Asset Protection for New Millennium

The King of Silver and the King of Rock-n-Roll

In the early 80’s two prominent men died.  One of them was a Hunt brother whose wealth had been estimated by Forbes Magazine as exceeding  $1 billion, shortly before his death.  The other was Elvis Presley, beloved King of Rock-n-Roll whose net worth was $300 million.

Elvis had no estate planning in place, no will, no trusts, no asset protection planning of any kind.  His heirs fought the local, state and federal government as well as each other for years.  Creditors came out of the woodwork like ants at a summer picnic.  When the courts had finally settled the matter, the King’s heirs received the sum of $30 million. Certainly a king’s ransom to most, but only 10 cents on the dollar of Elvis’ net worth.

Mr. Hunt, was a bit of a different story. A complex web of trusts, corporations, family partnerships and insurance policies had taken legal ownership and transferred it to others long before Mr. Hunt’s death. His last estate tax return claimed ownership of an old pick up truck valued at less than $2500. The government, potential creditors and the attorneys took nothing. His heirs took everything.

People often ask me in seminars and in private consultations “Joel, what is the best type of asset protection”?   And while the types of structures and entities are numerous and different for each person, the first word that comes to mind, when coupled together with asset protection is: “International.”

Why “International”?  

The answer is simple:  by removing assets to a foreign jurisdiction, you have changed the battlefield in your favor and away from that of the plaintiff, or would be claimant. Many “haven” jurisdictions have not only privacy provisions written into their laws, but also pro-asset protection clauses, that are designed to favor trusts, defendants and corporations. Almost no foreign jurisdictions permit contingency fee arrangements with plaintiff’s attorneys. Some require that a bond be placed by the plaintiff with the court in the amount of the claim. Other jurisdictions, such as Belize have statutorily waived the common law doctrine of fraudulent conveyances, thus blocking claims against trust assets.

Is it Legal?

International asset protection is a legal, legitimate and perfectly appropriate way to build a defensive fortress around your assets. As the great Chinese General Sun Tzu wrote over 2,500 years ago, a General always sets his defensive forces first. By ensuring that he cannot be defeated, he then can wait for an opportunity to achieve success.

In applying Sun Tzu’s theory to asset protection, one must first build a fortress around what one has, ensuring that nobody can attach or seize those assets. We then look for a way to achieve success by integrating investment strategies, and asset allocation, as well as tax minimization strategies, to produce the intended result of protection, growth and generational succession.

Attacks on wealth, generally come in the form of four primary risks including: Physical risks (such as crime), Economic risks (such as the downturn in a particular stock, bond or piece of real estate), Taxation and finally Litigation risks (including bankruptcy, tort litigation and divorce). While there is no “one-size-fits-all” remedy to those various attacks, one must analyze these risk factors on an individual basis and develop strategies accordingly. While we can’t anticipate when any of these risk factors may arise, like Noah, we must build our Arks before the rain begins to fall. To paraphrase Sun Tzu once more “The prevention of defeat lies in our own hands, hence the skillful fighter put himself in a position that makes defeat impossible.”

While the war may have shifted from gladiators on the battlefield, to lawyers with suits and cell phones, the goal of battle has not changed throughout the Millennia.  One party wants to defend what it has, while the other party wants to take it from him. Legally or by force, it makes no difference to the outcome.  Both sides feel they are right in their quest. Morality, however, does not play a role in the asset protection war, since God loves creditors and debtors equally.

So when we speak of modern day asset protection, we’re really talking about the newest and latest techniques in a struggle that has been waged in various forms throughout time eternal. Protecting what is ours, for our families and for ourselves, is what asset protection planning is all about.

When we come to the conclusion that “international asset protection planning” is appropriate for our individual circumstances, the next question is where and how?


The countries utilized should be modern jurisdictions that have made a statutory commitment to asset protection and privacy. English based laws and institutions often make for greater client understanding and feelings of comfort. Modern telecommunications, air travel, convenient time zones, political stability, a strong currency (or the ability to transact business in dollars) and a lack of direct income, corporate, capital gains or estate taxation make up all of the ingredients for a superior asset protection haven. Finally, where appropriate, consider jurisdictions in which you might actually want to vacation and/or retire. There are literally dozens of jurisdictions, such as the Turks & Caicos Islands, that meet these requirements.


Utilize a good asset protection specialist who can integrate estate planning, tax laws and litigation poison pills on the one hand, with a knowledge of jurisdictional competitive advantages on the other. If the specialist is practicing in an island jurisdiction, he or she should have at least enough knowledge of the various tax and regulatory requirements in the country of the client to advise the client of those obligations. If a US practitioner, he or she needs to be able to not only understand basic issues of the foreign jurisdiction, but also be able to advise clients as to top banks, accountants, money managers, etc., in the jurisdictions selected.

The Tools and Strategies

There are a variety of tools and strategies to address the physical, economic, tax and litigation risks that abound.

Physical risks can be addressed by the transference of physical custody. One cannot be robbed of valuable cash, securities or other tangible assets once they have been transferred to an overseas bank or trust company for safe keeping.

Economic risks can be addressed through asset allocation and diversity.   International planning has been proven to actually lower portfolio risks while increasing overall yields. An overall international portfolio of stocks, bonds, hedge and mutual funds as well as real estate, that is custom tailored to the individual, based on age and risk tolerance will clearly out-perform an unbalanced domestic portfolio over the long run.
Taxation risks can be addressed through a variety of insurances, designed to grow tax deferred and to alleviate the heavy burden of estate tax. Tax efficient investment planning can also minimize or defer current taxation. Effective generational transfers can also help to reduce taxation risks.

Finally, litigation risks (particularly divorce), which are the most damaging and dastardly threats to wealth, can be addressed through a variety of legal structures.  

The Irrevocable Asset Protection Trust (APT)

The Irrevocable Asset Protection Trust (APT) is the primary tool of the asset protection specialist. By transferring assets to an APT, one can legally stand in a court of law, place one’s hand on the bible and properly exclude assets previously transferred to the APT.

A Family Limited Partnership (FLP)

A Family Limited Partnership (FLP) is also an effective way to transfer "ownership" while still maintaining an interest in an asset. An FLP can also, through the discounting of an individual partnership interest, be an effective means to carry out inter-generational transfers, thereby savings estate and gift tax.

An International Business Company (IBC)

An International Business Company (IBC) can carry out business anonymously, have tax benefits in certain circumstances and allow ownership to be held by a "low risk person" (spouse or child) while the "high risk person" can contribute to the business. They are becoming increasingly utilized in both domestic and international planning.

Limited Liability Companies (LLCs)

Limited Liability Companies (LLCs) have some of the benefits of both FLPs and IBCs. They generally are taxed as partnerships, but protect the underlying owners from personal liability.
There are also a multitude of specialized techniques from the incorporation of private banks and insurance companies to family foundations, contractual arrangements, mortgages and customized insurance products designed to help one achieve their asset protection goals.  It is important to discuss your assets and asset protection goals frankly with your professional advisors.
While some might find my repeated reference to Sun Tzu and his book the Art of War as sensationalism, the reality is that asset protection is a type of warfare that one can either address and master, or fall prey to the next plaintiff attorney that comes along.  To General Tzu and to all of us wanting to protect our assets, “It is a matter of life and death, a road either to safety or to ruin. Hence under no circumstances can it be neglected.” The choice is clear regardless of our net worth. Do we follow the path of the King of Silver, or the path of the King of Rock-n-Roll? The choice will be made by each of us.