Kinetic vs Traditional Asset Protection Structures
Hello, Rob Lambert here with assetsprotectiontraining.com.
Today I’m going to explain the differences between a Traditional and a Kinetic Asset Protection Plan, and I’m going to deal with my preferences on each. They both have their places and the bottom line is, I don’t think any of you should ever do a kinetic asset protection structure, unless you’re really well advised. Make sure you have a real pro with you.
I actually invented this structure years ago and I love it! But I don’t know how to work it and my clients are really trained. Half the job of doing assets protection is training you clients, how to drive the 800 power Ferrari you built for him. If you start with a Connecticut protection trusts you’re very likely to crash your vehicle, if you haven’t had a lot of training.
Yes it’s a better car, yes it goes faster, yes it handles better, but it’s very high performance so most of you should stick with it additional Asset Protection structure, that’s my bottom line conclusion let me tell you why I get there.
Traditional Asset Protection Structures
This is a traditional asset protection structure. We have all been over this, we’ve already seen this diagram. You watch the videos, and if you haven’t, you need to. Bottom line- just a quick overview, this black line from the upper left of the lower right hand side of the page, symbolizes foreign vs domestic; on the right hand side it is foreign and therefore safer, on the left hand side its domestic and therefore less safe. The domestic side has no trust.
I keep the trust foreign to the extent possible making it much harder to serve it. Underneath or on the domestic side is the blue family limited partnership, it has a human being general partner. I don’t think it’s necessary to use a corporate entity, it sometimes wise many times I do, I just don’t necessarily think the money was well spent because the general partners always going to be personally name and any suit anyway. So that’s a question depends upon the client, but most of the time I let it be human being.
The family limited partnership is a domestic partnership, I usually use Delaware and 99 percent of the assets that’s in the partnership are owned by the trust. Why is that important? Because remember the first rule of asset protection, what you don’t own, cannot be taken from you.
So assets that are partnerships are theoretically fully protected without you doing any more, you just can’t trust domestic charges to do the right thing and follow the law. They often times do with our hearts demand and so they will sometimes disregard charging order protection, that’s many times and they will move and manipulate the law to favor creditors that theoretically trip to the law without the heart of the charge will be disenfranchised.
On the right hand side is the brown assets protection trusts traditional structure, it has a settlor a protector and beneficiaries. The last key player is a foreign and Trust Company. This is usually a license Trust Company there’s usually owned by major important law firms but they’re usually not rich, there is a lot of them own by banks.
There is a lot of them that are really rich, they do like assets protection trust very much and they almost insist on managing my client’s money. I think that’s usually a bad idea.
Table of Contents
I don’t know my client that all bank trust companies the power to manage their money, and then come to me and tell me how please have happened they are with the returns and the thoughtfulness. Most of those people managing those assets on behalf of banks to allocate the offsets follow simple computer models and do pretty poor work. So foreign trust companies are usually small to medium-sized highly prestigious law firms, and they are willing to allow my clients to usually control the adjustment of their hard earned money. I think you should insist on that with any trust company that you go to.
Problem with the Traditional Structure
This is a traditional structure, the only problem with the traditional structure is that the settlor is forced to trust this unrelated yellow foreign Trust Company up there. Oftentimes settlor will have many more money much greater Trust Company, I don’t think you are wise to trust anybody if you don’t have to. So traditional structures are not what I favor, but it’s what I think you should all do. The way I think you should avoid being subject to theft risk from the foreign Trust Company is to always make sure that you sign on all the bank accounts. Even if it’s with the foreign Trust Company and that’s always the best way in my mind, and you doing the simple trusting you not getting too complicated. It’s always better to have to signature before and Trust Company and settlor on the bank accounts.
That way is ordered to write a check to some credit, the settlor can comply with the judge’s order, the settlor is going to go to jail if settlor complies with the judge’s order. But settlor and Trust Company is not going to also sign the check, wire instructions, fax or make the call whatever has to be done to move money or assets. You can pretty well have your cake and eat it too with the traditional structure.
I am much more comfortable with the structure of the Connecticut the asset protection trusts because I believe it gives the clients more flexibility, but again don’t do this on your own it’s too dangerous; it’s like getting a 800 horsepower Ferrari. You’re going to crash it if you don’t have the training.
Kinetic Asset Protection Structure
A kinetic structure it’s identical to a traditional structure, except it has one more player right here, the US co-trustee, this is usually my client, who happen to also be the settlor. What you need to do is you need to have a carefully thought-out battle plan, basically what to do if the world falls apart. If you would adapt kinetic structure, go with somebody who knows what they’re doing and get a road map to follow if your life falls apart.
The bottom line steps that need be followed is, you need to have people other than yourself, such as a foreign protector actually removing the US co-trustee and converting the kinetic structure back to a traditional structure without the US co-trustee. You would only do that when the financial seas cloudy, warfare going when you were going into debt his exams, when you open attack. During the times where the financial are calm, always easier, always more comfortable and always make the clients happier because of the controller able to exercise; but believe me, you do not want a kinetic structure unless you have a plan and your vigilance to implement the plan if attacks comes.
I hope this helped you with the basic differences and I hope that you take us home with you. Don’t be afraid of either, but for heaven sakes if you’re getting any of this yourself or doing this without really high level guidance then stick with the traditional structures.
Okay thank you very much
Trust – Table of Contents
- Interpretation – page 4
- Governing law and power to change it – page 5
- Power to add and remove Beneficiaries; Settlors’ testamentary powers page 6
- Power to add Excluded Person – page 6
- Power to change the Vesting Day – page 7
- Trust for sale – page 7
- Power to receive additions to the Trust Fund – page 7
- Discretionary power of appointment – page 7
- Power to apply capital – page 8
- Applications and accumulation of income – page 8
- Trusts on Vesting Day – page 8
- Events of duress – page 9
- Payment to minors – page 9
- Trustees’ powers of investment – page 10
- Trustees’ general powers – page 10
- Trustees’ powers in relation to land and buildings – page 16
- Apportionment of income – page 16
- Trustees’ dealings with third parties – page 16
- Trustees’ charges – page 16
- Trustees interested in companies – page 17
- Trustees’ indemnity – page 17
- Trustees’ involvement in managing subsidiary companies – page 17
- Trustees not required to give security – page 18
- Trustees’ discretion uncontrolled – page 18
- Power to release and to add powers – page 18
- How Corporate Trustees may act – page 19
- Delegation by Trustees – page 19
- Appointment, retirement and removal of Trustees – page 19
- Protector’s powers – page 20
- No benefit for Excluded Persons – page 21
- Settlement irrevocable – page 21