An international asset protection strategy is a way of shielding your wealth from government interference and other predators from gaining access to your hard earned assets all while using legal international diversification tools available to you. Asset protection comes in many forms but the most flexible and widely used is the Asset Protection Trust or APT. In a trust arrangement, a trustee legally owns whatever is entrusted to him by the settlor. This means that a portion of the settlor’s assets have been placed in a safer alternative place.
With the increasing risks and threats to assets, transferring properties to trusts has become more popular and important in the present time. The major advantages of setting up APTs include insulation of assets from creditors, tax mitigation, and better succession planning of your wealth.
International asset protection entails placing of trusts in any or among different jurisdictions. It does not necessarily have to be internationalized in the beginning provided that the transferring process begins before any criminal investigation takes place. Different jurisdictions provide different sets of rules involving offshore trusts.
Now that there is no doubt about the importance of setting up an international asset protection strategy, you might wonder, who needs this kind of protection?
The following groups of people should consider this seriously:
High Net Worth Individuals (HNWI) varies from one financial institution to the other but the most common brackets are $1 million, $5 million and $50 million. Individuals who have less than $1 million but more than $100,000 belong to the sub-HNWI group. Those who have $1 million in liquid financial assets are considered HNWIs, those with $5 million are called very-HNWIs and those who have more than $50 million are ultra-HNWIs. Most of these people are senior managers in multi-national companies, successful entrepreneurs and heirs of wealthy families.
High net worth individuals are very susceptible to lawsuits because of money judgments received from lawsuits. These people attract significant public attention because of their high standing in industry or due to celebrity status. Not to mention the tremendous amount of transactions they do every day with numerous clients and partners who could easily be threats against their positions and properties. Most of all, there’s the great risk on governments seeking a larger tax revenue from these individuals.
High risk professionals
High risk professional such as doctors, lawyers, architects and accountants are also high risk in litigation. These professionals’ incomes make them very capable to pay lawsuits and because of the fact that they can pay, they are increasingly been targeted.
Senseless lawsuits are still lawsuits. And oftentimes, your clients or anyone for that matter could only care less about your reputation, what matters is that they could get something from you for a minimal or no fee at all.
These high risk professionals are considered “deep pocket” individuals and if they would care less in protecting their assets, everything could be taken away from them in an instant.
Corporations and Limited Liability Company (LLCs) are less prone to asset risks. Sole proprietorship businesses need asset protection more because personal assets are exposed.
Same with the HNWIs’, business owners also experience issues on assets located in more than one jurisdiction, taxation, exposure to claims and law suits and even family matters like succession planning, division of assets and extended families, among others.
Business owners will also have to deal with debts to suppliers, third party mortgages, claims for damages caused by employees and product liability.
Asset protection is indeed very applicable and useful to entrepreneurs. Improper handling of lawsuits may lead to loss of business and even personal assets. Before setting up a business, it is critical that you know the potential risks that might harm your business as well as the level of protection you should meet and where to find the right advice.
In general, the purpose of an asset protection plan is to reduce risks through the process of insulation of assets from creditors and unexpected claims. They serve as barriers for unforeseen crisis and threats. The long run effect of having asset protection is to sustain one’s wealth while continuing to generate a reliable rate of return.
Professional services from asset protection lawyers and tax accountants for setting up an international asset protection plan are relatively expensive, and more often then not they will pass most of the work over to international assets protection specialists. So before you look to get your own international asset protection plan ask your lawyer or accountant if they have the right connections and network of providers to be able to complete the work you require.