NOTE:

- THE 11 FIRST-LEVEL OUTLINE HEADINGS FOLLOW.

- AFTER THAT COME THESE SAME 11 FIRST-LEVEL HEADINGS, WITH EACH ONE FOLLOWED BY ITS RESPECTIVE SECOND-LEVEL HEADINGS.

- THE COMPLETE ASSET PROTECTION STRATEGIES MODULE HAS VARYING LEVELS OF OUTLINE HEADINGS, WITH THE EXACT NUMBER DEPENDING UPON THE PARTICULAR POINT IN QUESTION.

1. Some key, preliminary asset protection points!

2. So what if you've made money! Can you keep it? Asset protection threats are VERY real! Here are important example areas - AND TIPS!

3. How bankruptcy is used - both offensively and defensively - by people and entities both naughty and nice.

4. How fraudulent conveyances (and non-fraudulent conveyances) are used - both offensively and defensively - by people and entities both naughty and nice.

5. All about Swiss bank accounts!

6. How offshore strategies are used - by people and entities both naughty and nice.

7. How onshore strategies are used - by people and entities both naughty and nice.

8. A summary listing of asset protection strategies for individuals and businesses - both naughty and nice.

9. A listing of key miscellaneous asset protection points.

10. What makes some asset protection strategies naughty (- and, sometimes, just plain illegal)?

11. The moral to all this? Protect your assets to the extent you legally can; behave yourself to the extent you legally can't (ponder that one!); and know enough about these myriad, complex, and evolving subjects involved in asset protection planning to defend yourself - and to know when you need legal advice.

1. Some key, preliminary asset protection points!

•  In addition to just plain bad luck and costly human-derived shortcomings (including failing to adequately prepare for trouble - and failing to adequate prepare for opportunity!), many outside forces can devastate your net worth - even if you have already made money - and whether you be a business or individual. These include, but are not limited to:

•  Now the law does not require you to roll over and play dead in the face of such threats.

•  However, many asset protection “chess” moves that were intended to defraud creditors, or that violated state, federal, or foreign laws in some other way, have been unwound by courts - and, in fact, there is often a fine line between (1) legitimately protecting one's assets and (2) running afoul of a sometimes significant law of this and/or another country - with the concomitant, ever-present danger of experiencing 300-pound Bubba as a “roommate.”

•  Here are some further, key, preliminary asset protection points:

•  Regarding this asset protection module, there is some good and bad news:

•  “For everything you have missed, you have gained something else; and for everything you gain, you lose something.” Ralph Waldo Emerson.

2. So what if you've made money! Can you keep it? Asset protection threats are VERY real! Here are important example areas - AND TIPS!

•  Can you keep it from a spouse secretly or otherwise planning a divorce?

•  Can you keep it despite an upcoming marriage?

•  Can you keep it from creditors when your luck may soon be running low?

•  Can you keep it from a plaintiff in a lawsuit you may soon face?

•  Can you keep it from fraudulent others?

•  Can you keep it in spite of that “can't miss” “investment?”

•  Can you keep it in spite of the stock market?

•  Can you keep it in spite of your own bad habits?

•  Can you keep it in spite of your failure to adequately analyze situations?

•  Can you keep it despite a wasteful, bureaucratic - and taxing - government?

3. How bankruptcy is used - both offensively and defensively - by people and entities both naughty and nice.

•  The “perks” available to debtors have varied through the ages.

•  Basic bankruptcy law.

•  How bankruptcy is used, both offensively and defensively.

•  Pros/cons of availing oneself of bankruptcy protection:

•  A last resort?

4. How fraudulent conveyances (and non-fraudulent conveyances) are used - both offensively and defensively - by people and entities both naughty and nice.

•  A “conveyance” is a transfer of property. The key point regarding “fraudulent conveyances” is this: both the federal government, in bankruptcy and tax laws, and the states, in so-called “fraudulent conveyance” laws, make it illegal for a person (or legal entity, such as a company) to delay, hinder, or defraud creditors by, for example, transferring assets to friends, relatives, etc., for inadequate “consideration” of value (such as money) in return, when doing so would render the “transferor” (the one transferring the property) insolvent (= roughly, when the value of the transferor's liabilities would thereby exceed the value of the transferor's assets). (We will be more precise below!) Significant jail sentences, as well as fines, can be incurred for violation of these laws. Now this might be the end of the story on this subject, but for the reality that whether some transfers run afoul of these laws will often depend upon what a particular judge (or jury) thinks, in light of the facts and people before him (or them) (and, often key, how the parties and witnesses come across in the courtroom - as well as background facts known to the judge (or jury) about them - such as their being a past armed robber!). Making our summary point another way, some transfers are obviously fraudulent and will be “unwound” by a court, IF successfully challenged by an aggrieved party in court - such as when a creditor of yours seeks to unwind your transfer of your jet plane to your mother, for nothing in return, just after a jury has decided a lawsuit against you. Other transfers are not so obviously an attempt to thwart creditors - and if no one challenges them successfully in court (which costs creditors time and money), you may come to regard such transfers as having been a key - and very smart - component of your asset protection planning! (Of course, whether such transfers have been ultimately “smart” may ultimately depend upon whether you are caught - and if you are sent to jail, Bubba may become your roommate.) The tradeoffs are there. The risks are there. We do not recommend that you violate the law. Some people do violate the law. Some people don't. Some people do not get caught. Some people get caught. (As John F. Kennedy once observed, “Life is not fair.”)

