Asset Protection Planning: An Overview

06 November 2018
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This interview was originally featured on August 2017.

TL: What are the top three factors to consider when involved in asset protection planning?

Gideon Rothschild (GR): The most important factor is whether the client has any claims, contingent or otherwise, or creditors at the time that would render any planning subject to challenge as a fraudulent transfer. The second factor is what assets does the client own (that is, are they liquid or illiquid) and what are the client's personal estate planning objectives that can be integrated into the asset protection plan. 

TL: How does asset protection planning differ offshore vs. domestically?

GR: The main difference is that offshore provides greater protection, particularly if the client resides in a state that does not respect self-settled trusts.

TL: What are some of the current trends in international estate planning and what do you foresee for the industry in the next several years?

GR: From a US planning perspective, many individuals are seeking the safety and stability available through US investments and/or are considering moving to the US either permanently or for employment. Since we have a high income tax and wealth transfer tax regime, it is important that planning takes place prior to acquiring residency or US situs assets, such as real estate or US equity investments. In addition, if family members in the US might receive gifts or inheritances from foreign persons, proper planning can avoid US estate (inheritance) taxes when the donee passes away. Other cross-border issues include the need for multi-jurisdictional wills and the effective use of trusts, particularly in civil law jurisdictions where challenges remain.

TL: How do you best integrate estate planning with asset protection objectives?

GR: By utilizing trusts and completed gift transfers.

TL: How have the Panama Papers affected asset protection planning? Has it made your job as an asset protection specialist tougher?

GR: They have not if planning is legitimate and tax compliant, so no.

TL: How will Donald Trump’s tax plan for the US affect estate planning and asset protection?

GR: I doubt it will affect asset protection but if the estate tax is repealed there will be much to do in reviewing client documents to determine if revisions are needed, albeit for maybe only until the next administration.

TL: Any other thoughts you’d like to share with our community?

GR: The most important message I can leave you with is that asset protection planning must be implemented before a claim or threat of a claim arises. The reason I emphasize this point is that more than half the inquiries I receive are from folks who are already being sued or have creditors and it is too late to help them in any effective way.