Asset Protection Plans
Assets protection plans may be defined as the implementation of a plan to shield assets from the claims of future or potential creditors, for example from frivolous lawsuits. It is a form of wealth insurance using a series of lawful techniques to make it difficult or practically impossible for future creditors to get hold of assets. The use of a number of offshore jurisdictions is usually an essential element of asset protection plans.
The essential element of asset protection plans lies in isolating ownership and (where possible) control from the settler’s home jurisdiction, out of reach of the courts and therefore the creditors of that jurisdiction.. The attacker should have to pursue a variety of asset holding structures in a number of jurisdictions with different legal systems that at all times makes it harder and more expensive to achieve his end goal. Another powerful factor is that many offshore jurisdictions have strict confidentiality laws and hence little leakage of information. An attacker may simply not be able to find out where or how assets are held
Assets protection plans are necessary because the last few decades have seen an explosion in litigation and increasingly a change in attitudes in a number of countries towards seeking recompense for perceived losses. Asset protection plans generally seek to ensure the safety of assets that have already been acquired from taxed income. There may be issues with some classes of assets upon a formal change of ownership, for example unrealised investment gains may crystallise and attract capital gains tax. Proper tax advice should always be taken in one’s jurisdiction of residence and citizenship with regards to asset protection plans.