Not working with an experienced Asset Protection Law Firm
Unfortunately, there are too many marketing companies out there, not even law firms, selling asset protection products without any legal background. It's not uncommon for some of our clients to come to us after having created a complicated plan that they were told was asset protection, but in reality served only to confuse their estate and provided incomplete or no asset protection.
Thinking you can avoid paying taxes by creating an Offshore Tax Trust
Once again, many of these marketing companies use the "No More Paying Taxes" rhetoric as a selling tactic. Sure, no one enjoys paying taxes. But, if you create an Offshore Trust with the intent of avoiding taxes, you will get burned! The IRS has created a special Task Force to combat this. It's called Tax Evasion! You can read about it in our Beware of Scams section at www.lodmell.com.
Choosing a jurisdiction within the United States under the pretense that it will provide Offshore protection
Currently, there are a number of states within the U.S. that are being marketed as providing Offshore Asset Protection. Our position is simple. The whole point of creating the International Asset Protection Trust is so that in the event your liquid assets become threatened, they could be moved into a foreign jurisdiction. To market a U.S. based Asset Protection Trust overlooks the obvious. Since your assets are still in the U.S., they're still subject to the U.S. laws and although they may be more protected then without anything, they do not come close to the protection offered by a properly structured International Asset Protection Trust.
Improperly funding your asset protection vehicles
Without guidance from an experienced asset protection attorney, you could improperly fund your asset protection vehicles. A properly created, but improperly funded entity could expose your assets to a potential creditor. You need to know what can and cannot go into to your structures. Lack of compliance, in certain cases, could leave you wide open for a lawsuit.
Don't Do It Yourself!
Stay away from do-it-yourself kits! In a recent case, the IRS attacked a taxpayer who tried to cut costs by using a do-it-yourself Family Limited Partnership (FLP) kit and handling all the property transfers and accounting himself. The attempt was so careless that the IRS won and hit him with a $400,000 death tax bill (See Estate of Reichardt vs. Comm. No. 1224-98, 3/1/2000).
Thinking that being sued could never happen to you
Unfortunately, the United States is the most litigious society in world. If you've got money, chances are you will be sued. If you think it can't happen to you, you're wrong! Your financial information can be retrieved by anyone, especially an attorney contemplating suing you. If you've got money, you're a prime target!
Waiting until it's too late to begin your asset protection plan
It is often not possible to implement any of the Asset Protection tools we outline after you have been served in a lawsuit. In many cases, that would be considered a fraudulent conveyance. Only by taking a proactive stance against losing your money can you be sure you will you protect your assets. It's imperative that you take action to protect yourself now.