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10 ASSET PROTECTION TIPS

It’s not just what we say, but what we do – or don’t do – that says a lot about who we are.

We like to think our decisions are carefully thought out, but research and psychologists tell us that many of our everyday decisions are actually subconscious. As every second our brains are bombarded with millions of individual pieces of information, there is no way we can consciously sift through it all.

There are few things more fascinating than the human mind, yet it is one of the least understood objects in the universe. Still, we know enough that psychologists can make predictions about our behavior based on observations and rules that pretty much hold true.

These observations apply to our handwriting, how we describe others, our Internet research, the cars we drive, and even how we plan for protecting our assets and the administration of our estate. This is why AI and analytics are either loved or loathed.

Below are ten quick easy tips for protecting assets that help free us from the unconscious mold. But first, let’s see what more research reveals about some of our habits.

What We Say & Do

The courts typically accept testimony from under both the Daubert and Frye standards. The reasons handwriting analysis is admissible in court is that it gives clues to not only the author, but also 5,000 different personality traits based on the way you space your letters, how you sign your name, and even how you connect the letter 'o' and 's' to other letters in a word. The size of your handwriting can demonstrate your personality traits.  People with small handwriting tend to be shy, studious and meticulous, whereas outgoing people who love attention will have larger handwriting. Wide looping created in 'l' and 'e' can suggest you are relaxed or spontaneous, or open minded. Narrow loops tend to express scepticism of others.

What’s more, how you view others is often linked to your happiness, and can generally describe how happy, kind-hearted and emotionally stable you are. Describing others by positive and negative characteristics - researchers say - determine your well-being, mental health, social attitudes, and even how you believe you are judged by others.

Researchers understand that a person's tendency to describe others in positive terms is an important indicator of the positivity of the individual’s own personality traits. There are particularly strong associations between positively judging others and how enthusiastic, happy, kind-hearted, courteous, emotionally stable and capable you are generally described by others. In other words, seeing others positively reveals our own positive traits.

In contrast, negative perceptions of others are linked to higher levels of narcissism and antisocial behavior. Researchers discovered that a tendency to see others negatively indicates a greater likelihood of unhappiness or depression.

And it’s no news that what you wear says a lot about you. Your clothes provide information about your profession or occupation, as well as your ambitions, emotions and personal spending habits.

Your Internet browser history reveals other information about who you are – apparently more than most of us care to provide. Google and other spying-eyes go to great lengths to watch what you do when sitting down at the computer.

One of my favorites is how our post codes and the cars we drive are said to speak volumes about who we are. Car choices are said to correlate with hundreds of different personal characteristics, including hobbies, political preferences, TV habits and emotional qualities.

The Wall Street Journal, using data from credit reporting agency Experian, recently sifted through the most recent popular luxury cars purchased in some of America’s priciest ZIP Codes. They found that in Beverly Hills, CA 90210 (medium home price $4.9 million) car buyers favor Mercedes-Benz.  Up the coast in San Francisco, 94027 (medium home price $7 million) buyers quietly cruise in eco-friendly Tesla.

According to a recent Strategic Vision analysis, gambling is a more common hobby of the Mercedes-Benz E Class, while bridge and poker are popular pursuits among Mercedes-Benz S Class buyers.

In McLean, VA 22101, Pinecrest, FL 33156, and Dallas (Highland Park), TX 75205, it’s the Lexus RX350 by a wide margin. The Lexus is associated with high church attendance.

In Manhattan, NY 10013 (medium home price $3.2 million) it was the BMW X5 and Range Rover. Interesting how the Rover generally associated with outdoor pursuits, such as horseback riding and skeet shooting - activities not typically associated with the Big Apple. And the BMW X5 car owners are said to have a higher propensity for bowling than most other vehicle owners, according to the survey.

And what do your actions – or the lack thereof - to eliminate uncertainties about the future of your assets say about you?

What Asset Protection & Estate Planning Says About You

The process of insulating and protecting assets from disgruntled others is called asset protection. Anticipating and arranging for the disposal of your assets after death is called estate planning.  Quality planning integrates both lifetime and death planning.

Asset protection consists of using legal techniques to protect your assets from risks and liabilities arising from different sources. In many cases it is possible to vest legal title in personal assets in a trust, while retaining control over assets through LLCs.

Estate planning is the process of arranging the transfer of your assets for the future certain event of death. An estate plan aims to preserve the maximum amount of your assets as possible for beneficiaries and others of your choice.

Proper planning includes all property - real and personal - owned by an individual prior to holding title or distribution through a trust. Real property is real estate. Personal property includes everything else, for example your household items, cars, stocks and bank accounts.

If your financial house is in order and all assets are protected, it says a lot of positive things about you. It shows that you take life’s risks seriously, that you plan for the future, and care about protecting assets for your loved ones. It also demonstrates that you are willing to take responsibility and control of your life.

