PROTECTINGS ASSETS FROM RISKS

“Life is what happens while you’re busy making other plans.” (John Lennon)

There are two main financial battles in life: the first is creating wealth, and the second is keeping it. Some have learned too late that the second battle can be far more difficult than the first.

Asset protection is about accepting the possibility that eventually your hard-earned assets will come under attack. It also about taking steps to protect those assets. Asset protection starts with a plan, and builds on that foundation to weather a future storm.

Risks to your assets may be random, but expect them to occur.

The Random World of Living

First, consider how seemingly random events occur with probability.

Sometimes it appears the more you try to bring order to life, the more it seems disordered. Or, the more you look for certainty, the more it becomes filled with unplanned events.

Random events can and do appear in many forms, including changes in markets, social disorder, investments gone sour, business failures, unexpected law suits, death, divorce, and in many other unexpected ways. Life is uncertain, but the happening of these events occur with a certain probability.

Most of us would like to have a good ride, enjoy the moment, and be in control of our future. It's not that we shouldn’t make plans, but the true experience of being alive is beyond the plans we make. 'Stuff happens'. Yet we must continually live through this dynamic process of random changes.

And 'stuff' does not happen in an orderly process, like the Swiss. Instead, events act in a chaotic manner, like the Italians.

Those that understand unexpected events can, and will, occur, take steps in advance to manage, minimize or eliminate the risks. Asset protection and risk management are but two examples of protecting a lifetime of hard work.

If you’re like most individuals, whether on the road to success, or having arrived, you understand the logic in creating orderly planning to manage your risks. And you’ve hopefully discovered the importance of being flexible for the unexpected, random events to mitigate those risks. But without advance planning to protect your assets, you’re left playing the random lottery of life.

And even with the best plans made, things can and do go haywire when you least expect it. The real risk is not recognizing that these random events can and will occur with certain probability.

Investments go south, partnerships falter, businesses go bankrupt, patients or employees become disgruntled, litigation - and legal fees – overwhelm, social and political changes can make little sense, and divorce, death, and so many other events seem to randomly appear just when they shouldn’t.

We better understand the world by studying change. Our error lies in failing to understand the world as a series of events that change – our downfall is in ignoring these changes.

This is the reality of the world we live in. Like the Swiss, we try to maintain order in our life. But up close, we really only manage chaos, like the Italians. (I know, my father was Swiss, and mother, Italian.)

For these reasons, asset protection and risk management are essential to preserve assets. And a Standby International Trust, or an International Trust, are superior planning tools to start protecting assets from risks.

Why trusts?

The trusts we provide for our clients are generally integrated with asset protection, retirement planning, and estate planning. This means that the life and death sides are integrated as part of the overall planning. But there are significant differences between the Standby International Trust© and the International Trust. 

A Standby International Trust© is a domestic trust with a standby provision that allows you to elect to add an additional trustee later in any jurisdiction, anywhere in the world. There is no foreign trustee registered outside the U.S. when the trust is first established.

In the future, when a risk materializes, you can register the trust in a more favorable asset protective jurisdiction. The trust would then have the full international asset protection benefits provided for in the trust, and in the jurisdiction where it is then registered.

In the meantime, you avoid annual foreign trustee fees.

And when you first establish the trust, you can use either a personal trustee of your choosing, or alternatively, a corporate trustee that we set up for you. In both cases they would be located in the U.S.

A benefit of personal trustee is no trustee fees, and it's someone that knows you and your family. The benefit of a corporate trustee is that they are typically more experienced and routinely handle complex matters.

From the onset, the Standby International Trust© is implemented as a U.S. domestic trust, and not a foreign trust.

And a U.S. domestic trust it is tax neutral. All asset-generated income and expenses pass through the trust to your personal tax return.

So what happens after the standby election is made and completed?

The International Trust. This trust is also generally created and implemented as a U.S. domestic trust. It can be established one of two ways: 1) Designed and implemented from the beginning as an International Trust, or 2) After the standby election is completed in the Standby International Trust©.

If, and when, a standby election is made to convert the trust to an International Trust the trust can (and usually does) continue as a U.S. domestic trust even after the additional trustee is added from a foreign jurisdiction.