•  Some law and background are unavoidable if you are to truly understand some key aspects of this important asset protection topic (unfortunately, this law varies from state to state, it changes over time, as new statutes and case law interpretation come into existence, and, as you will see from even the example excerpts below, it can be irritatingly involved - so seek expert legal advice before engaging in any potentially significant individual move or course of conduct):

•  IMPORTANT: If, to thwart creditors, you are thinking about formally transferring title to another, or acquiring title to property in the name of another, bear in mind that:

5. All about Swiss bank accounts!

•  Swiss Bank secrecy and “numbered accounts” (see below) have been staples of Hollywood and of asset protection for years. However, Switzerland has been increasingly sensitive to appearing a “bad guy” helping criminals and dictators who engage in “indigenous spoilation” (= robbing their citizens blind = a practice some are attempting to have defined as a crime in violation of international law), and, against this backdrop, inroads into Swiss bank secrecy have occurred (see below). Unfortunately, when one contemplates depositing funds abroad for asset protection purposes, one will have to balance past and potential future inroads into Swiss bank secrecy with the bank safety and country stability questions of many jurisdictions which now try to compete with Switzerland for foreign assets fleeing in search of asset protecting havens.

•  The bottom line on using Swiss bank accounts for asset protection is this: while the major Swiss banks and Switzerland itself have been stable, and while Swiss bank secrecy is alive and well, this secrecy is not absolute, legislation has eroded it where criminal matters are alleged (for example, tax fraud, as opposed to such simple tax evasion as failing to report income - see below), and future changes could erode this secrecy further - as governments, plaintiffs, and changes in accepted international law continue to assault secrecy. Before depositing in Switzerland, verify the current rules, with the Swiss government and the banks themselves, verify future trends, utilizing many sources of information (including, for example, the Internet and reviews of the banking industry in The Economist magazine, including its excellent industry surveys), and verify the pros and cons of using a Swiss bank versus a bank purporting to offer secrecy in another country. Finally, before depositing anywhere overseas, determine whether the offshore financial institution would be required to, or would, cooperate with a subpoena or deposition notice, etc., in a civil or criminal or IRS proceeding in the U.S. - especially if that offshore financial institution has a legal presence (such as a branch or subsidiary) and/or is doing business in the U.S. (which can provide a U.S. court “jurisdiction” over the institution for legal proceedings purposes). Also relevant would be whether the country in which the offshore account is located would honor a U.S. court judgment against the owner of the offshore funds - which raises the questions of political stability, etc., in that country! Seek legal advice and otherwise do your homework before acting.

•  A secret Swiss bank account has been a staple ingredient of asset protection for many years - because:

•  To open a Swiss bank account:

•  Swiss banks are required to try to “know who their depositors are” - although some potential customers try to hide even this information from the banks - as an extra layer of secrecy protection - by depositing through an intermediary of some sort (a relative, a business, an attorney, an investment advisor, etc.).

•  Ever since 1977, and with revisions since then, a “Code Of Conduct” has existed, requiring banks to exercise “due diligence” in accepting funds. This code is a non-governmental, private agreement among the banks and the Swiss Bankers Association (http://www.swissbanking.org/). The code - which allows large money fines if it is violated - requires the banks:

6. How offshore strategies are used - by people and entities both naughty and nice.

•  Offshore strategies, including utilizing tax and/or asset protection havens, are time-honored means of attempting to hide and/or otherwise protect assets.

•  Important reasons for the utilization of tax and/or asset protections havens - in addition to a desire to “ream” creditors and taxing jurisdictions(!) - include the facts that:

•  Indeed, even techniques of money laundering are used by others besides drug dealers.

•  A number of jurisdictions have passed statutes and regulations in an attempt to become tax and/or asset protection havens - and the pros and cons of each such potential haven, with respect to such factors as stability, resistance to creditors, soundness of financial institutions, availability of predictable local legal advice, etc., must be determined and forecast and “reforecast” over time - if a person's assets are to be safe and remain safe. (No one has ever claimed that asset protection planning is simple!)

