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WHY ASSET PROTECTION NOW, MORE THAN EVER

Today’s email is relatively short, and to the point. It is about why asset protection today is more important than ever before. And it provides hopeful opportunities to protect your assets, if you take steps today.

The risks now threatening your assets are far greater than you realize.

Read on to see how and why it is more important today, than ever before.

Why Asset Protection is Needed Now.

Asset Protection is implemented to help protect assets in particularly challenging times. The current environment presents an extreme challenge at many levels, and particularly for protectimg your assets.

The good news is that there are things you can do to protect assets, but not for those that linger.

One quick and notable example of how asset protection helped saved fortunes was during WWII. Those across Europe with financial assets fleeing the harsh military regimes of Germany, Italy, and Russia, and hiding from local gangs of thieves and thugs, quietly hid their assets. At that time, Swiss accounts - and Swiss safety deposit boxes and storage facilities - was the go-to solution. For quick thinking individuals it became difficult, and even impossible, for others to trace assets and force individuals to transfers their assets under threats of force and torture. At that time, strict Swiss laws had made it illegal to disclose assets or account holders to anyone under any condition. Many Swiss depositors across Europe lost their lives, but those that took early precautions and survived, or the heirs for those that didn’t, came out far better after the war ended.

The Swiss bank secrecy laws, with asset protection trusts that spanned across boundaries during the 1930s and 1940s, became the model for similar cross border asset protection in offshore jurisdictions beginning in the 1980s and 1990s. The need for asset protection became readily apparent by the late 1980s as litigation started to escalate.

Enter yours truly.

During the 1980s my law practice focused on litigation, and that decade I witnessed many courtroom dramas unfold with how easy it was to separate individuals from their wealth. For many litigation lawyers, like myself, the courtroom was a sporting event, limited only by 5th century BC guidelines written by Sun Tzu, The Art of War. I was a highly competitive and successful litigator: ALTA named me a Top 100 Trial Lawyer, and member of the exclusive Million Dollar Advocates Forum during the 1980s. However, underneath it all, I was genuinely troubled by the abuse I witnessed during ligation. I started to find and listen to my conscience.

As a result, I switched gears and became one of the early legal pioneers in asset protection around 1990. At the time, you could count on one hand those of us involved in this new boutique legal field. I was eventually credited for re-identifying and restructuring the user-friendly family asset protection trust (FAPTs) to what’s well-recognized today as the International Trust. Since the early 1990s, I‘ve written extensively on the topic in four published asset protection and international planning books, and through hundreds of articles and newsletters. And as an adjunct law professor I taught law students and lawyers how international asset protection planning works. Some of those articles are available at this link.

What’s clear is that in times of uncertainty and risk, asset protection has helped protect investors, business owners and partners, spouses, medical professionals, the elderly and the young, widows, heirs, and a very long list of others with assets worth protecting. Whether the amount is $500,000, $5,000,000, or much more, or a bit less, a lifetime of hard-earned accumulated savings and investments means pretty much the same to all individuals, at all asset levels.

Since the early 1990s, asset protection in the US, and elsewhere, has provided integrated estate planning and asset protection for a long list of individuals. And the International Trust – planning across borders - is considered far superior to any other planning, in particular the domestic trust variety.  

What does history tell us about one of the biggest risks to assets today?

There is a long list of risks to assets. Government confiscation, one-off heavy taxation, frivolous lawsuits, business and professional failures, claims made by disgruntled employees and unhappy customers, clients, and patients, and the list goes on, and on. But you may be surprised to know what history tells us may be an even bigger than all of them under the current circumstances.

Taking a long view of history, global pandemics, and global wars, occur somewhat irregularly, and impact much larger numbers than most people understand. The smaller localized epidemics and regional wars we’ve experienced during recent decades are mostly routine smaller events compared to looking at history from a bigger perspective. The big picture demonstrates that global catastrophic events of major global pandemics and global wars occur about every century, give or take. In the past, the dull response I received when I discussed these historical moments with my now adult children, their spouses, friends and others with little knowledge of history, was customarily a response reserved for old cranks. But now they’re beginning to pay attention.

The common feature to all of the extreme events is that the risks to individuals with assets are greatly heightened during these times.

Why?

As is only starting to manifest, an atypical number of people lose their jobs. Businesses and professional offices close. Most individuals have limited savings and resources to fall back upon, with only short term reserves, if any. Homes and rental apartments are lost, and new large numbers of homeless add to the numbers already on the street. People become increasingly desperate as time goes on. Desperate to feed their families. Desperate for a place to live. Desperate for medical care and pay their bills. 

