Wealth Preservation & Asset Protection
ASSET PROTECTION & WEALTH PRESERVATION PLANNING IN UTAH
The Risks
There are over 20 million civil lawsuits filed each year in the United States and thousands of personal injury suits filed in Utah courts each year. We truly live in a litigious society. In an age where large legal judgments are often fodder for our 24-hour news cycle, the average American has become increasingly aware of their chances to win the “lawsuit lottery”.
Due to their financial success and high risk occupations, professionals are often the target of such suits. In our current economic environment, high risk professionals and businessmen such as doctors, surgeons, physicians, dentists, optometrists, pharmacists, veterinarians, business owners, and contractors, simply cannot afford to ignore the threat of litigation. For these and other high risk professionals, asset protection planning and wealth preservation planning are a necessity.
Medical professionals are particularly vulnerable to malpractice liability. According to an ABC News article in 2010, a survey by the American Medical Association found that more than 60% of doctors over the age of 55 have been sued at least once during their career. Furthermore, 90% of surgeons age 55 and older have been sued at least once. The survey also found that an average of 95 medical malpractice suits have been filed for every 100 physicians now in practice. In other words, it’s not a matter of if, but when. Without an effective asset protection strategy in place doctors and other high risk professionals and business owners run the risk of subjecting their personal assets to lawsuit liability, which can have devastating effects on their families.
What is Asset Protection?
Asset protection is the process of organizing assets in a manner which safeguards property from potential creditors. Asset protection planning involves taking non-exempt assets (assets subject to lawsuit judgments) and repositioning them outside of the creditor’s reach as exempt assets. It should be noted that transfers must occur prior to any claims by creditors so that the transferor is not subject to liability under fraudulent transfer laws.
Asset protection is an often misunderstood area of the law. In fact, overly complicated asset protection plans are often presented to professionals through “hard sell” or “scare tactic” sales pitches. Although asset protection does have its complexity, a solid asset protection plan should always include a heavy dose of common sense. Effective asset protection also requires knowledge in several areas of the law including: Estate Planning, Estate Tax, Income Tax, Business Law, Business Succession Planning, and Probate Law. Asset protection is typically associated with life planning, while estate planning is typically associated with end of life planning. However, a comprehensive wealth preservation plan integrates both disciplines in order to protect assets now and in the future.
Asset protection should never be about secrecy, hiding assets, evading taxes, or a strategy to avoid legitimate creditors by a fraudulent transfer.
Professional Wealth Protection
Our firm will work with you to create an asset protection plan that effectively integrates your asset protection, estate planning, business planning (or professional practice business structure) and financial planning goals. The foundation of this plan includes proven asset protection strategies, proven estate planning strategies, and common sense. Considering that there is no silver bullet when it comes to asset protection planning, this plan may utilize a variety of legal tools, including: Limited Liability Companies (LLCs), Corporations, Buy-Sell Agreements, Wills with Credit Shelter Trusts, Family Limited Liability Companies (FLLCs), Asset Protection Trusts, Annual Exclusion Gifting, Co-Ownership of Real Estate, Life Insurance, Annuities, Insurance, IRA’s, 401k’s, and Pension Plans
Offshore Trusts
Asset protection is often associated with offshore trusts in other jurisdictions such as the Cook Islands, Nevis, the Cayman Islands, and Bermuda. Our Asset Protection trust attorney can advise clients in the use of offshore trusts but it is a unique strategy that is employed sparingly. These are not used for purposes of tax avoidance and great care must be taken to avoid tax issues and in finding the right offshore partners.
LLCs- Delaware, Nevada, & Wyoming
Years ago, when the LLC was fairly new, states with strong LLC statutes on the books such as Delaware, Nevada, and Wyoming were good choices for LLC formation jurisdiction. Utah LLC’s and corporations are perfectly appropriate for most purposes. However, they are flawed when it comes to Asset Protection in that Utah law allows judgment creditors to seek dissolution if a company is not paying distributions, or a member judgment is not being liquidated through distributions. Our preference is Delaware because of lower costs and less required disclosure than Nevada.
We are here to help you make smart decisions in how to protect your wealth and assets. Don’t put everything you’ve worked so hard for in jeopardy by not taking action to safeguard it now. Let us review your individual circumstances and create a strategy that is most beneficial to you and your family.