•  Note that, in addition to Switzerland, “numbered accounts” may be available in Austria, Luxembourg, and many countries specializing in being and/or wanting to be tax/asset protection havens.

•  Note also that transfers to, for example, an offshore “asset protection trust” could be deemed a fraudulent conveyance and/or a violation of other law, especially when creditors are in one's face. (And when creditors are not in one's face, creating such a trust and making such transfers is seldom a priority - unfortunately for safe and legal asset protection planning!)

•  “Time's fun when you're having flies.” Kermit The Frog.

7. How onshore strategies are used - by people and entities both naughty and nice.

•  Onshore asset protection strategies “feature” many of the techniques used abroad - including:

•  The problems with onshore strategies include the facts that the states enforce each others' judgments, financial transfers are easier to trace, the distances and costs of reaching assets are less, and tax officials, tax agencies, and tax laws are ubiquitous (= “too much all over the place!”).

8. A summary listing of asset protection strategies for individuals and businesses - both naughty and nice.

•  The following asset protection strategies can be employed by both individuals and businesses. (See below for those applicable to either individuals alone or businesses alone.) (Also see, below, “A listing of key miscellaneous asset protection points,” in addition to points presented earlier in this Asset Protection Strategies module.) (Not all of these strategies are often used by both individuals and businesses - sometimes because the circumstances do not warrant same, and sometimes because thinking caps are not always kept on tight!) [Note that several of these strategies include discussion of marital-related topics and are included here both (A) for completeness of such topics as holding title in the best ways possible, and (B) because marital-related topics can be relevant in even business contexts for making the best decisions possible with respect to overall wealth maximization - including asset and wealth preservation!]

•  The following asset protection strategies can be employed by individuals alone. (See above for those applicable to both individuals and businesses and below for those applicable to businesses alone.) (Also see, below, “A listing of key miscellaneous asset protection points,” in addition to points presented earlier in this Asset Protection Strategies module.)

•  The following asset protection strategies can be employed by businesses alone. (See above for those applicable to both individuals and businesses and for those applicable to individuals alone.) (Also see, below, “A listing of key miscellaneous asset protection points,” in addition to points presented earlier in this Asset Protection Strategies module.)

•  “The reasonable man adapts himself to the world; the unreasonable one persists to adapt the world to himself. Therefore all progress depends on the unreasonable man.” George Bernard Shaw.

9. A listing of key miscellaneous asset protection points.

•  (Also see, above, “A summary listing of asset protection strategies for individuals and businesses - both naughty and nice,” in addition to points presented earlier in this Asset Protection Strategies module.)

•  Because it bears repeating, NEVER, EVER, EVER TRANSFER FUNDS TO OR THROUGH PERSONS AND/OR FINANCIAL INSTITUTIONS WHO OR THAT ARE NOT COMPLETELY, ABSOLUTELY, 100% TRUSTWORTHY - AND, WITH THIS IN MIND, SINCE NO SITUATION IS LIKELY TO BE 100% TRUSTWORTHY, NEVER PUT ALL OF YOUR EGGS IN ONE BASKET.

•  ALWAYS DIVERSIFY! A favorite asset protection device can come under attack - especially if a government perceives it as shakey/flakey, a foreign financial institution can become shakey/flakey, your asset protection plan can become shakey/flakey by virtue of political change abroad (- or at home, in terms of changes in enforcement, etc.!), ETC..

•  To the extent feasible, effective asset protection planning must take into account the possibility that even long-standing law may change. Unfortunately, this goal may be difficult to attain, as attorneys are not clairvoyant, and the diverse subjects involved in asset protection planning can be complex.

•  If something about a suggested asset protection plan does not make sense and/or if you do not understand everything and/or if you smell a potential rat of any kind, GET A SECOND OPINION BEFORE DOING ANYTHING!

•  Where dollars are present, scam artists are seldom far behind. Beware - and do your homework.

•  Where dollars are present, incompetence and/or shakey/flakey promoters and/or institutions are seldom far behind. Beware - and do your homework.

•  When receiving asset protection sales pitches, beware of - and seldom, if ever, believe - claims that asset protection planning will save on U.S. income taxes. It typically will not - because U.S. citizens and resident aliens are taxed on their worldwide income, regardless of where it is earned, paid, or received, and from whatever source derived. Hence, the establishment of an offshore bank account, for example, or some other sham, supposed “shifting” of income (/assets) abroad, for example (such as when a business leases, or supposedly leases, equipment from a sham, related company abroad, so as to reduce or eliminate, supposedly, U.S. domestic profits), will seldom, if ever, “save” on U.S. taxes - unless the (non-!)taxpayer indeed risks cheating, by not reporting or underreporting taxable income - and always remember that the IRS - while often understaffed - is on the lookout for foreign-related tax cheating.

