Domestic Is Domestic Is Domestic

Date : 31-Jan-2008

Many overworked and underemployed lawyers and financial planner types are now marketing themselves as Asset Protection experts. Unfortunately, most of these experts don’t know diddly-squat about Asset Protection. What they really know is that the Asset Protection Group is now out of business, and that there is a demand for low cost Asset Protection. These promoters don’t care if it is effective…they only care that your credit card or check clears.

What is happening is that Asset Protection has become promotion and not effectiveness driven.

These new guys, some of whom still claim to be the Father of Asset Protection, are normally just marketing crap.

The crap they are selling normally fits into four pots.

CRAP POT ONE: Form a Corporation, Family Limited Partnership or Limited Liability Company and you are protected. This is a bunch of bull. These types of entities can be helpful. They are often part of legitimate plans; however, they normally offer ZERO (that’s right, zero) protection for an owner who is also a manager.

CRAP POT TWO: Make a phony loan (or two) between strawman companies and hide the equity behind a phony encumbrance. Yes, this worthless scam is still hot and getting hotter. Stay away from anything you can’t fully disclose to a judge while holding your head up.

CRAP POT THREE: Form a Nevada Corporation and we will structure it so that nobody knows you are the real party in interest. OH…and by the way, you also won’t have to pay your State taxes. This should be dead by now; however, it is gaining greater and greater momentum.

CRAP POT FOUR: And this is the one which gets me the most. Legitimate, big time trust companies are offering domestic Asset Protection Trusts to their clients. The problem is that these trusts ignore the Full Faith and Credit Clause. Yes, a Delaware Asset Protection Trust might work if the dispute is in Delaware, the property is in Delaware and all the parties are in Delaware. Otherwise, the Full Faith and Credit Clause controls. Do you honestly think a New York plaintiff with a New York judgment is going to have any trouble enforcing the New York Judgment in New York (or in the other 49 States) just because of some Delaware Asset Protection Trust? The answer is a clear NO. BOTTOM LINE: Domestic Asset Protection Trusts are next to worthless.

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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