Asset Protection Planning Ethics
Asset protection planning is the organizing of your business and personal affairs in advance of duress in order to reduce or eliminate liability exposure or financial misfortune by placing assets beyond the reach of future creditors. Asset protection planning has also become a full-grown sub-specialty of estate planning.
Asset Planning is a science and as in all areas of science, there are ethical issues.
-- Science - any systematic knowledge or practice
-- Ethics - a set of principles or moral conduct
We say there is a science to asset protection because the actual design of the plan requires great knowledge of the laws. A good practice requires a practitioner who has knowledge of the physics or the working aspect of the plan.
We say there are ethical questions to asset protection because whenever an individual makes decisions from an "all powerful" position, they ultimately determine the boundary for morality. The king determines the fate of all the subjects under his rule, fair or unfair, the king reigns. If you have a good plan, you will control your assets.
The point is morality begins with integrity in the ethical person and begins with corruption for the unethical person. If you and your planner begin with integrity and have the moral fortitude to maintain the integrity of your intention, in the eyes of the law, there is no reason that you should not be permitted statutorily to control your assets.
Law is based on the foundation of reasonableness. Asset Protection statues and common law cases support this foundation. It is reasonable to expect that a person is permitted to protect what is legally theirs. However, after a court rules and brings judgment against a person, what they possessed may be taken from them.
In the case of a protected asset, the court may not be able to take what appears to be in the ownership of the defendant. Take the example of an injured person who desires to seize an expensive house to fulfill a judgment. The injured party sees the defendant enjoying the house, yet the creditor cannot take the house under seizure because the defendant does not own it, someone else does.
From the injured party's point of view (whether it is a malpractice victim, a party to a broken contract, a divorcing spouse or an unpaid business creditor) preventing their recovery and compensation by so-called asset protection planning is grossly unfair.
Is there an ethical dilemma in arranging both your assets and business affairs to defeat the claims of creditors?
Very few of us would hesitate at arranging our affairs to pay less income tax. The majority of people think it moral to try to reduce estate and inheritance taxes. It is legal to reduce taxes without committing fraud or tax evasion. In law, obligation is defined under duty and Duty of Care; it means what you owe by specific circumstances.
Then what Duty of Care does a person owe an injured party? There is a famous saying by lawyers answering this question, "that depends."
Is it ethical to do asset protection planning? Should you become the injured party, you will be subject to the ethics of others for which you have no control over the outcome or the consequences you will suffer or gain. One could argue that the party who is right will prevail. There are no guarantees and there is no magic wand.
Here is what we do know. We know that when the financial seas are calm, you have the right, by law, to protect your family, your estate and your assets. First-rate Asset Planners seek ethical solutions to your vulnerability and this is our goal.
ASSET PROTECTION EDUCATION
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- Types Of Trusts Spendthrift
- Asset Protection Facts
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- IRA Private Letter Ruling
- Types Of Trusts
- State Laws
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- Case Study
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- Asset Protection Education
- Family Trust
- Umbrella Insurance Policy
- Choosing An Asset Protection Advisor
- Asset Protection Concepts
- Types Of Trusts QTIP
- Asset Protection FLP
- Dynasty Trust The Basics
- Asset Protection Key Concepts
- Reasons For Asset Protection
- Asset Protection Ethical And Moral
- Asset Protection Privacy
- Protecting Your Assets
- Transfer Assets To Your Spouse
- LLC Asset Protection
- LLC For Asset Protection
- TrustMakers Forms Center
- TrustMakers Site Map
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