When creating an Asset Protection plan it is very important that you avoid these common Asset Protection mistakes. If you don’t avoid all six of these common mistakes, you may find that the planning you have done is completely ineffective at protecting your property.
The six asset protection mistakes to avoid are…
1. Thinking You Don’t Have Enough Assets to Protect
There is a misconception that Asset Protection is only for the super-wealthy. The super-wealthy, however, actually have less of a need for Asset Protection than individuals worth $300,000 to $3,000,000. If an individual worth $20,000,000 dollars is sued for $500,000 to $1,000,000, they can probably absorb the lawsuit without a change in their standard of living. Meanwhile, an individual with $300,000 to $3,000,000 would likely see a significant reduction in their standard of living if they were hit with a $500,000 to $1,000,000 lawsuit judgment.
2. Not Using an Attorney
It is very important to work with an attorney in creating your Asset Protection plan. If you do not use an attorney, then any information you share with the person creating your Asset Protection plan will not be protected by the attorney-client privilege and could easily become public record. The protection provided by the attorney-client privilege is very important to the success of your Asset Protection plan.
3. Selecting the Wrong Attorney
There are many attorneys who claim to provide Asset Protection services, however, there are very few attorneys with the resources and capabilities to provide effective Asset Protection. In selecting an Asset Protection attorney, you will want to work with an attorney who can provide you the best tools and advice for protecting yourself and your family.
At Mile High Estate Planning, we use only the most trusted and tested Asset Protection tools available to anyone worldwide, and our clients our guided by the nation’s top Asset Protection attorneys and experts.
4. Relying on Insurance Alone
While insurance is a helpful addition to an Asset Protection plan it is not a replacement for an Asset Protection plan. Insurance protects you from certain types of claims or from risks associated with a certain activity, whereas an Asset Protection plan will protect your property regardless of the reason for the lawsuit.
Additionally, insurance companies may attempt to escape paying a claim if a large judgment is rendered against you. Your Asset Protection plan will remain in full force regardless of whether your insurance is available.
5. Relying on a single member LLC Alone
A single member Limited Liability Company is a great way to reduce your exposure to lawsuits, but it does not protect your assets. When incorporated into a full asset protection plan, a single member LLC can help protect your assets, but standing alone it will not provide Asset Protection.
6. Using a Domestic (Only) Asset Protection Trust
Asset Protection began in 1984 when the Cook Islands passed their Trust Act. Since then two to three dozen other countries including the United States have passed their own trust acts. In 1998, Alaska began allowing Asset Protection Trusts. The problem with an Alaska Trust, or any other Domestic Asset Protection Trust, is that Article 4 Section 1 of the U.S. Constitution requires every state to honor the judicial proceedings of every other state, which leaves a Domestic Asset Protection Trust vulnerable to attack. Although Domestic Asset Protection Trusts have only existed for about half as long as the Foreign Asset Protection Trusts, we have already seen several failures of the Domestic Asset Protection Trusts.
At Mile High Estate Planning, we use The Bridge Trust™, which is as simple to establish as a domestic trust but it offers the protection of an offshore Trust that is not subject to the judicial proceedings of the United States.