From the guru, Jay Adkisson. Start early, keep it simple and don’t try to hide stuff from creditors. Here are the ten rules.
For years I’ve been telling my clients that Nevada corporations are not the panacea of asset protection as touted on the radio and web.Nevada’s corporate statues generaly provide better asset protection than Californria statutes because they make a Charging Order the exclusive remedy for a judgment creditor (similar to their LLC statutes). And that is powerfule. However, Nevada law is bulletproof as the hucksters on the radio and web say it is.
The Las Vegas Review and Journal reports that Richard Reed, Richard Neiswonger and Wendell Waite were indicted last week on federal charges of defrauding the federal government, mail fraud, wire fraud, conspiracy and money laundering in connection with an IRS criminal investigation into the activities of a company called Asset Protection Group.
With variations on a fraudulent theme that trace to 1998, APG promised participants in its Nevada incorporation program that they would be virtually free from showing asset ownership, revealing profits or paying taxes.
Participants paid up to $10,000 apiece. Reed, a part-time Las Vegan, became the sole signatory on 619 accounts at Nevada First Bank that processed $63 million in anonymous deposits. He sent another $11 million into offshore accounts, according to the indictment.
That’s not to mention the $152 million in fraudulent “friendly encumbrances” he helped generate.
In all, the IRS and U.S. attorney’s office allege Reed and his friends owe more than $13 million in taxes while APG’s clients are good for another $14 million.
One of the chief advantages touted on the radio and web ads was that creditors can’t get to assets owned in a Nevada corporation. That’s simply not true unless you are willing to commit perjury. Apparently Asset Protection Group would create a labyrinth of shell corporations and liens to allegedly allow their clients to hide their assets from a judge.
Another pitch: “Don’t wait until you’re the defendant in a lawsuit or the target of an IRS investigation to consider protecting your assets.
“Better to have your assets where the IRS can never seize them or know about them.
“What a judge can’t find, he can’t seize. And, when asked about your assets, you want to be able to say, ‘I don’t have any assets,’ not ‘I’ve got assets — but you can’t get them.’
Asset protection can be done and done effectively. But it must be done right and way before a creditor comes knocking at your door. If someone promises you asset protection that is too good to be trust – it is.
If a creditor is at your door, stripping the equity from your real property won’t help in bankruptcy court.
Time magazine online in its Feb. 26 edition has a funny article by Joel Stein about his experience with an estate planning attorney. Embedded in the article is a link to an older article by Sally Stich which has this great final paragraph about the responsibility of parents to do estate planning.
That is the crux of the problem. Parents don’t want to think about their death either, and nobody wants to talk about it. But, say experts, parents need to be parents one last time. “It’s selfish not to take care of these end-of-life issues,” says Dennis Belcher, chairman of the Real Property, Probate and Trust Law section of the American Bar Association, “and selfish not to communicate with your kids about them.” More important, it’s the final statement you make as a parent. Done openly, it will ensure the greatest legacy of all: family members who remain friends after you’re gone.
This conjures up one of my maxims that not doing estate planning (like not having life insurance when your children are young) is parental malpractice. And, unlike Joel Stein’s experience in the article linked above, estate planning doesn’t have to be complicated and expensive. If you are a California resident and have a small to moderate size estate, our online Will Package or Living Trust Package can help you establish a comprehensive living trust estate plan in just a few weeks for a very affordable price with one of our attorneys to guide you and follow-up with you. Check it out, get it done, and cross it off the list of things you need to do as a parent.