Protecting Your Blind Side

Dear Clients, Colleagues, and Friends,

“White-eighty, white-eighty, hut!”

A crisp snap slams the ball firmly into Carolina Panther Cam Newton’s hands, and he drops back into the pocket, searching for his receiver as defensive linemen bear down. He hears a loud crunch – the sound of two bodies colliding. Cam smiles, knowing that his left tackle Michael Oher is protecting his blind side, giving him precious extra seconds. Cam cocks his arm, launching a bullet into the end zone. Touchdown!

Every great quarterback has a talented left tackle protecting their “blind side.” Who is protecting yours?

If you own a business, are married, or have an estate you care to pass onto your heirs – and you haven’t installed an asset protection plan – you are risking everything.

Take Samantha, for example. As the second generation of a successful family-owned business, she looks forward to a comfortable retirement. But last year, her company manufactured a defective product that could be the direct cause of dozens of fatalities. Between lawsuits and a massive product recall, her suddenly once-thriving business quickly becomes bankrupt, leaving Samantha on the verge of retirement with nothing to her name. If she had been aware of just a few of the many ways to protect some of her assets, her personal financial situation would not have been so dire.

She is not alone. Many hard working Americans find out far too late that financial ruin could have been avoided had their trusted advisors so informed them.

Like the left tackle on an NFL team, an asset protection lawyer’s job is to protect you from what you can’t see coming – to protect your blind side.

Lawyers ask a lot of “what ifs,” and in Samantha’s case, a lawyer might have warned her ahead of time that insurance can be woefully insufficient in product liability cases, and that other forms of advanced planning can lawfully keep judgement creditors from reaching your hard-earned assets during such financial and legal disasters. Moreover, a skilled asset protection lawyer would have evaluated her risks and recommended legal, effective, and proven asset protection vehicles designed to reach an early and modest financial settlement.

What are some of these planning vehicles? California businesses and their owners can take advantage of one of the most protective structures very few professionals have heard of – a Private Retirement Trust™ (PRT), which fully exempts assets held in the Trust from creditors, as well as subsequent distributions paid to the owner at retirement – whether from lawsuits or bankruptcy. Properly administered, Samantha’s assets would have been protected as her business imploded. Another proven “firewall” is the foreign asset protection trust (FAPT) to hold her cash and other liquid assets and personal investments. FAPTs use the more protective laws in wellestablished foreign countries that won’t allow U.S. judgments to be satisfied against the assets of the FAPT, even if Samantha is one of the FAPT’s beneficiaries. As protective trusts are irrevocable, if Samantha had moved her assets into an irrevocable trust and later needed or wanted to reclaim them, she could have used the HYCET Trust®, which allows remorseful clients to “have your cake and eat it too” by reclaiming gifted assets, again, sanctioned by the IRS (See PLR200944002).

These are just three examples of the many different methods that skilled asset protection lawyers use to protect their most valuable players (their clients) against unforeseen lawsuits, creditors, estate tax burdens in estate planning, and the risks of exposing their separate property in a contentious divorce. They are vehicles that could have saved Samantha from having to start over.

Like a good left tackle, an asset protection lawyer will always protect your blind side. If yours is exposed, we would like to speak to you.

Posted in Client Alert, Scenario.