Dear Valued Client,


In my library are a number of books, written by a broad spectrum of "asset protection strategists" describing their unique system for "Bullet-Proof" asset protection. There are several consistent weaknesses in each of these very clever plans - and the problem is usually not the plan.

Some of the more common reasons that elaborate and expensive asset protection strategies fail are:

1. My lawyer made a great plan, but my CPA did not understand it, so nothing happened.
   
   
2. My business, assets and family have changed since I made my plan, but the plan has not been updated.
   
   
3. The plan is all made, I know what I should do, I am just too busy right now!
   
   
4. Operating my business and personal life was overly complicated by my planning, so I dropped it.
   
   
5. Too many states, too many companies, just too complicated to keep it straight.
   
   
6. The Plaintiff's counsel got inside one of my companies and took everything it owned - so I assumed the plan was no good and have done nothing with the plan since.

If any of the above statements struck a note with you - keep reading and then call us. We will help you bring your planning up to date, help you implement it and maintain it so that it continues to provide the protection you need for your assets and and income streams.

1. My lawyer made a great plan, but my CPA did not understand it or did not agree with it, so we really have not put it into operation yet. This highlights several very significant weaknesses with asset protection plans - a) lawyers who create excellent plans but have no time or interest in the implementation and maintenance activities; b) CPAs who will not do what they do not understand (and will not learn this important area of client service) or CPAs who discourage implementation of asset protection plans; and c) owners who decide they really do not need professional help to implement and maintain their planning because they can learn all they need to know from the internet.
   
   
2. Failure to maintain the plan: Asset Protection Strategies require regular maintenance to keep up with capital transactions that occur, to keep up with changes in the family or business structure, to adjust to changes in income streams, to stay current with tax law changes, to avoid co-mingling of funds and to avoid confusion about personal financial needs, and to maintain the company records. And, once you start the process, it is important to finish it - to complete the structures and to put them into operation. The best plan purchased at the highest cost will fail if it is not maintained properly, just as the best made and most expensive auto will fail if it is not maintained. We often get calls from people who have paid substantial sums for an "asset protection plan' and now they want a CPA to help them with their tax filings. When we look at their plan, we invaribly see that they paid a lot of money for what they have but it is neither complete nor fully implemented. If you do not have a complete plan, we will be pleased to help. If you have a plan or do not have knowledgable professionals monitoring and maintaining your plan, we will be pleased to help.
   
   
3. Waiting until something happens! When you actually implement your strategy may be more important than your strategy. Time is your friend, not your enemy. Remember that Federal Bankruptcy laws have a 10 year lookback in many cases and the ability of the states to look back varies from state to state. So, sooner is better.
   
   
4. Failure to fund your plan: We find many excellent plans that were a waste of time because the client failed to fund it as planned. Perhaps there was a change in finances. Perhaps the bank would not loan against property held in an irrevocable trust. Perhaps it was just too complicated and got forgotten. Most problems can be solved with a creative approach, so do not stop until the plan is in place and operating.
   
   
5. Multi-state issues created problems and ultimately defeated the plan. The entities that hold your liquidity and ownership of your operating businesses should be in different states. You may have the trusts that own your family assets (preferably that holds that entity that holds your family assets and ownership of operating entities) in one state and your operating entities in another state, but they must not all be in the same state, particularily in a state with weak asset protection laws. In other words - do not put all your eggs in one state - always separate ownership from operations - and do not put ownership in the same state as operations.
   
   
6. Failure to strip the equity out of assets that cannot be placed into the asset protection structures or assets that are in any operating company. If you live in a state without homestead protection or with very low amounts of protection, strip out the equity. If you have property in an operating company, strip out the equity. All of your equity should be held by a senior and passive entity that is formed in a state in which you have no operations and the equity stripped should be the subject of recorded mortgages and liens.

If you have purchased an asset protection plan in the past and it has not been carefully monitored and maintained by knowledgable professionals, we will be pleased to review your current planning and your implementation progress and your quality of maintence. If you are concerned about the costs of quality planning, call us - a fully formed plan should more than pay for itself in the first year - and every year after that.

Feel free to share this newsletter with your family, friends and colleagues. This firm relies on satisfied clients as the primary source of new business, and your referrals are both welcome and most sincerely appreciated!

David Southwell, CPA

Natalie Reid, CPA


Creative Asset Protection Strategies, Inc.

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