successfully protect your assets. The Asset Protection Consulting Group, http://www.apcg.com/, writes about asset protection and uses the O.J. Simpson case as an example:
“Essentially asset protection is a legal way to put your assets beyond the reach of those who would like to take them from you by filing a lawsuit. Here is an example you are likely familiar with that demonstrates its effectiveness and legality.
Remember the O.J. Simpson case? O.J. went to trial in 1995 and was acquitted of murder charges. His story is a perfect example of how and why asset protection works. Now there’s a whole criminal side to O.J.’s case. So let’s put aside the moral issues surrounding O.J. We’re just talking about asset protection here. The point here is that the nation was able to see for the first time how an alleged murderer was able to have a judgment entered against him and no one was able to collect any money. So let’s outline what happened here. By the way, do you know how O.J.’s doing now? Do you have any doubts he’s living all right?
What happened after he was acquitted from the criminal charges? The Goldmans sued him on a wrongful death case in civil court and obtained a judgment for $33.5 million. Yet have they collected anything? All they got was his Heisman trophy. The piano he said belonged to his mother. But what happened to his money? Well he was lucky. O.J. had pensions, or retirement plans through the NFL and the Screen Actor’s Guild (SAG), and both pensions were exempt from judgments by law in California.
What about his house? He had a nice home near Beverly Hills. What happened there? The house was worth $3.5 million. He had a first mortgage for $1.5 million. The question everyone asked was what happened to the rest of the equity? Why didn’t they take it? Well, he had what are called equity stripping mortgage liens placed on it. By the time they got to the house all the equity was encumbered in favor of his attorneys. His home was leveraged to the hilt so by the time the Goldmans got to it there was nothing left for them to take.
Other groups ward against these techniques and quote various court cases and legal decisions that demonstrate their point. Almost all reported cases are those whereby the debtors had transferred or attempted to transfer their assets into an asset protection structure once litigation or potential litigation is on the horizon. Of course, the logical course of events are such that with arrangements that work, litigants will settle and often for pennies on the dollar.
This article is about creating structures that add “layers” to your assets, making it more difficult and costly for litigants and creditors to attach them with a judgment from a court of competent jurisdiction. By creating entities such as corporations and limited liability companies in different states and even foreign jurisdictions, it becomes difficult for a judgment creditor to attach assets since judgments cannot be obtained and enforced within statute of limitation time limits. Also, suing and enforcing judgments in multiple jurisdictions becomes very costly to do so. Remember however, your “structure” must have a legitimate business purpose beyond just that of avoiding creditors.
Here’s an example:
Dr. J establishes a Delaware “Series” Limited Liability Company. This type of entity allows you to segregate assets, for liability purposes, from each other within the same entity. The sole member of the LLC is a Nevada Corporation which is filed blindly as allowed under Nevada law using a nominee appointed for such purpose. Therefore, Dr. J’s information remains out of the public record. All stock in the Nevada Corporation (which can be issued as “bearer” certificates) is owned by another limited liability company created in the jurisdiction of Nevis, in the British Virgin Islands. Created in 1995, Nevis past legislation that allows for the creation of an LLC without public filings and a statute of limitations on judgments of only six months. The Nevis LLC could be owned by an asset protection trust in the Cook Islands located in the Pacific Ocean enroute to Australia.
Now, this is an extreme example and probably includes more “layers” than would be necessary in most situations. Probably a Delaware Series LLC would suffice or a Nevada entity could be used if the professional wishes to file blindly. As an alternate, off-shore jurisdictions could be used where it is suspect as to whether a foreign court would even enforce a US-obtained judgment.
The point in these examples are this: given a complex and costly structure, most litigants will think twice about instituting suit. Generally, a good litigation attorney would first conduct an asset search to determine if the prospective defendant had anything worth pursuing and the suit might end there or insurance settlement offers may be accepted.
There is one important key to creating an effective structure: putting it in place well before any problems arise. So called “rainy day” planning should be completed as soon as possible. Whenever working with new clients, we seek to create an asset protection strategy, as part of the doctor’s estate plan, that contemplates the accumulation of assets over time. In almost all cases where defendants have lost and forfeited assets that they were trying to protect, the persons had transferred assets at a time when the potential litigation had already reared its ugly head. Fraud and fraudulent transfers never work, no matter how complex the structure.
Also, remember this: never use a structure, especially off-shore arrangements, to avoid the payment of federal income taxes. The IRS can always access assets and you can be liable for criminal charges as well."
February 28, 2008
Starting at the Beginning
This blog has been created to share my thoughts, ideas, strategies and opinions about various topics, legal or otherwise. In addition, it is intended to share the unique services I provide to clients and to better inform those looking for a new attorney relationship.
This is my first posting.
I welcome free consultations in our office. If you think our service would better serve your needs, give us a call.
This is my first posting.
My practice is a transactional one, focusing on wills, trusts & estates, corporate/business planning, asset protection planning, and real estate. The practice has been and is being built around clients who require our full-time support on a retainer basis. I call this our Legal Retainer Program and I will discuss it in more detail in later blogs (if you'd like information, please email me). I find that many of these types of clients (Professionals, Executives and Business Owners) use a multitude of legal advisors for different purposes. Nothing is coordinated or integrated and many parts, unbeknownst to the client, are missing. One of their attorneys might have ideas that would better help the client or protect them, but they fail to bring them to light either because they do not have intimate knowledge of the client's entire situation or because they believe the client does not want to spend the money. Many professionals, Attorneys, CPAs, and the like, take the "let's not rock the boat" attitude and fail to make effective and continuous recommendations. I've seen it time and time again: there is some action the client should take or a decision he or she should make, but the advisor won't push them to make the decision out of fear of damaging the relationship. In reality, their failure to do what's right for the client ultimately causes more damage many more times than not.
Instead, I have chosen to develop the firm on a flat-fee retainer basis (costs and the use of outside professionals is additional). The client pays a regular, manageable cost and we can change, update, negotiate, and recommend all that is in the client's interest. We track our time and may adjust the retainer for the following year. The client gets integrated, holistic advice and has an advisor who always acts in the clients interest.
I welcome free consultations in our office. If you think our service would better serve your needs, give us a call.
Enough of the commercial!
In later blogs, "why you need a will", "how to buy distressed real estate", and "asset protection secrets".
Subscribe to:
Posts (Atom)