Relying on Inadequate Coverage or Insurance Alone Can Be False Security

You don’t want to work with inexperienced counsel, no counsel, or promoters. There are some common issues with “do it yourself” (DIY) kits and those created by promoters; mainly that they are often based on some of the faulty logic and planning outlined above and often combine a variety of the mistakes that we’ve warned you about. Non-attorney promoters of DIY LLC kits, abusive or outright fraudulent trust structures (pure trusts, constitutional trusts, admiralty trusts and abusive private charitable foundations are just a few of many examples) have no real professional liability or oversight, nor do they have an attorney-client privileged relationship with you as a consumer. In plain English, that means every letter and email you exchange in the course of their “consultation” as these sales presentations are euphemistically referred to, should be expected to be fully discoverable by any 3rd party. Adding a final layer of risk, many of these plans are abusive from the perspective of the I.R.S. and you cannot rely upon sales materials, false (or forged) letters of opinion, or their marketing materials as a defense. You will be all alone and out-of-pocket if these issues are challenged by the I.R.S. The worst of these plans are not only defective from a creditor protection standpoint, they actually can create six and seven figure liabilities for the clients who are taken by them, and in some cases, criminal charges.

Why can’t we just insure our way to safety? This is a reasonable and common question clients and advisors often ask. In the most egregious cases of armchair quarterback misinformation, uninformed advisors tell their clients that the only asset protection they need is a good umbrella policy. This is flat out wrong, especially for the kind of successful people that need protection. Why? Because they are successful, visible and typically have assets above and beyond just the insurance policy itself, they are good targets from a net-worth perspective and litigators love people they can collect from…it’s what they do.

Much of the content in this press release was taken from Ike Devji’s article Common Flaws of Asset Protection Planning with permission.