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Top 10 Misconceptions of Asset Protection Planning

After many years of answering asset protection questions, we've come across a number of common misconceptions on the subject. We've compiled a 'Top 10' List of these common misconceptions and we'd like to share them with you!

I'll wait until someone threatens me with a lawsuit
This is probably the most common mistake. When a lawsuit has been filed, it is too late. No asset protection plan will work. Any judge will most likely rule that any structure created or asset transfer after the fact is fraudulent. An asset protection plan has to be put in place before the threat of a lawsuit to be effective. It's like life insurance. When you are in the intensive care unit in the hospital, you can't buy a life insurance policy. You have to plan ahead...

No one will sue me
You better think twice on your exposure. With over 19 million lawsuits filed each year in the U.S., just about everyone with assets is at risk of a lawsuit. According to the American Bar Association, there are close to 700,000 lawyers in practice in America. That's one lawyer for every 400 men, women and children! Many of these lawyers make a living solely on suing others for part of the winnings. So, if you own a business or practice a profession you have a one in three chance of being named in a lawsuit THIS YEAR! Do you want to win or lose in this lawsuit lottery?

I don't have much to protect so I am not worried
Unless the equity you have in your house is lower than the homestead exemption provided in your state, a creditor can come after the equity in your house. Collection attorneys know that the best way to get you to pony up money is to threaten foreclosure on your home. If you have a sizeable equity in you home, you are vulnerable. Just because your net worth is not in the millions doesn't mean that you don't need protection. Someone with a $3 million net worth can more easily absorb a $100,000 loss from a lawsuit than someone with a $500,000 net worth.

Only a lawyer can help me do this
Lawyers are knowledgeable on a number of subjects but asset protection is not usually one of them. Asset protection is not taught in law schools and most lawyers have no international experience. Therefore, unless a lawyer has a great deal of experience in collection or onshore/offshore planning, he/she is almost as clueless as the general public on this subject.
As a matter of fact, some attorneys, knowing their lack of experience in asset protection, actually refer their clients to www.CoverYourAssetsASAP.com to take advantage of our affordable high value services.

A Trust is what I need for asset protection
Many people have been told that Trusts can provide all the asset protection necessary. Well, that is incorrect. Trusts are primarily estate planning tools. There have been too many cases where Trusts were busted by lawsuits and assets were lost forever. This is primarly because these Trusts where either created and/or managed incorrectly. So Trusts are unreliable as asset protection tools
by themselves... The preferred way to structure an Irrevocable Trust is to name it as the majority or sole 'member' (owner) of an Invisible New Mexico LLC ! This structure provides a rock-solid additional layer of both anonymity and liability insulation as well..

I will just transfer my assets to my spouse or relatives
This is probably the worst thing you can do. Any competent collection attorney will sue you as well as your family members to collect the debt. In addition, your relatives or friends could refuse to return your assets when you want them back. Worse yet, they can be sued for their own liabilities such as a car accident and your assets are therefore exposed to their lawsuits. Transferring assets to relatives is no protection at all and increases your risks of loss.

It costs a lot of money to set up an asset protection plan
This is not true when you use our services. Many firms charge fees to their asset protection clients based on their net worth. We know of a firm in Hollywood that is charging athletes and wealthy clients $10,000 to $20,000 to do the same thing we do. Our fees are just a tiny fraction of this and are easily affordable to most. Our Ultimate New Mexico LLC Package pays for itself by including 3 years of Registered Agent service fees! This is an un-matched $300 value!

LLC's are an income tax 'dodging' vehicle
This is False! Income tax-wise our New Mexico LLC's are intended to be structured strictly as passive, private, holding companies. Their income tax consequences, liabilities as well as benefits, if any, pass through to their ownership. A single member LLC has no IRS reporting requirement while a multiple member LLC is treated as a limited partnership and must file an IRS form 1065 (K-1). While LLC's can serve as a tax planning or tax avoidance tool, tax evation is strictly illegal and ultimately financially dangerous and inadvisable.

There is a huge difference between "avoiding" and "evading" income taxes. The wealthy have used perfectly legal methods to avoid paying income taxes for generations. However, anyone thinking about evading taxes with an LLC by not reporting or under reporting income is in for a big surprise when the Taxman knocks on the door. So many law-abiding people are sucked in by illegal tax shelters that they end up losing much more than they try to save. If there was any legal way of evading taxes, everyone would be doing it! The key here is to think "avoid" not "evade". Consult your tax professional for advise.

Asset Protection planning is too complicated & risky
Asset Protection planning is not complicated or risky if you do it properly... Now, there are many illegal schemes out there, so you need to do your due diligence before you entrust your money to someone. Everyone needs an Asset Protection plan in place. Our Ultimate Asset Protection Package includes everything you need to get your affairs structured legally, quickly, affordably and with
total anonymity. Use the Documents in our 'Members Area' to ensure your safe Asset Protection planning structure.

This can't be legal... The 'government' will go after me if I do this.
The U.S. Constitution guarantees every citizen the rights of liberty and the pursuit of happiness. Setting up an asset protection plan is perfectly within these rights. We have never heard of anyone getting into trouble with the government for setting up an asset protection plan as long as it is not used to illegally evade taxes. Hiding gold bars in the ground is a form of asset protection - even though it might be a bit primitive & risky... it is perfectly legal, isn't it? So why wouldn't an asset protection plan to make your assets invisible and judgment-proof be legal?

To learn more about how you can use your 'Invisible' New Mexico LLC's to effectively protect your assets (everything you currently own in your name...) be sure to read our Free Asset Protection Crash-Course and then our Frequently Asked Questions.