Many quickly reach the bottom tier of Maslow’s hierarchy of needs, because their basic needs for food, clothing and shelter are not met.

Let’s be honest. If you or your family had no food or shelter, and needed medicine and warm clothing to survive, would you hesitate to forceably take from others that did? In a world where everything looks bleak - nothing but desperation everywhere - this is when desperate people turn to desperate measures.

Throughout history, whether during local epidemics or global pandemics, or during regional wars or global wars, desperate people turn to desperate measures. The current environment will be no exception. Just look at the regional desperate measures at hot spots around the globe where hundreds of thousands – or millions – took to crossing dangerous borders and oceans for a safer, or better life, or even just to survive. 

You too would take desperate measure to survive. The same should be true about protecting your assets from those that will become increasingly desperate.

Events throughout history, like we see today, occur in stages. First, the denial. Then business closures, job losses, and worse. Fear and anxiety as economies come to a standstill, and entire countries go into lockdown. What follows for some is trying to come to grips with the reality. But as conditions and events get worse over time, more and more individuals will suffer hardships, and many will become increasingly desperate. Desperate people always turn to desperate measures, of all types.

This means more than desperate governments taking from those that have to provide for desperate others. It also means an increase in petty theft, armed robbery, and home break-ins. It means forcible transfers of assets under risk of harsh measures, by whatever it takes. Kidnappings for cash. And far worse. On line hackings are already spiking. Read the history books. See the unimaginable extremes that desperate people will take during extreme events.  

And there is only so much the government or police powers can do to stop or prevent some of the worst in human nature from occurring. Or that personal defense weapons can protect.

How far? How long? How bad? No one knows. But what we learn from history is that those that take steps early and prepare for the worst are the ones that best survive the ugly times ahead. And the others?

Already in the US, week ending March 21, 2020 - in only one-week – initial unemployment claims were 3,283,000. This is an incredible number. A historical number of people have already lost their jobs and need money to survive. But then this was then toppled the following week ending March 28 as weekly claims rose to 6,650,000, double the week before. Next week, and the weeks after?

Too fully comprehend these early numbers, during the past 70 years - even during the Global Financial Crisis of 2007/2008 - under the worst conditions, the highest initial weekly unemployed claims never exceeded 500,000, and were always much, much lower. The total unemployed during the GFC reached ‘only’ about 8.7 million. The US is already on track to surpass the Great Depression unemployed of 15 million when at its very worst point. The sad stories of hunger, desperation, and worse, during the 1930s were told by my long-deceased parents and their friends when I was a little boy. These memories ring loudly in my ears today.

Baton down the hatches, and protect your assets! What is certain is that this is only the beginning, and much worse will follow. Terms of 'catastrophic' and 'unprecedented' don’t do justice to the numbers.

This is the Minsky moment on hyper-steroids.

Today, the wealth of the top 1% is equal to the lower 90% combined, according to the Bureau of Economic Analysis at the US Federal Reserve. The disparity in wealth today is far greater than leading up to the 1930s Great Depression. Today, governments are terrified with the economic fallout. They are concerned that these events will be far worse combined with the global pandemic. Leading global economists are already forecasting GDP losses between a staggering -20% to -40% in 2020 alone. That's an unfathomable economic loss, and it will impact all of us in the coming months and years in ways we cannot predict today. Even before the pandemic, governments, economists, and reserve banks around the world were forecasting the end to the last forty-year debt super-cycle, with concerns of a greater recession, or depression, or worse. 

And then in recent weeks we were all slammed with a new threat – and a new norm – that feels every morning like waking up from a nightmare. Concerns from all quarters are what lies ahead could be far worse than the 1930s, the authoritative regimes that followed, and then the resulting global wars of the 1940s. What began in 1929, took until 1945 to establish a new global order. For those lucky enough to recapture equity losses, it took twenty-five years to break even, and that’s before considering lost opportunity costs during those years. We can only wonder today what shape our world ahead will take.

Yes, our hearts go out to those that will suffer financial hardships. And yes, we all should do our part to help those in desperate need. But admittedly, there are limits to all of our resources. And there are limites to what governments straddled with debt, the state and federal agencies, and kind-hearted individuals can do for increasingly mounting numbers of desperate people that will appear.

But that doesn’t mean that those with any measurable assets can’t, or shouldn’t, take steps now to protect what they have. 