On the other hand, if you fail to take the necessary steps to protect your assets, what do you think the reverse says?

What follows are ten tips for protecting your assets.

Ten Simple Tips

1. Asset protection can limit risks to assets against current creditors. Timely and well-planned asset protection can potentially keep all or a majority of assets out of the hands of all future, potential creditors. At a minimum, you should be able to greatly mitigate the risks to your assets. If you don’t own the asset, it is difficult for others to reach them.

2. Start early, and don’t try to hide assets from your creditors. Generally speaking, steps taken today - before a claim arises - generally works best. Only limited steps taken after a claim arises will be successful. Transfers can be undone by fraudulent transfer laws, or worse.

3. And you don’t need to hide cash offshore. Hiding assets has never been a hallmark of quality asset protection planning. But assets placed timely offshore are certainly more difficult for creditors to reach. How many – and importantly when - assets are placed offshore is an important decision. Timing is everything. But until or unless these measures are necessary, you can keep your assets right at home. However, having steps in place to quickly and timely transfer assets when necessary is an important part of a quality planning structure.

4. Diversify Your Assets. Some individuals take great pleasure in diversifying their assets between onshore and offshore. Not only is this smart thinking for a variety of reasons, but it can offer greater returns with lower risks. And those assets offshore are generally far better protected when a claim arises.

5. Late Planning Usually Backfires. Asset protection created after a claim arises usually makes matters worse. By comparison, what good is trying to obtain homeowner’s insurance after the fire trucks are already in the driveway? Not only can a judge unwind an asset transfer after the fact, but both the debtor and those who assisted in the transfers can become liable to the creditors. There is never a better time than ‘early’ to implement your planning.

6. Asset Protection Planning Can Reduce Insurance Premiums. Asset protection can and does allow for opportunities to save money on insurance premiums. And asset protection and traditional insurance can go hand-in-hand. While asset protection is sometimes thought of as another form of insurance to protect assets, it does not entirely eliminate the need for traditional insurance altogether. Depending on the type of traditional insurance cover, some insurance can serve as a useful tool to quickly and inexpensively resolve disputes. Then, when the need arises, your asset protection plan is in place to offer the best available protection well-beyond what traditional insurance provides.

7. Remember the KISS methodKeep it simple, stupid. What good is a planning structure that you don’t understand? If you don’t understand it, or know how to use it effectively, then it may not be effective. Asset protection and estate planning should not be overly-complicated. If your planner can’t help you understand the planning principals in their basic form, then it may not be right for you.

8. Trust should own LLCs, and LLCs should own the assets. Think of the trust as the primary planning tool that protects your assets. It contains not only your estate planning, but also the essential asset protection provisions and other features important to you. Then, to properly segregate assets and equity from risks, the trust should own the LLCs, and in turn, the LLCs should own the assets. You can control the assets directly as the LLC manager. And as trust protector, you have important controls over the trust and the trustees.

9. Too Much Control Is A Bad Thing. With the above being said, asset protection planning attempts to reach a balance between sufficient control of assets and to avoid creditor’s arguments that the planning structure is a sham, or it should be disregarded on alter ego or similar theories. This is where proper planning – and an experienced planner – comes into play. Follow this link to learn about what to look for in a good planner.

10. Don’t Rely Upon Homestead Exemptions & Bankruptcy to Protect Your Assets. Prior to the last major changes in the bankruptcy codes, filing for bankruptcy allowed a debtor to get rid of debts, keep many assets, and start anew. But that has changed. Today, homestead exemptions are limited, and provisions in the bankruptcy code and case law can make relying upon homestead exemptions unreliable, or sometimes useless. Relying upon bankruptcy to protect assets is not a good plan. What’s worse, why place the fate of your assets in the hands of a local bankruptcy judge who yields strong powers?

Bonus TipAsset protection planning should be based on the presumption that your planning will eventually become known to creditors. Generally, it usually does. And this is not a bad thing. And if the timing is right, it can actually serve as a benefit when you need to press upon a plaintiff’s lawyer - or an opposing litigant - about how difficult it will be to recover assets from the planning you implemented ages ago. As noted above, secrecy is rarely good planning, and often creates more problems than it serves.

What you do today to protect your assets says plenty about you.

What to do Next …..

Our web site – DavidTanzer.com – offers complimentary past articles describing International Trusts, and Standby International Trusts, if you wish to learn more. The more you understand international planning options, the less foreign they become.

The complimentary past newsletters and articles on our website is a great place to begin. International tips are located here.

To learn more, the book How to Legally Protect Your Assets, 2nd edition, is a good next step. And learn more from Offshore Living & Investing, 2nd edition.

Start today and learn how to proceed with a confidential consultation to review your personal situation to accomplish your objectives and contact me here. I’ll explain how to proceed with a confidential initial review.

Remember, it’s not just what we say, but what we 'do' that says who we are.

I look forward to talking with you.

Until next time……

David