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

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
9 Great Growth ETFs for 2022 and Beyond

9 Great Growth ETFs for 2022 and Beyond

These growth ETFs offer exposure to higher-risk, higher-reward stocks while lessening the risk of a single stock torpedoing your returns.
January 18, 2022
The 10 Best Closed-End Funds (CEFs) for 2022

The 10 Best Closed-End Funds (CEFs) for 2022

These high-yielding CEFs won't just significantly boost your portfolio income. They'll also allow you to buy their underlying stocks and bonds at a di…
January 12, 2022


12 States That Tax Social Security Benefits
social security

12 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in one of these states, your Social Security benefits may be subject to state taxes.
January 27, 2022
What to Do When a Family Member Needs a Guardian
estate planning

What to Do When a Family Member Needs a Guardian

Seeking a guardianship for a loved one is a decision that shouldn't be taken lightly. Here's how the process works.
January 25, 2022
The “Gray Resignation” with Liz Windisch
Making Your Money Last

The “Gray Resignation” with Liz Windisch

Pandemic pressures (and high stock and real estate values) are leading many to try to move up retirement. Plus, tax-filing season gets under way.
January 25, 2022
The 4 Phases of Retirement

The 4 Phases of Retirement

Retirement means more than no longer working 9 to 5. There are four phases of retirement, and you should be prepared for each one.
January 24, 2022