The best domestic asset protection plan is the Ultra Trust® irrevocable trust. Implementing an irrevocable trust properly is very important.
The Ultra Trust® irrevocable trust asset protection plan is the best way to protect your assets without going offshore and without risking trouble with the IRS and government.
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Irrevocable trust asset protection is the strongest domestic asset protection available, hands down – that is, when it's properly set up and implemented. The reason why is because you are literally separating your assets from yourself. Once in the irrevocable trust, the assets are no longer yours. The assets are titled to the irrevocable trust which should have its own tax identification number, independent trustee, and trust protector. If you do not own the assets, the outside world cannot attain assets that are not yours. One can only make the claim that you fraudulently conveyed them into the irrevocable trust.
This goes back to my original comment: when implemented and set-up correctly, irrevocable trust asset protection is the strongest domestic asset protection available. In order to transfer the assets into the irrevocable trust, one must have a legitimate sale, exchange, or transfer with the trust – this will avoid fraudulent transfer claims by creditors. This process of transferring assets into the irrevocable trust truly differentiates the experts from the novice advisors. If someone tells you to gift the assets into the irrevocable trust, it is time to stand up and walk away. The person you are speaking with does not understand asset protection and thus, there is a 90% or better probability this exposes the entire gift to a clawback by a judge. In other words, that a judge will undo any of the planning you are doing if a creditor or plaintiff has the most basic knowledge of asset protection. Ninety-five percent of issues, challenges, and problems come from how the assets are transferred. It varies state-to-state, but the statute of limitations for asset transfers is four years. This means a creditor or judge can go back four years to reverse an asset transfer if he deems it to be questionable; that is, if the transfer is not done properly.
An irrevocable trust's only serious competition with regards to asset protection strength is with the offshore asset protection trust. The only significant difference lies with the judgment; with a domestic irrevocable trust, a judgment should not be executable if the defendant's assets are no longer in his name. A properly set-up irrevocable trust will have clauses that make it simply impossible for a trustee to go against his fiduciary duties to the beneficiaries by dispersing funds from a properly set up irrevocable trust. With regards to an offshore asset protection trust, a judgment from a United States judge is simply not recognized in other countries. The plaintiff must hire a local legal team and restart the process in the new country with non-contingent fee attorneys; outside the United States, contingent fee attorneys do not exist.
From this, one may conclude it is a no-brainer to go with an offshore asset protection trust. However, the costs of implementing this type of trust, combined with the reporting requirements due to the Patriot act, and now the new reporting requirements as of April 2010, make this an increasingly challenging task. With the administration's hard-nosed view to discourage sending money offshore, one must seriously consider the costs in money, time, and future risk of being red-flagged for going offshore before executing on this aggressive strategy. We typically recommend to our clients that unless you have more than five million dollars, it may be more advantageous to stay here in the United States or utilize a hybrid onshore/offshore irrevocable trust.
When choosing someone to write an irrevocable trust to protect your assets, you should know that irrevocable trust's are not all the same; there are no standards in the industry for quality, so a trust from an attorney that is a generalist is not likely to have had experience with their irrevocable trust being challenged by a judge – they will just tell you "not to worry, it should not be a problem." Or to put it in another way, the irrevocable trust, which was set up by a general attorney who is inexperienced or less experienced, will not have had their irrevocable trust tested under scrutiny by shrewd and cunning lawyers and a good judge, and it cannot be said that their irrevocable trust has endured the test of time. Similarly, the general attorneys are likely not to include critical pieces relevant to your problem or family circumstances that foresee landmines that will explode if not maneuvered through meticulously – they do not know what they do not know. The difference really is in the details. Isn't it true that any of the finest things in life are in the details? So it is true with an irrevocable trust that is carefully crafted in the minutest details. You are not buying a trust, but rather, you are buying the experience of the person writing the trust. How knowledgeable is the writer with dealing with difficult situations and complex problems that inherently arise. Can the attorney foresee problems that can arise BEFORE they occur and implement these clauses in your irrevocable trust plan? Has the irrevocable trust ever been put in front of a judge? When there is one-hundred thousand or a million dollars on the line, this is not the time to take risks with inexperienced advisors.
The Ultra Trust® has been around for thirty years; being challenged by some of the most powerful groups in the country: the Attorney General of New York, the Attorney General of California, the IRS, and the US Attorney in Washington D.C., among others, without a single detrimental client outcome. Why not put the odds in your corner?
Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an asset protection award winning trust and estate planning expert.
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