Asset Protection Lawyer: Strategies for Protecting Assets and Privacy

Asset protection attorneys provide legal services designed to protect their client’s property, savings and investments from lawsuit liability and claims . The process of asset  protection planning for U.S. and international clients involves legal structuring  of business and personal assets to protect assets from risk of loss from sources of potential liability.

Asset protection lawyers focus on the correct choice of strategies and business entities for protecting business ownership, investment assets and accumulated wealth.  The laws of multiple domestic and overseas jurisdictions must be applied and  compared  to  take advantage of the most favorable laws for the client’s asset protection and business goals. Relationships with U.S and foreign banking and trust companies are maintained by lawyers to establish necessary banking and privacy arrangements.

Attorney-Client Privilege and  Duty of Secrecy

Asset protection lawyers and their clients often discuss and document client financial information of the most sensitive nature. Attorneys are under a legal duty to protect client communications and are prohibited from any unauthorized disclosures. Confidential information between a lawyer and client is accorded the highest legal privilege and not subject to discovery by a third party. Section 6068 of the Business & Professions Code states: “It is the duty of an attorney….(e) To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” (Emphasis added.) This duty of secrecy includes all information learned during the professional relationship that the client has requested to be inviolate or is likely to be detrimental to the client if disclosed.  The Rules of the California State Bar reiterate this secrecy obligation and attorneys are subject to legal action and loss of their professional license for violation of this rule.   (See Rule 3-100 Confidential Information of a Client)

U.S and International Tax Planning

Tax planning is key component of legal asset protection services. Foreign  investors and business owners in the U.S.  are subject to an array of  income and estate tax challenges which must be correctly navigated.  The 2018 tax law creates new and abundant tax planning opportunities for shifting income from high to low bracket jurisdictions, entities and taxpayers.  Domestic and foreign corporations, LLC’s and trusts are important components of the most sophisticated asset protection plans to shift income and minimize the overall tax burden of businesses and individuals. Asset protection plans are also intended to minimize or avoid U.S. estate taxes for residents and foreign investors.

Real Estate Protection

An asset protection lawyer is often involved in structuring real estate ownership to protect clients from liability associated with the purchase, management or sale of a property. An asset protection plan for real estate develops the proper legal structure to protect the client from liabilities arising from ownership of the properties. Equally important,  the plan must insulate each property from the liabilities of all other properties, often through multiple entities.  A well designed plan will also shield the client’s properties and investment assets from other business and personal risks which the client may face.  Asset protection for real estate must also take into consideration, among other issues, legal restrictions on transfer, loan obligations and local property tax requirements.

Trusts and Estate Planning

Legal expertise in trust law and estate planning allow asset protection attorneys to create specially designed trusts to accomplish individual client goals. Trusts for sophisticated asset protection, tax saving and estate planning are critical to all of these advantages:

• Protecting accumulated wealth from liability risks;
• Passing property in an efficient manner to family members;
• Minimizing estate and gift taxes;
• Shifting income to low or no tax jurisdictions;
• Protecting inherited property from claims in marital dissolutions;
• Protecting inherited wealth from liability claims against children or grandchildren;
• Privacy and confidential asset ownership;
• Segregating valuable business assets from the operating risks of the business:
• Insulating ownership of multiple real estate or investment vehicles from crossover liability risks:

Avoiding Fraudulent Transfers

An asset protection lawyer also provides legal advice about how to avoid asset transfers which may be restricted or limited by fraudulent transfer laws. A key consideration in asset protection is that laws in every state allow creditors to invalidate property transfers intended to “hinder, delay, or defraud” a creditor. A transfer which  leaves a person insolvent or unable to meet his or her obligations is also prohibited.

Since asset protection planning is intended to minimize liability and lawsuit risks, asset protection attorneys must make sure that transfers of property carefully adhere to existing case law and statutes. State laws differ considerably on what assets are exempt from collection, what transfers are permissible and the legal time period for pursuing an action to set aside a transfer. Asset protection planning often takes advantage of exemption laws and legal entity rules to produce the most favorable outcome for a client.

For example, assets which are fully exempt in various states include personal residences, annuities, life insurance policies and retirement plans. Conversion of property into these exempt assets may steer clear of  fraudulent transfer rules, depending on the state.  Statutes of limitations also vary considerably between the states.  Further, nineteen states have adopted asset protection legislation which specifically permit transfers to “asset protection trusts” with narrow limitations periods and windows for creditor action. The laws in a number of states also severely restrict creditor access and remedies to legal entities such as limited partnerships, corporations and limited liability companies.  Besides the states, a dozen overseas jurisdictions have adopted laws providing significant asset protection advantages.

Rules determining the proper choice of law, the appropriate legal entities and the timing and manner of any property transfers should be carefully considered based on the advice of your asset protection lawyer.