After all, your assets will protect you and your family from becoming desperate, too. If history is our guide, we're a long way baby from the beginning of a recovery, which is likely at least 12-18 months away, or much longer. A lot can happen between now and then, and things could get much worse for much longer. 

Are you willing to gamble your life that it will be happy days again soon? And what if you're wrong? 

Throughout history, during these extraordinary times, risks arose not just from desperate people, but also from thieves and thugs dressed in different forms. Some were clothed with government or military authority, and others were armed with weapons, or nothing more than their fists and sticks.

During desperate times, there is always a desperate need to take assets away from those that have, to give to those that don’t. It literally becomes a matter of life or death.

Rested assured, I’m a life-long optimist by nature. I feel positive that at some point, when we step over the bridge in the future, things will get better. But I’m also a realist. And a good student of history. Vaccines will be found, but that too takes time to properly identify, test, produce, distribute, and inoculate large populations around the world.

What to do now?

The opening sentence to my first book on asset protection written in 1999 asked the question: What are the two greatest financial battles of life?

The answers are this: The first great challenge is to reach your goals and objectives.  The second great challenge is simply keeping what you have created.

The following pages in that book provide a long list of examples for times like we are experiencing today.

For that reason, I encourage you now, more than ever before, to take whatever measures are available to protect your assets.

Even if you only take small steps like keeping a low profile, or using multiple bank accounts at multiple banks for maximum depositor insurance protection, diversify not just investments, but diversifying in venues and jurisdictions in different countries to avoid having all eggs in one basket. Avoid personal guarantees. Equity strips in place for hard assets like real estate. 

Better yet, use entities that you control to hold and own assets. A cross border International Trust with integrated estate planning that holds title to underlying entities, that is registered in an asset protection friendly jurisdiction, outside the reach of where risks and litigation might arise. Strong trust protective provisions over trustees that you, and your successors and heirs, control. The ability to quickly redomicile assets, or entities, or the trust, to another venue, or replace trustees, if needed. Levelling the playing field against known and unknown risks.

Is there a place for insurance? Yes, maybe, but in limited amounts. Think of insurance as throwing a dog a bone to go away. And keep in mind that umbrella policies are inexpensive with limited coverage. High-end professional and director liability policies can be very expensive or prohibitive. Insurance claims have limits, and even then, the claim may not be covered, or there's a hidden exclusion. Insurance companies can, and do, go bankrupt leaving you with no coverage even if a good claim. And what the insurer’s appointed defense litigation lawyers thrust upon you may not be in your best interest. 

I have repeatedly witnessed all of the above, and more, during my nearly forty years of practicing law. I've represented insurance companies. And as a former civil court judge, litigation lawyer, international lawyer, and adjunct law professor, I've witness wealth quickly change hands even during normal times. And personally, when a family member was threatened with some of the above insurance risks at time when selling their business and retiring, our law office stepped in to set straight the insurance company and their defense lawyers. 

The list goes on and on with positive opportunities to protect your assets. There are many other ideas covered in the above book. In case you’re interested, a second edition of How to Legally Protect Your Assets is still available, right here on our site, with a companion book.

Depending on the types and values of assets you own, how they are titled, where located, your and objectives and goals, yes, there are many steps you can take right now to protect your assets. This is true even with different asset levels and types. There are planning similarities to what others have done, and always your unique and individual characteristics and goals are taken into account.

For now, I’m still here to share my nearly 40 years of planning experience and help you protect assets, if needed.

If you’d like to conduct a confidential review of your personal situation and see for yourself how international planning might fit into your future, contact me here.

Until next time…..

David


David A Tanzer, Esq.

JD, BSc, Ph.D (Hon)

 

For more information visit www.DavidTanzer.com or email to Datlegal@aol.com. David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”

David A Tanzer & Assoc., PC.

Datlegal@aol.com
DAT@DavidTanzer.com
www.DavidTanzer.com


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(Licensed to Practice Law in U.S. States & Federal Courts; Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; & Assoc. Member Queensland Law Society, AU - Foreign Lawyer)


The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.


(c) Copyright by David A. Tanzer & Associates, P.C. All rights reserved. Except as permitted under the United States Copyright Act of 1976, as amended, and pursuant to the laws of all countries, no part hereof may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, electronic or otherwise, without the prior written permission of David A. Tanzer & Associates, P.C. Reprint in whole or part strictly prohibited unless prior written permission is granted. International Copyright protected under the Berne Convention, Universal Copyright Convention  and laws of all other Copyright protected countries, and consistent with the World Trade Organization TRIPS.

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