Identifying an Asset Protection Trust Candidate

By Steven J. Oshins, Esq., AEP (Distinguished)

If I had a Nickel for Every Time…

If I had a nickel for every time an estate planning advisor called or emailed me with a prospective client that they deem to be an absolutely perfect asset protection trust candidate “because they’re in a lot of trouble”, I would be a rich man!

This is How the Conversation Often Goes

Bernie the Attorney:  Hi, Steve.  I have the perfect referral for you for an asset protection trust.

Steve Oshins:  Great!  Tell me a little about the referral.

Bernie the Attorney:  Well, my client is a doctor who botched a surgery and just got served with a lawsuit.  He called me asking me what he can do to protect his assets and I told him that you and I split cases and that I would call you so we can put his assets into an asset protection trust so they will be protected.

Steve Oshins:  That won’t work.  It’s too late.  Asset protection planning isn’t about hiding assets and making fraudulent transfers.  Proper asset protection is done well in advance.

Bernie the Attorney:  So, you mean before the person is served with a lawsuit?

Steve Oshins:  No, Bernie!  Before the person does the act that leads to the lawsuit.  In fact, well before that time!

Bernie the Attorney:  So I know when to call you with another asset protection trust candidate, can you tell me who that is?

Steve Oshins:  It’s likely every client you have other the one you’re calling me about today!  Look for someone who generally has at least a million dollars of net worth and who is not already in trouble.  You must have hundreds of clients who fit that description.  Those are the ones you should be calling me about.

An Even More Egregious Conversation

Sawyer the Lawyer:  Hi, Steve.  I have the perfect candidate for an asset protection trust.

Steve Oshins:  Great!  Tell me a little about the client.

Sawyer the Lawyer:  He’s about to file for divorce and wants to protect his assets from his wife.  I told him to hold off for now until we can transfer most of his assets into an asset protection trust.  And he…

Steve Oshins:  Sawyer, hold on, hold on.  Do you think it’s okay for us to assist him in trying to scam his wife out of her fair share of the marital assets?  Not only will that not work, but it will make him look horrible to the family court judge who is assessing the situation and weighing the facts to determine who gets what.

Sawyer the Lawyer:  Then what exactly is asset protection planning?  I thought the point of it was to move assets away so the creditor or divorcing spouse can’t access them.

Steve Oshins:  Yes, that’s the point of it.  But there are fraudulent transfer laws that stop people from doing this.  It’s perfectly legal to arrange your assets so they are protected from a creditor or from divorce.  But this planning must be done far in advance.  If you would start recommending this planning to your clients who aren’t in trouble or about to get divorced, you and I would be splitting one or two of these a week.  Understand?

Sawyer the Lawyer:  Yes, now I do.

The Concept of Asset Protection Planning

Asset protection planning is a necessary subset of estate planning and of financial planning.  You can’t work in the area of estate planning or financial planning without having at least minimal knowledge about asset protection planning.  They all go hand in hand.

There is nothing wrong with arranging your assets so that they are protected in the event of a future creditor attack.  In fact, unless your asset base is too small, it is irresponsible to your family not to do some amount of asset protection planning.

People buy homeowner’s insurance, automobile insurance, health insurance, life insurance, umbrella insurance and other forms of insurance in order to hedge the possibility of a catastrophic event.  Asset protection planning is really no different than buying insurance.

Summary

Hopefully, this article has dispelled many myths about what asset protection planning is and isn’t and who can and should protect their assets and who shouldn’t.  Estate planners and financial planners need to be proactive and open the asset protection discussion with their clients.  Human nature is such that our clients will often only ask us about protecting their assets AFTER the event that is causing the concerns.  That is too late and is EXACTLY why planners need to open the discussion with their clients and prospective clients.


ABOUT THE AUTHOR

Steven J. OshSteven-Oshins43721143ins, Esq., AEP (Distinguished) is an attorney at the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada, with clients throughout the United States. He is listed in The Best Lawyers in America®. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011 and was named one of the 24 Elite Estate Planning Attorneys in America by the Trust Advisor. He has authored many of the most valuable estate planning and asset protection laws that have been enacted in Nevada. He can be reached at 702-341-6000, ext. 2, at [email protected] or at his firm’s website, www.oshins.com.

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