Asset Protection Planning Principles

Principle #1: Firewalls

As legal advisors, The Presser Law Firm, P.A. recommends that its clients use many different "firewalls" to protect their assets. Regardless of the perceived protection that a particular firewall might provide, in the unlikely event that it is pierced, a backup firewall should be in place to provide extra protection.

Our 'belt-and–suspenders' protection plan is the basis for the many successful protection programs that we have created. If one firewall fails, others are behind it. The challenge is to understand which firewalls to use, and when to add firewalls against an advancing threat. Highly effective Asset Protection plans frequently evolve in stages. A preventative plan is frequently deployed first and a crisis plan is implemented only as a creditor becomes a more imminent threat.

A solid preventative plan will provide essential protection and backup firewalls will deliver protection if you are actually sued. In the event of a lawsuit or claim, additional firewalls can be added to further protect your assets.

Crisis plans can be more costly to add, so we frequently add additional firewalls only after a specific threat arises. Our defensive strategies and additional firewalls are dependent on the situation, nature of the claim and amount involved, among other factors.

We advocate beginning with a cost-efficient, simple plan. Because not every lawsuit is wealth threatening and insurance may cover some lawsuits (or a lawsuit can be quickly and favorably settled), over-layering may actually cause problems in a complex situation and could prevent essential flexibility in a defensive action. Accordingly, we design protection plans that are capable of withstanding many types of challenges and preserve select actions for future defenses. This strategy reflects our years of experience in wealth protection.

The goal of any plan is ultimate safety—but no plan is one hundred percent guaranteed and proper legal advice and careful strategy will provide essential protection that can be augmented with many different firewalls to provide you with the peace of mind and confidence that you assets are adequately protected.

Principle #2: Diversification

It is essential to place your assets into different protective "baskets". This sound practice of "never placing all of your eggs into one basket" can force a creditor to pursue your assets distributed in different directions and protected by different entities and can severely handicap the creditor. Under this strategy, a creditor who succeeds in recovering assets from one basket must still go after the other baskets.

When protecting substantial wealth, diversification is essential. Each "basket" can be unique to all others and by combining layering (or defense-in-depth) with diversification creates an exceptionally strong shield and sturdy obstacle to any creditor. The Presser Law Firm, P.A.'s objective is always to block the pursuit and exploitation of your assets.

Principle #3: Counter Offensive Strategies

The Presser Law Firm, P.A. believes that "the best defense is a good offense." We utilize a number of strategies to impose liability on a creditor pursuing your assets. For example, a creditor that obtains a charging order against a limited partnership or LLC interest can actually incur the debtor's tax liability. Similarly, it is possible to make a creditor who sues a Nevis LLC or trust to post a $25,000 bond. Numerous other liabilities can be imposed upon a creditor in the event that they make an aggressive move on your assets. We integrate our comprehensive knowledge of these tactics in our Asset Protection plans and strive to ensure that a creditor has a downside or risk to pursuing your wealth.

Principle #4: Customize Your Plan

With years of experience in Asset Protection planning, we know that there is not one perfect firewall, strategy or plan, so we customize your plan to your specific needs. The Presser Law Firm, P.A. does not have a one-size-fits-all plan and we do not agree with Asset Protection planners that peddle a 'one quick fix' or 'magic bullet' protection strategy. Some planners push international trusts, limited partnerships or Nevada corporations—but are they the right firewalls for you? Only a unique, objective plan can property protect your assets.

It is quite possible that your situation may dictate the use of a domestic and an international strategy that is augmented by several other firewall practices. Your plan must reflect careful consideration of every possible protection tool and your Asset Protection planner must have a full command of all techniques.

In our years of practice we have seen certain planners use self-serving techniques that do not provide the most effective protection. A frequent example is the use of accounts receivable factoring programs that are preferred by insurance professionals who actually earn a commission from the life insurance policy that is funded by the accounts receivable. While this may protect your receivables—does it adequately protect your other assets?

Factors of consideration in the design of an Asset Protection program include:

• Your state laws.
• Your personal situation (age, marital status, etc.).
• Your financial (estate planning, investment and tax) situation.
• The strategies that you would be most comfortable adopting.
• The specific assets you must protect; and their value.
• What liability (if any) you need protection against.
• Whether you are in the preventative or crisis planning stage.
• Costs.

The Presser Law Firm, P.A. analyzes each of these factors in the design of a solid, reliable and effective Asset Protection plan.

Principle #5: Update Protection

Constant maintenance and management of a plan insures maximized effectiveness. It is not uncommon for a client to rush to protect themselves upon first threat of a lawsuit then allow their plan to fall into disrepair and provide exposure in the future—when it is likely that their asset base and wealth has substantially matured.

