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Kinetic Asset Protection: “Where’s Spot?

By Rob Lambert - Email Editor

Date : 03-Nov-2005

There is a popular set of drawings where children of all ages try to find a yellow dog named Spot. It is surprisingly difficult in some cases.

Well, let’s play the same game, except that Spot is your protected liquidity, and the person trying to find it is a judgment creditor. I am assuming that you have a properly crafted “old and cold” Kinetic Asset Protection Plan funded when the financial seas are calm.

Where Can Spot Be?

The United States: This is where you probably live. By this stage, you are no longer the U.S. Trustee and have no power over the Kinetic Asset Protection Trust at all. You were probably removed as the U.S. Trustee by the Protector. Most certainly, the protected liquidity is not in the U.S. As a result, a creditor can’t find Spot in the U.S. In most cases, this is enough to cause them to quit because most litigators can’t contemplate pursuing money outside of their state, much less into another country. This is especially true if the act of pursuing Spot requires hiring a lawyer on an hourly, non-contingent basis. Not too many contingent fee litigators (who litigate for money and not principle) will shell out cold cash to actually hire a lawyer in another country to maybe collect something.

If this doesn’t stop your creditor in his tracks, then they will have to look for Spot elsewhere.

Where Else Can Spot Be?

Spot can be in the jurisdiction where the Kinetic Asset Protection Trust is settled. This is the jurisdiction where the Foreign Trust Company is formed, and normally, the law of this country will control the Trust. Many lawyers will proceed to attack the Trust in this jurisdiction. What will they find? Usually nothing. I have a rule that the money should never be in the same country where the Trust Company is formed. It is ironic that the creditor may have to prosecute the suit to completion (shelling out money for his hourly rate lawyer) before discovering that the money is not there. Ironically, during the pendancy of this litigation it is common to change Foreign Trust Companies, thereby, changing the jurisdiction where the Trust is settled. This takes about two hours, and again, ironically, the creditor will probably not be informed of this change until his litigation against the lame duck Trustee is completed.

Spot can be in the country where the Foreign Trust Company is administered. This is often different from the country where the Foreign Trust Company is formed. For example, a St. Lucian Trust Company administered from Hong Kong. Should the creditor sue there also? Difficult question. Again, also easy to change.

Spot can, and normally, is in a jurisdiction completely unrelated to the Trustee, the Trust or the Settlor. Basically, a safe Fortune 500 level bank is probably where Spot will be.

Spot could be in fifty such banks. Again, it takes less than a day to change the battlefield. This is done by wiring the money (Spot) from one bank to another.

It is a horrific task just to find Spot. He can be in many places and jump around at will. Note: It is important that the U.S. Settlor not be involved in this process; however, that is a subject for a later newsletter.

Note further that even though finding Spot is a difficult task, it is not enough. Once Spot is found, he must also be captured (meaning the money has to be frozen so that it cannot be moved at will if attack looms), and the creditor must beat you in the second suit that he must bring in whatever country where he captured Spot. That is a large task, especially under our assumption that the Kinetic Asset Protection Trust was set up when the financial seas were calm, and that the operation of the Kinetic Asset Protection Trust is in the hands of people other than the Settlor.

This is why I have never had a client with a properly done Kinetic Asset Protection Plan ever involuntarily give a penny to a creditor.

Finally, don’t lose sight of the fact that one of the main purposes of solid Asset Protection Planning of any sort is to encourage settlement. A bad settlement is much better than a good lawsuit. A good plan makes this settlement easier to achieve.

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