Orange County Business Journal

Wealth Management Column Answers from Jeff Verdon

Why should clients include asset protection strategies into their estate planning?

Protecting your assets and family’s legacy is an important part of any comprehensive estate plan. Many traditional estate plans include a component called revocable living trust (RLT) to hold a client’s assets. While the RLT will avoid probate at death, it offers no protection from lawsuit creditors.  This leaves a client’s assets perilously unprotected. The client could lose a large portion of their carefully built nest egg unless an asset protection strategy is incorporated into their estate planning process.

Eighty percent of the world’s lawyers live in the United States and every year 15 million lawsuits are filed here. Many of them are frivolous suits in which the litigant has a very low chance of winning. The goal of asset protection is to remove any economic incentive for new creditors to go after assets because they are securely protected in a trust. This allows clients to hold onto their assets for their future and families.

What are some of the planning strategies that people should consider implementing?

Protecting assets can include setting up trusts in states or nations whose laws make it difficult to violate those trusts.  There are a variety of domestic and foreign asset protection trusts which we will detail in future columns.

Many people ask whether going offshore for foreign trusts is legal.  After many years of experience creating these trusts, my answer is that the IRS wouldn’t print all of the forms one is required to file if going offshore were a crime.

Here are a few of the many types of trusts for anyone wishing to safeguard their accumulated wealth and estate.

  • Dynasty Trust – a trust established to remain in effect over multiple generations
  • Directed Trust – a trust where the trustee may delegate the investment activities to investment professionals
  • Foreign Asset Protection Trust – a self-settled trust established in a non-US jurisdiction under laws that are more protective than domestic trusts from lawsuits and other third-party claims
Posted in Client Alert, Orange County Business Journal.