The Reports Of The Death Of Asset Protection Trusts Are Greatly Exaggerated

Date: June 15, 2006

Every year one commentator or another opines that Asset Protection Trusts are dead. The pundits writing these obituaries normally are relying on one or several of the correctly decided cases like Laurence or Anderson where some foolhardy nutjob tried to push the limits of proper planning and got in trouble. I will be preparing a series of newsletters in the coming months discussing these cases and putting them into proper perspective. Before I do, I think it is appropriate for you to know where I am coming from.

THE BOTTOM LINE
Asset Protection Trusts work well. There are THOUSANDS (really 10's of thousands) of solid Trusts out there working just fine. These plans were done when the financial seas were calm as part of solid financial plans and were done in such a way that the person who did them is able to comply with any order from any U.S. judge.

All of the bad cases involve either crooks, scoundrels or people who chose to retain so much control that they appeared to be abusers of the system. The settlors of these overreaching and inappropriate Trusts and their advisors were and are idiots who stretched the limits of common sense and got caught. All of these bad cases were decided correctly and do not stand for the proposition that Asset Protection Trusts are unethical or ineffective. (I will demonstrate this in later newsletters.)

If a person follows the Kinetic Asset Protection Trust model (and I have written many newsletters on this), he can sleep comfortably knowing that his assets are safe, and that he has done no wrong which can expose him to any material risk of facing down a contempt order.

I have hundreds of clients who have such plans. Not one has ever lost a penny of protected funds to a creditor (many have settled suits for pennies on the dollar, though, because of their plans) and not one has ever spent a day in jail. PERIOD.

For the right person, Trusts work and work well. They are simple, straightforward and effective.

I have literally been through trial by fire with these types of Trusts. I have seen huge law firms with unlimited budgets go after my clients with no success. In all cases, my clients: 1) Did their planning when the financial seas were calm retaining sufficient assets in an unprotected environment to more than satisfy all known creditors, and 2) were well and truly out of a control position so that they had no power to move any assets at all. In all cases, my clients were represented by excellent law firms and behaved ethically. In each case, the clients have clean hands both before and after the plans are implemented as a part of their normal financial/estate planning effort. I have been through several chapter 7 cases where the Trusts were disclosed and held up. Honestly, the good cases are not reported, as there is no issue with the Trust at all.

Every single case where an appellate judge has held up a contempt order involving Asset Protection Trusts were decided correctly. Guys like Lawrence and the Andersons (who got to keep their money B.T.W.) are crooks who deserve worse treatment than they received by the judicial system. These guys do not deserve the benefits of Asset Protection, and they should end up in the jailhouse as they are essentially flicking the judicial system (and the individual judge reviewing their case) the bird. Judges are not stupid, and they hate to be told to go to hell.

Asset Protection works well when done right at the right time. Just like forming a corporation, LLC, LLP or even a pension plan. Some of these naysayers even go so far as to say that advocating Asset Protection Trusts is malpractice. To follow this position to the logical end, it should be malpractice for a lawyer to form a LLP to shield his assets from liability for the malpractice of his partners. Pure poppycock. Asset Protection Planning is both ethical and important. Asset Protection Trusts work and are alive and well.

I am proud to do Asset Protection. I sleep well every night knowing that I help people protect their hard earned assets from the many predators out there. I feel like a Doctor who only delivers healthy babies.

It is certainly not malpractice to propose an Asset Protection Trust. In fact, I believe it is malpractice to fail to propose Asset Protection Planning (which may involve a properly done Kinetic Trust) when doing estate planning. Apparently, judging from the calls I get from estate planners, many agree.

WHEW. At least I am transparent and easy to figure out. Asset Protection in all forms is important and helpful. SIMPLE. Protect it or lose it.

I hope this is helpful and I look forward to the many comments I expect to receive as I review the cases in this arena.

Now, on to a little business. I want to hire a law clerk for the summer with at least two years of law school behind him and a passionate interest in Asset Protection. If you are such a person, please shoot me an email with your resume.

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