On its face, asset protection planning sounds a lot like what billionaires in movies do to evade taxes, or the government. Unfortunately, many business owners have this same understanding when they sign up for the plan. Asset protection planning is a legal financial tool that allows people to protect their property from unfortunate events; it wouldn’t gain such a status if it had an overreaching capacity for fraud.
The biggest red flag that get most people’s attention is the ability of people to hide their assets in offshore locations. What most people don’t understand about asset protection is that even if the property or money is several oceans away, the owner is still in the country.
There are several cases around the end of the first decade that people can ask lawyers like assetprotectionatty.com about regarding how they changed asset protection. These cases set a precedent regarding the power of the courts to order people to retrieve their assets under specific circumstances.
These court measures are known as repatriation orders, which people can choose to comply with or not. But the consequences for non-compliance include a bench warrant for contempt of court, as well as jail time for a set number of years, or until the money comes back, whichever comes first. A corporate lawyer spent fourteen years in prison for refusing to repatriate assets to pay alimony to his ex-wife.
Most asset protection specialists quickly dissuade their clients from thinking that they’re creating a shadow fund. The truth of the matter is that everything manages to find the light one way or another. Good luck trying to discourage disgruntled spouses or employees from talking to people about protected assets. Don’t even think about trying to hide it from a bankruptcy court; failure of full disclosure will usually lead to a denial of discharge, or even perjury and fraud.
Asset protection is a legitimate financial tool, and it can only be effective in the hands of someone not looking to game the system.