What Are Reasonable Legal Fees for an Asset Protection Plan?
This is a very important question. There is often a large disparity in fees among attorneys for similar legal work.
This is true in the field of asset protection as it is in all other areas of the law. Your attorney fees for litigation or divorce or any transaction will vary widely simply depending on whom you have hired. Some lawyers bill the heck out of a case and some don’t. It is also true that the amount of your legal fees are not generally related to the competence or experience of your lawyer. Whether he is good or bad is not the factor that determines the amount of fees you will be charged. A partner at a law firm in New York City may charge $750 per hour versus $250 in a Des Moines firm. Assume both attorneys net the same amount because of differences in firm overhead. Which attorney is better? Who knows? It will be reflected in the quality of their service and not in the amount of fees they charge.
The Wall Street Journal ran a great story about asset protection on October 14, 2003. Here is a quote about fees.
“Asset-protection trusts don’t come cheap. Offshore asset-protection trusts can cost anywhere from $20,000 to $50,000 to set up, plus annual administrative fees of $2,000 to $5,000 and asset management fees of about 1% on the assets placed in the trust.”
Now, it is true that offshore asset protection trusts involve considerable thought and planning. It is a highly specialized field. You will need good legal advice to select the proper jurisdiction, the right bank and trust company and to properly document the plan. But, these types of fees are way out of line, far beyond what could be reasonable under almost any circumstances. Fifty thousand dollars is one hundred hours of time at $500 an hour. What could they be doing?
I can’t imagine spending that type of time or money on any client. And my understanding is that over the last ten years we have created more offshore trusts then any other firm in the country. So we are very experienced and know what we are doing. In most cases, the range of legal fees for these types of offshore trusts has been between $7,500 and $12,500. Fees are significantly less for domestic plans, not involving an offshore component. Highly complex matters may be more. Perhaps 10% of our cases are outside of this range. The annual administrative fees for offshore trusts quoted in the article, which we have negotiated, are generally below the low end of the stated amounts. Asset management fees depend entirely upon the type of services requested by the client. An accurate range for asset management is zero to 1%, based on the arrangement which you select.
The point here is pretty clear. As with all legal work, there is a big discrepancy in fees for all types of asset protection plans-domestic as well as offshore. Holding down your legal costs means selecting a highly qualified, experienced attorney with a reasonable fee structure. Most attorneys will tell you in advance how much they will charge for particular services, so obtaining this information is something that you can and should do if costs are a concern in the process.