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The Two Key Rules Of Asset Protection

By Rob Lambert - Email Editor

Date : 12-July-2007

I am almost done with my rules, but here are some of the basics. Learn these and nothing more, and you will have the fundamentals down.

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, and I won’t beat this to death. Suffice it to say that if you don’t own something (even though you gave it away to an Asset Protection Trust) you are no longer the owner. If so, 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.” It doesn’t owe anybody anything. As long as the gift to the “new baby” did not impair your ability to pay your reasonably anticipated debts it should stand up. PERIOD.

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

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

To have solid protection, you need 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 Asset Protection concept is that you can choose your battleground. Do you know how easy it is to change the battleground?

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 another country, such as Belize or the Cook Islands, the entire battleground 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 that regulate any claims on those assets.

HOW? Easy: Just wire the protected funds from their repository in Switzerland to another repository in Singapore or any other country. The bottom line is that it takes 10 minutes to change the situs of the funds, and this completely changes the rules and the game.

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

What solid 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.

I hope this was helpful.

I wish you a healthy and protected week.

Best,

Rob Lambert

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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.

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