June 27, 2017

Education

“Global” Asset Protection

Many asset protection “gurus” say they know how to protect your assets. The real question is what do they mean when they say this? What the vast majority of advisors mean when they say they know how to help a client protect assets is that they know how to use domestic LLCs and FLPs or maybe an Offshore Asset Protection Trust(OAPT) for protection (some might also use domestic asset protection trusts).

Let us first say that if your current advisors know how to properly use LLCs and OAPTs, that puts them way ahead of most (assuming they know how to set them up correctly).

LLCs and OAPTs are used to protect your money from traditional creditors. Who are they? People who would sue you for negligence (typically an auto case, or professional negligence case).

Here is the APS™ definition of “global” asset protection

“Global asset protection is protecting your wealth from anyone or anything that can take your money.”

While you certainly should protect your wealth from traditional creditors, ask yourself the following questions:

-Are you more likely to pay income taxes this year or be sued for negligence?

-Are you more likely to lose money in the stock market over the next five years or be sued for negligence?

-Are you more likely to pay sizable amounts for your health care expenses after you retire or be sued for negligence?

-Are you more likely to pay capital gains taxes on the sale of a highly appreciating asset or be sued for negligence?

-Finally, is it more likely that your overall estate will be reduced by estate taxes at your death or have the estate reduced in size because of a negligence suit?

Even if you are a physician (a professional that is sued more than any other), the answer to all the questions is that you they are all more likely to happen during your lives than a negligence suit.

Then why does everyone talk simply about protecting your assets from the typical creditor which arises out of a negligence suit? Because that’s what the asset protection “gurus” know. Most do not know much about protecting your wealth from taxes, downturns in the stock market, and long term care expenses.

This is one reason the APS™ was created, to set a new standard of care for those who call themselves asset protection specialists or “gurus.”

When you see a “G” as part of the rating of an advisor listed on this web-site, you know that their knowledge is not just limited to protecting you from a typical negligence suit. Instead, their knowledge and skill will help you protect your wealth from ALL the typical creditors who can take your money.

The following is a more detailed discussion about the “other” types of creditors you need to protect yourself from besides those that arise from a typical negligence suit.

-The IRS and state government (if you have a state income tax).The IRS is everyone’s number one guaranteed creditor every year. Every year high income clients pay taxes to this creditor. Would you like to pay$15,000, $50,000, 100,000+ less in income taxes this year? Absolutely. Then you should consider using an APS™ rated advisor to look at your personal situation to see if they can help protect you from your number one guaranteed creditor, the IRS.

The stock market. You know this is the case if you had money invested from 1999-2001 when the stock market lost nearly 40% of its value. Think about it, did you lose money from 1999-2001? Absolutely. Would you like to invest in the market with good potential for growth and still principally protect all or the majority of their money? Then you should consider using an APS™ rated advisor to look at your personal situation to see if you can benefit from their knowledge in this area.

Capital gains. Many clients every year sell highly appreciated real estate and stocks. Those clients complain because they have to pay capital gains taxes. APS™ rated advisors help can you sell highly appreciated assets and mitigate the current capital gains. This can be done through CRTs/CGAs, installment notes, 1031 exchanges, etc. The key, as always, is to us a “Rated” advisor who knows all the solutions. Also, while it might sound counter intuitive, many times a client should use an intentionally defective grantor trust (IDGT) where the capital gains tax would be paid at the time of sale. Why? Because when setup properly, the client will be able to receive a completely tax free income stream for life from the IDGT (something that can not be done by the other solutions. Again, what sets an APS™ rated advisor apart from other advisors is that they know more solutions to help clients which allows them to give clients advice that is in their best interest.

Estate taxes. Clients with wealth all worry about the estate taxes that will be paid upon their death. Few advisors truly know “advanced” estate planning and ways to mitigate estate taxes.  APS™ rated advisors know many tools to reduce the size of a client’s taxable estate so as to minimize or eliminate estate taxes (such as “Freeze Partnership, “SCINs, GRATs, IDGTs, CGA/CRTs, etc.).

Long-term-care expenses. The number one guaranteed creditor of clients over the age of 65 comes from the health industry in the form of long term care expenses (drug costs, home health care, nursing home, surgeries, etc.). It is vitally important for you to protect yourself (or for your parents to protect themselves) from this guaranteed expense. The best time to protect yourself from this guaranteed cost is to deal with it when you are still working (if possible).  The earlier you deal with this expense, the lower out of pocket costs you will have. An APS™ rated advisor who has a “G” as part of their rating can help you protect yourself from this ever growing expense.