book
BULLETPROOF A$$ET PROTECTION
by
William S. Reed, J.D.

INTRODUCTION

Our constitutionally guaranteed rights are under attack, not from some outside threatening force, but from our own government - and our own people. For instance, the First Amendment Center at Vanderbilt University conducted a survey during February and March of 1999 and found that 53 percent of those questioned believe that the press has too much freedom. That is an increase of 15 percentage points from 1997.

"It's a humbling reminder that fundamental rights of expression can disappear if the press and public are not vigilant," said Ken Paulson, the center's executive director.

The survey was conducted to explore Americans' commitment to the forty-five word First Amendment that guarantees freedoms of religion, speech, the press, petition, and assembly. The poll identified freedom of speech as one of the most cherished of constitutional rights, followed by freedom of religion and the Second Amendment's right to bear arms. Nevertheless, when asked to name any of the rights guaranteed by the First Amendment, 49 percent of those questioned could not.

You don't have to be a Rhodes scholar to know that the First Amendment is under relentless assault on a daily basis, whether from adverse court decisions, proposed laws, fanatic religious groups, or citizen initiatives. Only 65 percent of those surveyed thought that newspapers should be able to publish freely without government approval of a story - down from 80 percent in a 1997 survey.

The quotation from Bill Clinton listed above is not based on any personal conviction. He was reflecting the current attitudes toward personal freedom and the willingness of a growing number of people to surrender certain freedoms in exchange for some sort of security they believe will come with more government control. This does not bode well for Americans with money who enjoy the privileges of freedom. The federal government works like a shark, it has to constantly devour things in its path (i.e., by passing new laws) or it will die.

With the stock markets and individual productivity at record highs, you might think people would be clamoring for less government, but the truth is that 10 percent of Americans own the lion's share of the wealth. This leaves plenty of people in the other 90 percent to elect sycophants like Hilary Clinton who relish using the government as a tool to redistribute the wealth.

The Litigation Explosion

Another method of redistributing the wealth is to file a lawsuit and ask the court system to assist you. The rising tide of frivolous litigation filed by plaintiffs and their lawyers has created an omnipresent threat to anyone with a positive net worth.

One in three Americans will be involved in a lawsuit sometime in their life. The staggering cost in attorneys' fees to defend a lawsuit is many times more onerous than the potential outcome of the lawsuit itself. In the past, lawsuits were filed when a point of law needed to be clarified or the amount of a damage claim needed to be decided by a jury, but that's changed. Because judges lack the backbone to assess plaintiffs and their lawyers for attorneys' fees sustained by the defendants in frivolous or groundless lawsuits, there are legions of underemployed lawyers who have turned a lawsuit into a live hand grenade. They roll it into a room full of defendants and see who will pay.

There is no purer form of extortion than a lawsuit; the defendant has to decide whether to pay the plaintiff or pay his attorney to defend the case. Oh, sure, every state bar association pays lip service to enforcing a code of professional responsibility allegedly designed to restrain its members from filing unfounded lawsuits, but the real story lies in the chilling statistics showing the alarming increase in the number of lawsuits filed each year.

When I started in business more than ten years ago, I had never heard the words asset protection to describe a specific field of business. It isn't that people were poorer back then or that wealthy people didn't want to protect their wealth, but with the explosion in litigation, the increasing number of new lawyers, and the construction of new law schools, litigation has become a blood sport used to employ the overpopulation of lawyers.

Nowadays, there is absolutely no moral compass involved with a lawyer's decision to file a lawsuit. Judges have the power to check this trend, but they are all lawyers themselves with a self-interest in perpetuating the system. Congress has the power to limit lawsuits, but most are lawyers as well. And if they're not, they feast on the campaign contributions of lawyers and their special interest groups.

Ironically, collection lawyers, government agencies such as the IRS, and everyone outside the asset protection business make every effort to characterize asset protection as dishonest, fraudulent, or worse. Of course, their motives are transparent. They denounce anyone who successfully thwarts their efforts to collect or seize assets, disrupting the stream of income flowing in their direction. And they do more than talk.

The American Trial Lawyers Association is a brutally powerful and influential private interest group that generously supports any candidate, usually a Democrat, who helps them keep the ground rules of litigation tilted in their favor. They will fight for their right to litigate at all costs. Litigation is their lifeblood. Be damned the innocent parties who stand in their way.

The Wealth Factor

Up until the 1980s, you had to be a Rockefeller, Ford, or Kennedy to be considered a wealthy person. With the advent of the personal computer industry in the 1980s, and the explosion of commerce on the Internet, the number of wealthy people has grown exponentially. There has never been a larger pool of people who need and can afford asset protection.

As a result, asset protection has become a growth industry. Increasingly, people with wealth or even a modest nest egg must come to terms with the fact that the threat from the federal government or a frivolous lawsuit is real.

I don't pretend to know what the current definition of a wealthy person might be, but I know for certain, as a former collection lawyer, that there have never been so many collectable defendants.

The Peace of Mind Factor

There are also people who will never be sued or be the subject of any investigation. They may have quietly inherited their money or passively invested their assets wisely. They live modestly and spend prudently. No doubt, some people would argue that the members of this group needn't worry or invest in asset protection.

Nevertheless, at least one third of my client fall into this category. They're not concerned about divorce or the IRS; they just like to know at least some of their assets are out of sight. They're not doomsday prophets hoarding briefcases full of gold coins; they just derive some comfort in the knowledge that part of their net worth is outside the grasp of the U.S. court system.

I call it bulletproof asset protection. They call it peace of mind.
W.S.R.

Bulletproof Asset Protection Chapter 1