Kinetic Asset Protection: Choosing the Battle Ground

Date: 15-Sep-2005

It is time to get back to some basics. Here are the two KEY rules of Asset Protection.

RULE #1: What you don't own can't be taken from you.

My long-time subscribers are bored with this, so I won't beat this to death. Suffice it to say that if you give an asset away to an Asset Protection Trust you are no longer its owner. As long as you are no longer the owner of the protected asset, it is NOT fair game for a creditor as long as the transfer to the new entity was not a fraudulent conveyance. I often tell my clients that their brand new Asset Protection Trust is a “new baby” which doesn't owe anyone anything.

Enough on this rule. If you don't own it, your creditors should not be able to take it away. PERIOD.

PROBLEM… Rule #1 alone is not enough. Judges in the U.S. tend to do what they want to do; and, if the assets remain in their backyard (e.g. under their jurisdiction) then Rule #1 definitely isn't enough.

This is why you need to have solid protection to enable the second Rule of Asset Protection.

RULE #2: No country in the world automatically enforces U.S. Judgments.

Imagine a Japanese court trying to enforce a U.S. antitrust award. This entire set of laws is nonsense to a judge in a country built on government encouraged price fixing and tying arrangements. (Much more on this in later newsletters.)

One of the wonderful things about the Kinetic Asset Protection concept is that you can choose your battle ground. Do you know how easy it is to change the battle ground?

If you want to change the laws regulating the Trust, all that happens is that the situs of the Trust needs to be changed. This happens in a split second when the Protector fires a Trustee in one country in favor of a trustee in a second, different country. For example, if the Protector fires the trustee in England in favor of a trustee in Belize or the Cook Islands, the entire battle ground changes. There is instantly another set of laws, and a different set of hurdles for any claimant.

Second, even though the protected assets will normally not be in the same country as the trustee, it is just as easy to change the laws which regulate any claims on those assets. HOW? Easy, just wire the protected funds from their repository in, say, Switzerland to another repository in Singapore or any other country. The bottom line is that it takes ten minutes to change the situs of the funds, and this completely changes the rules of the game.

In short, a Kinetic Asset Protection Plan is a living, moving organism. The game changes, and it always costs $10 to collect 10 cents.

What solid Kinetic Asset Protection does is remove the economic incentive to litigate. Few contingent fee lawyers litigate on principal. They litigate for money and nothing else. Like common burglars, they look for easy targets. It is our job to make sure that you are never an easy target.

ABOUT THIS EDITOR:

Rob Lambert, Founder and former law professor is considered to be foremost expert on tax compliant asset protection structures. A contributing editor to Lexus Nexus debtor creditors series of law books Rob's passion is implement client wealth plans that stand the test of time and hold up under duress.

Full Bio - Email Rob