Asset protection is an important discipline used in conjunction with estate planning which employs various strategies to ensure that one’s wealth is not unnecessarily at risk of being depleted. Many people benefit from doing a little, or a lot, of asset protection. But one thing to be careful about is that you get good advice when doing asset protection.
The reality is that there are asset protection scams out there. Not all advice on the issue is good advice, and sometimes vulnerable folks may get led into a planning strategy that is not uniquely designed for their situation, but rather for the benefit of the one suggesting the strategy.
It is important to remember that the way each person goes about asset protection will be unique to their situation. Whatever the solution is, it should take an interdisciplinary approach, integrating concerns about estate planning, tax planning, and other key areas of concern.
Another thing to consider is the cost of setting up and maintaining an asset protection plan. For example, a foreign asset protection trust may promise a high degree of security, but such trusts can easily cost $20,000 or more to set up, not to mention maintenance costs. In many cases, insurance is a relatively low-cost solution for asset protection. Insurance does have its limitations, but it can be combined with estate, tax and business planning to come up with a respectable asset protection plan.
Most important to remember, though, is that hiding assets is not a valid option. Coming up with a legal asset protection plan is the right way to go. Just make sure you do it smart.
Source: Forbes, “Beware Of Asset Protection Scams,” Todd Ganos, January 20, 2013