As discussed in earlier newsletters, the International Trust offers significantly superior asset protection and planning not found at home.

Does history tell us anything about the future?

In the 1930s, after experiencing historic economic prosperity, world trade started to collapse. At first trade wars and protectionism bumped up the local economy, jobs, and finances.  But eventually wealth evaporated and the banking system was nearly broken. Companies slashed production, pay and prices. What unexpectedly followed was the worse depression with 25 percent unemployment. Worse yet, many millions were led to their death in the name of fighting for nationalism.

Both the recent GFC and Covid 2020s were tough periods for many individuals, but unfortunately may only be a harbinger of what is yet to come. Unfortunately, most individuals alive today have never lived nor learned the most difficult past lessons from the deepest economic collapse, nor the heartaches that followed in the 1930s and 1940s.  

History tells us that new laws, regulations and protectionism restricting the free economy and the movement of people and money are certain to occur. They have in the past, and they will again. Short term they too may appear to work, but history shows how devastating they become long term.

What’s also true is that more laws and tougher regulations will make the free movement of people and money more cumbersome – border controls and Exit Taxes are already in place - but it will not stop those with a different view of their place in the world.

No one knows for certain what will occur next. The only certainty is the high probability of more uncertain, random changes to come. 

But for those willing to take steps today to protect their hard-earned assets, there is greater certainty they will survive.

Technology and international planning provide us as individuals enormous power to live, invest, and diversify assets where and how we choose that politicians cannot undue. History has shown that those prepared today to think and act internationally - and use asset protection planning tools - will certainly come out much better than those who don’t. That’s a fact you can rely upon.

But the world is struggling holding together a world order forged at Bretton Woods following World War II. Today, a new world order and banking system is being formed without the U.S., and in place of the US$. Long term allies are increasingly isolated from the U.S., old villains are suddenly good guys, and new villains are created to threaten your world. The U.S. once fostered the global order that brought mostly peace and economic opportunities for the past seventy-five years, yet now is unwinding almost overnight.   

The happening of unexpected, random events occurring with probability is alive and well in our larger world of politics, economics, social order, and financial markets.

Bring Some Certainty into Your World

Are you thinking for yourself? Or are you following the crowd? Do you understand how international planning and International Trusts can benefit you and your family?

There are approximately 100 complimentary past articles at our website that provide basic principles and tips to protecting your assets. Look closer at what international planning means. How to protect assets in a changing world. Learn more about offshore risk management, whether offshore is legal, and much more.

Asset protection planning - whether at home or abroad - provides a superior alternative for protecting a lifetime of achievement. An International Trust and a Standby International Trust © are two excellent examples for managing assets, global protection, and asset diversification.

As a former litigation attorney and judge, I’ve witnessed how fortunes were quickly won and lost in courtrooms. Asset protection designed and implemented with an eye towards future challenges – including litigation - is essential.

For some individuals it’s all about asset protection, wealth preservation and estate planning. For others: retirement. For many: opening doors to international investing, foreign currencies, offshore banking, or global diversification. And for some it’s about keeping open the option for offshore living & investing, full or part-time.

For a select few, it’s about leaving America’s burdens behind. Or becoming a sovereign individual, as found here and here.

Integrated planning is an important component of the planning process to combine estate planning and protecting assets. Minimizing estate taxes, providing for surviving spouse or children, keeping assets from a re-marriage - or second marriage children - are a few of the objectives when integrating estate planning into a structure.

The freedom to choose can be found without leaving home by combining domestic and offshore planning. Learn how to reopen the door to greater opportunities.

Your world will continue to change in unexpected, and seemly random ways. Yet, there are ways to retain some certainty and control over your assets in a random, chaotic world.

Start Now.

There are more International Trust and Standby International Trust© tips found at our site DavidTanzer.com.

The book How to Legally Protect Your Assets, 2nd edition, explains how you can use an International Trust to accomplish your objectives. And information on the Standby International Trust© can be found right here.

Offshore Living & Investing, 2nd edition, takes offshore planning to another level.

Both books are available at reduced prices right here at our web site in quality soft cover, pdf, or Kindle.

If you’d like to learn more and discuss your planning objectives in a confidential initial review, contact me here.

Until next time …

David