Arnold S. Goldstein, JD, Ph.D. and W. Ryan Fowler

322 Pages·2009·1.76 MB·English

ASSET
PROTECTION
n n n
A Guide for Professionals
and Their Clients
Arnold S. Goldstein, J.D., Ph.D. and
W. Ryan Fowler
forward
Copyright 2009 by Arnold S. Goldstein, JD, Ph.D. and W. Ryan Fowler
Published by: Garrett Press, Inc.
368 South Military Trail
Deerfield Beach, Florida 33446
Telephone: [phone]
E-mail: [email protected]
Website: www.garrettpub.com
All rights reserved. No part of this publication may be reproduced or transmitted in any form
or by any means, electronic or mechanical, including photocopy, recording or any information
storage and retrieval system now known or to be invented, without permission in writing
from the publisher, except by a reviewer who wishes to quote brief passages in connection
with a review for inclusion in a magazine, newspaper, or broadcast. Requests for permission
should be addressed in writing to the publisher. This book is designed to provide accurate and
authoritative information on the subject of asset protection. While all of the cases and examples
described in the book are based on true experiences, most of the names and some situations
have been changed slightly to protect privacy. It is sold with the understanding that neither
the author nor the publisher is engaged in rendering legal, accounting, or other professional
advice. As each individual situation is unique, questions specific to your circumstances should
be addressed to an appropriate professional to ensure that your situation has been evaluated
carefully and appropriately. The author and the publisher specifically disclaim any liability or
loss incurred as a consequence, directly or indirectly, of using and applying any of the concepts
in this book.
Goldstein, Arnold S.
ASSET PROTECTION Arnold S. Goldstein, J.D., Ph.D. and W. Ryan Fowler
p. cm.

PCN
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1 0509 V1.0
ISBN: 978-1-880539-88-0
forward
As president of the National Association of Asset Protection Attorneys (NAAPA),
I am delighted to write the forward for this important new book.
Asset Protection…in financially unsafe times, by my colleagues Arnold S.
Goldstein and W. Ryan Fowler, is a welcome and much needed addition to the
fast-growing specialty of asset protection. Increasingly, individuals, families and
even corporations are recognizing the need to defensively position their assets to
withstand attack against the many legal and financial threats that are so prevalent
in today’s society: lawsuits, creditor problems, foreclosures, divorce and even tax
troubles.
I have known Arnold for several years and he has been my mentor in helping
me achieve my own position of prominence within the specialty. He is also my
partner in Presser Goldstein. His knowledge of the field is unsurpassed.
Ryan is one of America’s best asset protection strategists, innovators, researcher
and practitioner. I have worked closely with Ryan on a number of cases, and his
knowledge has been invaluable.
For these reasons, I am deeply honored to express my feelings on the unique
contribution that both Arnold and Ryan have made through their authorship of
this book. Through their skill they have successfully created what is perhaps the
most up-to-date book on the subject, presented in a way that will prove invaluable
both to the professional advisor as well as their clients.
Hillel L. Presser, Esq.
Boca Raton, FL.

