The Sky is Falling Theory of Asset Protection

Date: July 27, 2006

I appreciate Randall Edward's article on contempt of court last week. It is satisfying to see a litigator apply common sense to Asset Protection Planning.

Note his conclusion:

"With a little bit of smart planning and some good common sense, the chances that the client will ever be in the position of being threatened with a contempt citation are almost nil."

Randall is right.

This newsletter is closely akin to a well-deserved rant directed at the "Sky is Falling Planners." If you already believe in Asset Protection and write these guys off as marketers with something to sell other than Asset Protection Trusts, then read no further.

Note that Randall focused on the law and the practice in the legal community. He did not focus on one of the handful of "train wreck" cases like Anderson or Lawrence. Some planners read these cases and reach the illogical and ill reasoned conclusion that "Asset Protection Trusts are fraud per se," or the even more idiotic reach that "it must be negligence for a planner to even suggest an Asset Protection Trust."

Don't fall for this bull.

EXPECT to see more and more train wreck cases as people engage in egregious fraudulent conveyances. Expect to see more people put into jail for doing stupid things like retaining power over protected assets and defying pissed off judges by refusing to return assets to legitimate creditors.

What do these cases stand for? They stand for the proposition that crooked planners with overreaching clients will get the book thrown at them by judges who don't like to be defied.

WHAT DO THESE CASES NOT STAND FOR?

They do not stand for the proposition that Asset Protection is invalid, ineffective, immoral and just plain stinky.

There are some undisputed facts, and a few of them are:

-There are literally thousands of solid plans out there that work just fine.

-Plans which work (and this is most of them) do not have reported cases. The protected funds just stay insulated from creditors.

-The guys in the train wreck cases kept their money. (Ooops, I guess the plans worked even for bad guys.)

-More and more major financial institutions are pleased as punch to accept deposits of protected assets (do you think they would IF there was really any thought that Asset Protection was unethical, negligent or illegal?)

-More and more States (yes, the ones right here in the good old USA) are enacting Asset Protection Trust legislation. Do you think they would if it was unethical or illegal to do Asset Protection Trusts? The pundits constantly bashing Trusts don't do them. Instead they have some other high commission, financial product they are willing to peddle to you.

I guess it's all in the approach. The half-full or half-empty glass. So, next time you see a train wreck or a 747 crash, you can adopt "The Sky Is Falling Approach" and assume that all trains and planes are dangerous and must be avoided, or you can learn from the disaster and take your chances.

In my mind, you are better off getting good advice and protecting your assets. If you don't do so, and somebody takes them away from you, you have nobody to else to blame but yourself.

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