NPR on Asset Protection: Bad Advice for Doctors

NPR’s Planet Money team recently aired a report titled “They Won’t Tell You Their Names But They’ll Help You Hide Your Money,” featuring an interview with an asset protection service provider that works from offshore and refuses to reveal his real name. The advisor works under an alias, as does the company’s “director of operations” Adam Wolf, who reportedly appears on their website in a motorcycle helmet, face obscured. NPR featured a questionable source and presented information that was in my opinion wrong in some cases and in others made dangerous omissions that would keep the informed consumer from acting in this way and any plan so outlined to fail.

I have shared many discussions on asset protection in this forum including a self-exam of your exposed assets and countless specific issues of liability and planning flaws you must address in your practice. I encourage you to review those articles for a more detailed explanation of the issues I summarize below.

What They Had Right

There is in fact a high degree of litigation in the U.S. and much of it is frivolous. You do need to be proactive about protecting your wealth and the right legal structures can provide great protection. Both doctors and real estate owners are prime targets. Offshore tools can provide an exceptionally high degree of security for a portion of your wealth.

What They Had Wrong

They did not talk about timing.

The first and most important lesson in any asset protection discussion is about timing. You must do this in advance of the problem (think net-worth insurance) for it to be effective and legal.

They use a source that is unidentified, outside the U.S., and that has no professional oversight or liability for giving you bad advice or aiding you in committing fraud.

My associates and I practice in this area of the law exclusively and have provided this planning to literally thousands of American doctors and business owners. They all know exactly who we are, where we are, and t each of our professional backgrounds. We are legally and ethically bound to give you the best advice and to the greatest degree possible make sure that that solutions provided are legal and will not subject you to further legal jeopardy. Do you think the guy in Latvia giving you very specific legal advice is on the hook if it turns out your planning was fraud? Done right, this planning requires a variety of professionals, typically an attorney, a CPA and a financial advisor; make sure you know and trust your team.

They talked about “hiding assets.”

There are certain flags for fraud and amateur planning we have come to recognize - “hiding and secrecy” are two big ones. Good asset protection planning provides you with legal, defensible, and discloseable ways to hold your assets with the minimum amount of expense and complication.

“Secrecy” means “hiding” an asset, hoping no one will find it and typically, being willing to lie about it under oath (also known as perjury) if anyone asks. Hope is not a plan. This is certainly bad lawyering by any standard and is in no way a defensible long-term plan. If you want to see the kind of questions lawyers routinely now ask in lawsuit contact me directly and I’ll send you a 14-page questionnaire one of my clients recently received that had questions about every trust, partnership, or corporation they owned, had an interest in or created, every gift of over $5,000 they had made in the last five years and every time they had left the country during the same time. You better be able to answer those questions with any plan you implement.

They talked about divorce.

Most asset protection planners get calls from one member of a couple that wants to get divorced and “protect my assets from that $%^&*/!!” Here’s a simple rule: If your existing spouse has vested property rights in the property you want to move and you put it out of their reach with intent of keeping it from them and the courts, you are likely committing fraud, even if the guy who sells Nevada (or Delaware, or what ever) Trust assures you it’s perfectly legal there. Worse, if you are like most people who’ve used this strategy, you don’t even live in the state where this magic trust is and the assets aren’t there either. The judge in your state won’t find that argument cute or convincing.

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