While there is no real formula for determining whether an individual or business should engage in asset protection, as a preventative measure, it should be considered by all high-net worth individuals and those with high-risk professions, including doctors.
For those unfamiliar with the term, “asset protection planning” is the adoption of advance planning techniques that place one’s assets beyond the reach of future potential creditors. It is based upon proven sophisticated combinations of business and estate planning techniques, utilizing offshore trusts.
In today’s litigious society, people are being forced to protect themselves and their assets from liabilities that were not a concern in the past. While there is no real formula for determining whether an individual or business should engage in asset protection, as a preventative measure, it should be considered by all high-net worth individuals and those with high-risk professions, including doctors. Here are five reasons that every physician should be considering asset protection planning.
As a Physician, You Work in a High-Risk Profession
Writing prescriptions, diagnosing illnesses and performing procedures and surgeries can potentially be risky business. If there is any chance that you or your practice may be sued in the future, consider asset protection planning. When a potential client consults a litigator, the attorney will analyze the merits of the client's case, and, if the case looks strong, make a determination regarding whether a judgment, if won, can be collected. If the lawyer does not believe he can collect the judgment—the source of his fee—he will not take the case. Effective asset protection planning reduces or eliminates the ability of a creditor to collect a judgment from you, making you an unattractive target for the litigator.
Offshore Asset Protection Planning is Entirely Legal
The key to effective asset protection planning is the word “advance.” As long as this type of planning is undertaken in advance of a creditor appearing on the horizon, it is 100% legal to protect yourself. Unfortunately, many people first seek to protect their assets after they have been sued or otherwise incurred an obligation. In such circumstances the planning options are significantly narrowed because of fraudulent transfer laws (in all states) that permit a court to set aside transfers made at the “eleventh hour.”
You Can’t Just Hide Your Money in a Swiss or Other Foreign Account
While investing funds in a Swiss or other foreign account may prove to be a worthwhile investment, any asset protection planning that depends upon hiding assets or secrecy is doomed to failure. As a US taxpayer, the law requires you to report your interest in any foreign bank account, securities account, or other financial account. If you comply with this requirement, as you must, a creditor can obtain this information in a lawsuit, and if you lose the suit, the court can simply order you to bring the funds back to the US to satisfy the judgment. If you intentionally fail to comply with the foreign account reporting rule, you will be committing a serious crime—and the Internal Revenue Service does have the means to uncover non-reporters.
Asset Protection Trusts Will Not Fail Against American Legal Challenges
If properly drafted, structured and implemented (something easily done with the help of experienced counsel), no American court will have the power to reach the assets directly held in the offshore asset protection trust. Should an American plaintiff try to enforce a judgment of a US court in the Cook Islands, for example (where the trusts we set up are located), it will learn why the Cook Islands is the premier asset protection trust jurisdiction. It has a proven trust law and track record in applying it. The International Trusts Act 1984 (ITA) is the cornerstone of the Cook Islands offshore industry. Highly regarded amongst attorneys, the ITA has been tested many times before the High Court of the Cook Islands in some very challenging cases, including one brought by a US government agency.
Offshore Trusts Protect More Than Monetary Assets
Immoveable assets, such as real estate, art, antiques, furniture, jewelry, and high-value personal property, as well as ownership interests in closely held businesses, can be protected utilizing ancillary techniques in conjunction with a properly structured trust.
Properly structured asset protection planning can effectively protect your assets from potential litigants and creditors. It allows an individual or practice to protect assets against potential claims, yet maintain a great degree of flexibility. True asset protection planning is a legal discipline. Therefore, any information or advice on the subject you might consider should come from a lawyer. Consider: if you needed an open-heart procedure, wouldn't you want it performed by someone who does that procedure every day?
Donlevy-Rosen & Rosen, P.A. is law firm with a national practice focused on asset protection planning and offshore trusts. Attorneys Howard Rosen and Patricia Donlevy-Rosen co-founded the firm in 1991, and have since become internationally recognized authorities in the field of asset protection planning. They are the authors of the recently released Asset Protection: A Guide for Professionals. On the web: http://protectyou.com.