retirement

High-Level Strategies to Protect Your Wealth from the Wolf at the Door

From foreign asset protection trusts to a preferred partnership freeze and bankruptcy planning, there are several options to ensure your long-term financial health in these trying times.

As we approach the “next normal’ and begin to plan re-entry into a more traditional work and lifestyle with more social interaction, there are many aspects of business and personal lives that need to be planned and reconsidered.

It’s difficult — if not impossible — to determine the long-term effects of the coronavirus lockdown on our economy, and we’re all feeling a loss of control over this lingering uncertainty. So, let’s take some uncertainty off the table. Let’s ask, “What can I do to ensure my long-term financial health and well-being? How can I apply those lessons to my family and my company? How I can keep at bay the ‘wolf at the door?’”

Although we don’t possess a crystal ball to predict the future, there are strategies we can implement to prepare for it. The following list outlines some smart, high-level strategies in risk mitigation and asset protection planning. To learn more about each, please download your free white paper, The Wolf at the Door.

Foreign Asset Protection Trust (FAPT)

This establishes a foreign trust in countries with strict and protective trust laws to protect your nest egg from creditors and predators more so than establishing the trust in any of the United States.

HYCET™ Trust (“Have Your Cake and Eat it Too”) ®

Conventional irrevocable gift trusts typically do not allow the donor to reclaim gifted assets once made; however, the HYCET Trust can help you make the gift tax exemption so that if you later have donor’s remorse — or need or want to recapture all or part of the gifted assets — your trustee can accommodate you — This is Why You Get to Have Your Cake and Eat it Too!

Preferred Partnership Freeze

The Preferred Partnership Freeze (PPF) takes advantage of income tax laws to achieve a basis step up at death while "freezing" the value of your appreciating assets.

Premium Financed Life Insurance

To conserve cash flow, consider financing your life insurance premiums by borrowing the premiums from a lender who specializes in financing life insurance premiums. Financing your premiums can reduce your cash outlay by as much as 60%, allowing you to conserve your cash for emergencies.

IRA Rescue Strategy

If you live in a state that does not provide a significant creditor exemption to individual retirement accounts (IRAs), one may use our IRA rescue strategy to place the IRA assets into a foreign LLC owned by the IRA and managed by a foreign managing director.

Conserve Cash

A little cushion can go a long way in the midst of disaster, and lengthening your runway can help you deal more effectively with unexpected bad news. To accomplish this, perform an asset protection stress test to help determine what assets would be protected from creditors. Spend what is exposed and save what is protected, and cut your spending by reconsidering housing investments, selling your toys and re-evaluating leveraged investment real estate.

Protect What’s Owed

Don’t leave any money on the table. Ensure all outstanding accounts receivable are paid and file proper liens on debts. Take advantage of new federal and state programs designed to relieve your economic burden during this crisis. Be aware of and apply for the new programs afforded by the CARES Act and the Families First Coronavirus Response Act.

Mitigate Risk

In addition to the above legal strategies, risk mitigation (from unforeseen lawsuits) is a prudent strategy to prepare for and lessen the effects of threats when faced with financial ruinous lawsuit. Identify potential risks, perform a risk assessment (Lawsuit Exposure and Privacy Test), determine the likelihood of occurrence, and plan to mitigate each risk.

Smart Bankruptcy Planning

In the worst-case scenario, you may have to consider bankruptcy. Bankruptcy provides an honest but overburdened debtor with a “fresh start,” provides for the equal treatment of creditors, and preserves the going-concern value of companies in financial distress by reorganizing rather than liquidating. There are several different types of bankruptcy, and understanding the language and strategies relating to bankruptcy is an important step in protecting your assets.

While our future in this time of crisis feels uncertain, it’s comforting to understand the steps we can take to protect our health and our financial well-being. To help you prepare for the worst, but hope for the best, please read our white paper.

Keeping “the wolves” at bay isn’t easy, but armed with the right tools and advisers, you may just have a fighting chance.

About the Author

Jeffrey M. Verdon, Esq.

Managing Partner, Jeffrey M. Verdon Law Group, LLP

Jeffrey M. Verdon, Esq. is the managing partner of the Jeffrey M. Verdon Law Group, LLP, a Trusts & Estates boutique law firm located in Newport Beach, Calif. With more than 30 years of experience in designing and implementing comprehensive estate planning and asset protection structures, the law firm serves affluent families and successful business owners in solving their most complex and vexing estate tax, income tax, and asset protection goals and objectives.

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your stimulus checks.
February 19, 2021
Want More Tax-Free Retirement Income? One Man’s Whole Life Decision
life insurance

Want More Tax-Free Retirement Income? One Man’s Whole Life Decision

Whole life insurance might not be something that’s on your retirement planning radar, but for this client, here’s how it served his need to control ta…
February 23, 2021
The Current Plan for $1,400 Checks
Coronavirus and Your Money

The Current Plan for $1,400 Checks

Here's what you need to know about the stimulus check plan currently being considered in Congress for President Biden's COVID-relief package.
February 18, 2021

Recommended

33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
February 24, 2021
Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

There were a lot of tax changes for the 2020 tax year. Get familiar with them now – before you file your 2020 tax return.
February 8, 2021
Estate Planning Checklist: 5 Tasks to Do Now, While You’re Still Well
estate planning

Estate Planning Checklist: 5 Tasks to Do Now, While You’re Still Well

Being prepared is going to feel great, you’ll see. As you work your way down the list, make sure you communicate your decisions with your loved ones.
February 8, 2021
Worried about Passing Down a Big IRA? Consider a CRT
estate planning

Worried about Passing Down a Big IRA? Consider a CRT

Charitable remainder trusts give you more options and more control on how your heirs inherit now that the “stretch” IRA is a thing of the past.
February 8, 2021