Simple Concepts and Interesting Facts about Asset Protection
* Nobody can take your assets away without first winning a lawsuit and obtaining a judgment. Except in the rarest of situations (or in the case of the IRS or in certain divorce situations), pre-judgment attachment is not available in the USA. You always have several years warning.
* Asset protection strategies can be best implemented when the financial seas are calm. Once attacks have mounted, it is sometimes too late to do any serious protecting because of the fraudulent conveyancing laws. You work hard to make your money and we believe that you should take ten percent of this effort and direct it toward protecting your nest egg.
* What judgment creditors don’t know about can’t be taken. In other words, stealth works. Never volunteer anything.
* Judgment creditors can only take what you own. If it is not yours, they can’t take it.
* No country in the world automatically will recognize judgments from a US court. To register and enforce a US judgment abroad, the case must first be relitigated in the foreign country (not true with respect to certain arbitration awards which are sometimes recognized by virtue of a treaty). No country anywhere in the world recognizes tax oriented judgments from the US. Most also refuse to recognize our tort, securities and antitrust judgments. They simply think our laws are stupid and unfair, and refuse to recognize judgments based upon nonsensical laws. This is one reason for asset protection trusts.
* Never trust anybody (especially a foreign trust company) with your money. All asset protection plans should be structured so that you never are vulnerable to any other person taking or dealing with your money without your consent.
* Divide and conquer. Never mix liability generating assets in the same entity (for example, you would never have two apartment houses owned by the same limited partnership).
* The United States is the only country in the world which permits contingent fee litigation. In all other countries it is unethical for an attorney to take a case on a contingent fee basis. In addition, in many countries the plaintiff must post cash with the court to handle the defendant’s fees and costs if the plaintiff is unsuccessful.
* Every year, one out of ten Americans is sued.
* Doctors: There are 13.9 malpractice claims for each 100 doctors. Four out of ten medical doctors have been sued. The average Obstetrician in New York has been sued eight times. Nationwide, the average jury verdict is 1.33 million, and in New York it is three times larger than the national average.
* Accountants: Accounting firms now face over 3,000 suits seeking more than 13 billion in damages. Huge judgments are being obtained like the recent 338 million judgment against Price Waterhouse. Several regional firms have gone bankrupt.
* Attorneys: Although I believe that attorneys are the cause of our problem, they are also beset by malpractice claims, often from third parties who were never clients.
* Investors: Every businessman, including developers, syndicators, business owners and board members is exposed. The liability is often based on emerging and unanticipated legal theories. For example, the partners in a major law firm were recently stunned when they were notified of their joint and several liability under CERCLA for the projected $72 million toxic clean-up cost on a parcel of raw land they bought in the early 1970’s.
* There are currently over 880,000 lawyers in the United States (as opposed to 13,500 in Japan) each licensed to file lawsuits. We will cross the million mark by the turn of the century. A large percentage of these lawyers (estimated to be as high as 36%) are either unemployed or underemployed. The economic incentive for these underemployed lawyers is to file suits and force settlement. In most cases, it is less expensive to buy peace rather than fight on principle.