•  Don't allow your assets to be encumbered with phony loans designed to understate your equity in those assets. Doing so can be illegal - and is sometimes a part of asset protection scams.

•  Sometimes, your use of advertised/“ballyhooed” gimmicks or entities - such as Nevada corporations, Alaska trusts, Delaware trusts, and the like - or, indeed, your use of offshore financial accounts and/or trusts - can be seen as a red flag by a court, the IRS, or other investigators. (On the other hand, creditors may become discouraged if they learn of offshore accounts and/or trusts and/or other entities and/or activities, and conclude they are up against too formidable a “wheeler dealer.”)

•  “Multiple-entity planning” can be a valuable asset protection planning tool.

•  An asset protection trust can be a valuable asset protection planning tool.

•  Be aware of and protect against ploys being used by scammers. See, for example, Section 126: SERIAL SCAMMERS STILL AT LARGE -- AND HOW TO AVOID THEM! and other Sections, Attaining American Dreams !!!!!! TM Business/Life Skills, Entrepreneurial, And Self-Help Strategies TM, and http://www.insurancefraud.org/.

•  Be aware that the federal government has greatly stepped up its efforts to thwart money laundering and other financial crimes - most notably in its creation of the U.S. Department of the Treasury's Financial Crimes Enforcement Network (“FinCEN”).

•  Watch for forum shopping and conflict of laws issues in asset protection planning (see above).

•  That trusted spouse, friend, or kid may betray - no “kidding.”

•  Even when asset protection planning cannot entirely thwart creditors, it may provide the debtor more leverage in negotiating a settlement with those creditors - by driving up the costs envisioned by creditors of their NOT negotiating with the debtor, and litigating with the debtor instead.

•  An asset protection plan should not depend upon your having to conceal or lie illegally - now or in the future.

•  For a debtor, a moment of truth often comes when, after the trial in a civil lawsuit, that judgment debtor is undergoing a verbal post-judgment examination as to his or her finances by a plaintiff who has won that civil litigation against that judgment debtor. Will the judgment debtor reveal all? Will the judgment debtor suffer lapses of memory? Will the judgment debtor out and out lie? Does your view of what is ethically appropriate change if the plaintiff lied through his or her teeth, fraudulently obtaining his or her judgment? Life features grey areas - but so, often, do jail cells for those who commit perjury, etc..

10. What makes some asset protection strategies naughty (- and, sometimes, just plain illegal)?

•  Failing to disclose all of your assets/sources of income for state and federal income tax reporting purposes.

•  Failing to disclose all of your gifts and/or estate assets, liabilities, and dispositions for federal and state estate and gift tax reporting purposes (such as when you fail to report gifts in excess of annual and lifetime limitations on tax-free transfers to others, or such as when you transfer assets to others for insufficient consideration of value in exchange (for asset protection purposes) - the overage on which could be argued by tax authorities to be a gift(!), if the transaction is not unwound). (Not all states have such state taxes, and, again, even where such federal and/or state taxes would be eliminated, they can again be enacted in some form. Planning must take such possibility into account.)

•  Failing to disclose all of your assets/sources of income when, after you lose a lawsuit, a plaintiff formally questions you as to same, under oath, in a “debtor's examination.” (Your rights to privacy typically prevent an opposing attorney from examining you as to your finances prior to an adverse judgment - unless your attorney fails to properly object to such attempts of the opposition.)

•  Failing to disclose all of your assets/sources of income during bankruptcy proceedings.

•  Transferring property to another, so as to (fraudulently) hinder a creditor - potentially violative of both state fraudulent conveyance and federal bankruptcy statutes (the latter, if you are in bankruptcy).

•  Acting through an undisclosed intermediary, when, for example, opening an account in a jurisdiction where doing so through an undisclosed intermediary is illegal.

•  Otherwise covering up the true source and/or ownership of funds, and/or covering up the fact that the funds were generated from illegal sources, when, for example, opening an account in a jurisdiction where doing so is illegal.

•  Otherwise breaking a law.

•  Inducing another to break a law.

•  Conspiring with another to break a law.

•  Covering up or helping to cover up the breaking of a law.

•  Hindering authorities in their attempts to enforce a law, including hindering them in investigations (= obstruction of justice).

•  “All movements which attack the existing state of society attract both the people who are not good enough for the world and the people for whom the world is not good enough.” George Bernard Shaw, from “Preface To Androcles And The Lion” (1913).

•  “Resolve to perform what you ought; perform without fail what you resolve.” Benjamin Franklin.

11. The moral to all this? Protect your assets to the extent you legally can; behave yourself to the extent you legally can't (ponder that one!); and know enough about these myriad, complex, and evolving subjects involved in asset protection planning to defend yourself - and to know when you need legal advice.

• As my father often said, “Darrell, a word to the wise is sufficient!”