table of contents
Chapter One: Liability Threats and Why You Need Asset Protection ................. 9
Chapter Two: Asset Protection Fundamentals ................................... 21
Chapter Three: Eleven Sound Planning Principles .............................. 35
Chapter Four: Benefits and Psychology of Asset Protection ....................... 47
Chapter Five: Fraudulent Transfers .......................................... 53
Chapter Six: Exemption Planning ............................................ 73
Chapter Seven: Co-Ownership Planning ...................................... 87
Chapter Eight: The Corporation and Limited Liability Concepts .................. 95
Chapter Nine: Limited Partnerships and Charging Order Fundamentals .......... 113
Chapter Ten: Using Limited Liability Companies for Domestic Asset Protection ..... 131
Chapter Eleven: Trust Fundamentals ....................................... 151
Chapter Twelve: Trusts for Asset Protection .................................. 159
Chapter Thirteen: Trusts for Estate Planning ................................. 173
Chapter Fourteen: Cutting-Edge Trusts ..................................... 197
Chapter Fifteen: The Equity Stripping Strategy ................................ 209
Chapter Sixteen: Investing Offshore to Protect and Grow Wealth in
Perilous Economic Times ................................................... 223
Chapter Seventeen: Offshore Planning Fundamentals .......................... 239
Chapter Eighteen: Asset Protection a Judge Will Respect ....................... 249
Chapter Nineteen: Using Phantom Income to Lay a Tax Trap for Creditors ........ 261
Chapter Twenty: Pre-Divorce/Pre-Marital Planning ........................... 267
Chapter Twenty-One: Asset Protection and the IRS ........................... 273
Appendix: The Asset Protection Relative Efficacy Chart ......................... 283
Last Step ................................................................ 273
References .............................................................. 283
Index ................................................................... 317
introduction
in tro ducti on
Protecting yourself against the unexpected is a vital element in financial planning.
This means having adequate protection against all forms of financial exigencies
that can erode — if not completely eliminate your wealth.
We wrote this book because there is a need for more legal and financial
professionals to advise their clients on the many ways they may go about protecting
their wealth in these financially perilous times.
The mention of wealth protection can take on many dimensions. It certainly
includes economic hazards — such as market downturns, inflation or confiscatory
taxes. And those are serious concerns. Fortunately, most financial advisors focus on
these concerns and prepare their clients for these possibilities quite competently.
We discuss these same concerns within this book — but our writing has a
somewhat different focus. We address the more commonly overlooked planning
issues – strategies one can take, indeed, must take — to protect their wealth against
such predatory threats as lawsuits, creditors, tax claims, bankruptcy and the many
other life challenges for which so few of us are well-prepared.
Who can benefit from this book?
Our objective in writing this book is to present asset protection strategies at a
level that would be comprehensible, useful and hopefully even interesting to
the professional and their clients. The term professional in this context does
not mean attorneys exclusively, though attorneys who are unfamiliar with asset
protection practices will certainly find much information here that can increase
their knowledge of the subject. Financial planners, accountants and insurance
professionals also have clients who can benefit from their advisors bringing to
the planning process an appreciation and understanding of the need for asset
protection — as well as solutions. This book will certainly help the non-attorney
professional work more collaboratively with asset protection attorneys in creating
comprehensive, integrated plans appropriate for their clients needs.
viii A Guide for Professionals and their Clients
More than a professional treatise, this book is written at a sufficiently basic
level to be helpful to the client — the layman who has little or no familiarity with
asset protection. It will help those:
• from every economic background
• who are now unprotected against lawsuits or have a plan in place and
seek ways to improve their protection
• who need to protect their own wealth or their clients wealth
• who need to shelter not only their personal assets but also their business
or professional practice
• who are starting out in life and want to secure their future wealth or are
in their twilight years and want to safeguard their nest egg or children’s
inheritance
• who want to integrate wealth protection with their investment, tax and
estate planning objectives
How to Use this Book
These pages explain the same proven, practical strategies that anyone can use
to protect their wealth. These are the same tactics and tools that we, as asset
protection specialists, have used to successfully shield the wealth of thousands of
individuals, families and companies nationwide.
Nevertheless, this book is not intended to promote ‘do-it-yourself’
planning. Asset protection is a highly complex legal specialty and every plan
must be customized to the needs of the client after considering a broad range
of issues. Many strategies in this book may not be suitable in a particular set
of circumstances and may carry unfavorable tax, estate planning or other legal
or financial consequences. Therefore, the reader is advised to take no action
without consulting a qualified asset protection advisor. Moreover, laws change
and vary between states, and any statement made in this book can only be taken
as a general proposition and subject to exceptions. Accordingly, the authors and
publisher disclaim any liability for any action taken or not taken in reliance on the
information in this book.
We do hope the reader will find this to be a valuable reference and armchair
advisor on how to protect the wealth they have worked so hard to build!
o n e
c h a p t e r
Liability Threats and Why
You Need Asset Protection
As most of us know, the U.S. is a lawsuit-crazy country. It’s an exaggeration to say
most businesses and wealthy individuals are sued several times a year, although
this certainly happens in some cases. However, if you only get sued once, and
as a result you lose your home, your car, bank accounts, brokerage accounts,
everything, wouldn’t you have wished you’d done some planning to keep those
assets safe?
Threats to your wealth don’t just come from lawsuits. There’s also divorce,
bankruptcy, federal or state tax problems, and non-judicial government seizures.
There are also estate tax and market downturn threats, which we discuss later in
this book. Although this chapter primarily focuses on liability threats, we should
always remember that estate taxes and market downturns can be just as great or
greater a threat to one’s wealth. In the authors’ opinion, no wealth preservation
plan is complete until it accounts for all threats, not just liability and creditor
threats. This book therefore discusses estate tax matters in Chapters 9, 11, 13 and
14, and economic threats in Chapter 16.