Laws change, fortunes increase, families break apart and "things change." Accordingly, we advocate and provide an annual review of every Asset Protection plan that we author to ensure that the most appropriate firewalls are in place and that as life's events unfold (inheritances, moves to another state, marital status, change in number of dependents…) that you remain adequately protected.

Principle #6: Protect All Assets

Frequently, clients believe that some of their assets (such as copyrights, patents, notes receivable, claims against others, etc.) are automatically protected. Certain "exempt" assets are often not protected against all creditors or are not protected to their full value and as a result a serious exposure may exist. A business or professional practice must also be protected in addition to personal assets, yet it is surprising how frequently this is overlooked.

Principle #7: Begin with a Flexible Plan

No single plan is effective against every potential threat or claim. The consequence of a divorce is very different than that of a civil lawsuit and each requires proper planning and strategy, as do the array of other threats to any collection of assets. Basic protection should take into consideration many different situations with a focus on known or imminent threats, reinforced with suitable firewall strategies to be activated as future threats develop.

The limitations of any particular plan must be clearly understood so that any situation can be adequately addressed in the future to provide swift and effective protection that counteracts future challenges.

Principle #8: Maintain Compliance with all Laws

Asset Protection is legal and is now recognized as a standard practice by wealthy individuals and corporations. Years ago this was not the case, but in today's litigious society it is an essential safeguard for all persons and entities with small or large assets.

Many protection schemes that are not implemented by professionals can skirt the law and fall into a shady area between legal and illegal. A qualified and experienced Asset Protection planner will not allow a plan to conceal assets fraudulently, design a plan that may require a client to commit perjury, violate any laws, launder funds, engage in bankruptcy fraud, or otherwise illegally mislead creditors. Any use of these tactics is not good Asset Protection.

The idea behind competent Asset Protection is that you have the law standing behind you. Schemes or protective strategies that are unlawful can create bigger legal problems than the value of the assets that are being protected, so always seek the advice of licensed and qualified legal counsel who can advise you the vast range of entirely legal protection practices available to you around the world without breaking any laws or engaging in questionable practices.

Principle #9: Keep it Simple

Complexity is not a requirement of an effective Asset Protection plan and we strive to design comprehensive programs that are not outrageously complicated or difficult to maintain. The layering of multiple firewalls should be implemented strategically in the design process and can always be added during times of duress to reinforce a plan, which is typically our choice. But every Asset Protection plan is unique and we treat each client's situation on a case-by-case basis.

Techniques such as exemption planning and equity stripping (encumbering the equity in your assets) are highly effective examples of uncomplicated ways to add layers of protection and enable both you and any future asset plan manager to easily understand the protection scheme without risking any exposure. The bottom line is that if don't understand the way that your Asset Protection plan works—it's too complex.

Principle #10: Keep it Cost-Effective

Economy and simplicity go hand in hand when designing an Asset Protection plan and clients need to be alert to exorbitant costs that can often make the process intimidating or seem impractical. A good plan does not need to be expensive to be effective but clients should be aware that surprisingly inexpensive plans might be generically designed and not customized around their particular needs.

Expensive tactics frequently increase the cost of plan include creating an international company organized by an international incorporation service to shelter assets. Effective? Possibly. Practical? Not always. Plan design is a function of your specific situation and cost should be relative to the value of your current assets and their projected value over the life of their protection, remembering that complexity is not always the best approach to Asset Protection.

Principle #11: Comprehensive Financial Planning

Clients should remember that Asset Protection should not be a substitute for proper financial planning and that estate, investment and retirement planning are essential components of successful wealth management. Combined with asset protection, these components of a well-balanced wealth management program are fundamental to long-term financial stability.

Principle #12: Balance Liability

A quality Asset Protection program must protect your assets from creditors and actually contain certain liability components to insulate you from business and other external liabilities. This practice limits creditors to one (or the fewest number of entities) and deploys assets in different baskets so a creditor can target a fewer number of assets. By way of example, a plan that shelters a business owner's personal assets is incomplete unless the plan contains or limits creditors to the assets of the specific business entities.

Principle #13: Make Sure the Plan Works

Our goal is to make your assets 100 percent lawsuit-proof using every available and appropriate legal tactic possible. Anything less than 100 percent is not a quality Asset Protection plan. While no planner can guarantee the absolute safety of an Asset Protection program (and you should be wary of any planner who does), you want reasonable certainty that your assets can sustain a creditor attack, should it occur.

PROTECT YOUR ASSETS TODAY!