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WPG
Articles : Asset Protection |
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Personal Wealth Retention In America |
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By Ray Chodos |
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 American personal wealth inequality, the haves and have-nots. The United States
population is economically polarized and continuing to grow further apart. While reliable personal wealth statistics are rare; according to government estimates, the top 1%
of wealth holders’ control 39% of US privately owned wealth. The bottom 80% control less than 16%. This great disparity is not lost on trial judges, juries, disgruntled
employees, consumers, shareholders or litigators. When a hard working bread winner reads about other families supporting a lavish life style on a million or more a month, it
becomes difficult for him to be happy for the affluent. Thousands of individuals and businesses engage in proactive efforts to redistribute other’s wealth. America’s
"litigation culture" of non-accountability for individual actions coupled with more laws and regulations than most people can keep up with leads to an unpredictable civil
litigation system. Trial outcomes may hinge on subjective social perception more so than legal evidence or precedent. Lawsuit related redistribution proceeds equal 2.2
percent of the US gross domestic product ("GDP"). England, France, Canada are at 0.8 and in Japan, 0.5 percent of their GDP. (Business Week, Dec, 1995). Credit card debt has
reached frightening levels as a percent of the average American’s disposable income. The current average outstanding balance is at $8,000 per each American family on
average. There are 1.3 billion cards in current use, or an average of 4 cards per every man woman and child in the United States. Estimates are that 1 in five cards are
“maxed out”. Credit card interest rates are among the highest of any source of funds and the government denies a tax deduction for the interest charges. Personal
bankruptcies are at an all time high in 2002 there were more than 1.5 million declared. Corporate misdeeds are widely reported and add to public mistrust and scorn of
businesses in general. More than 65 million anti-depressant prescriptions were written in 1998 in the US. When opportunity knocks, it isn’t difficult to understand why so
many are ready to utilize the US legal system to improve their financial standing. Affluent families or companies rarely have ordinary citizen’s sympathy or empathy.
Taxation Relief
The primary benefit of asset protection planning is to insulate assets
from unforeseen attack irrespective of the claimant’s motive. There is
no substantive and legal tax obviation opportunity for US citizens in
utilizing asset protection plans onshore or offshore. There are however
tax minimization techniques that are legal and substantive available to
US citizens unrelated to asset protection planning. As an example:
Assets held by a limited partnership may qualify for a 35% or so
valuation discount in calculating gift and estate tax. There are also
large income tax minimization opportunities available in US Possession’s
economic development programs available to US citizens. Effective
professional planning integrates tax minimization with asset protection
and estate planning. While the planning process is not inexpensive, fast
or easy, living with a well designed plan generally is without
sacrifice. The level of experience and breadth of specialization within
the professional advisors has key impact on the planning efficacy and
ease of administration. Sensible preventative approach rather than
reaction to fear and intimidation. Even the most effective insulation
programs are of limited value if the “event” preceded planning
strategies. Most all worldwide legal systems will regard a plan
implemented after the fact to be deemed a “fraudulent transfer”. For
planning to be effective, well thought out and comfortable it must be
engineered when no threat exists on the horizon. The mastery of asset
protection, estate planning as well as tax minimization lies in the
family becoming educated and adaptive to concepts rather than simply
handing a problem issue over to an advisor to “fix” and then continue to
do business as usual. Considering what is involved in becoming
financially well off and how few of the world’s population ever achieve
this state; can we afford not to understand asset protection planning?
Learn from yesterday, plan for tomorrow, live for today. |
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Ray Chodos and Adam Chodos, Esq., CPA are members of
the Wealth Preservation Group LLC, a Greenwich, Connecticut based planning
organization specializing in wealth preservation, business succession,
executive benefits, interacting with the legal and accounting communities.
Find more information at www.WealthPreserve.com. |
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Impact of Litigation on Small Business |
 Most
companies used business assets to pay the damages. However,
in the case of employee complaints, insurance covered some
of the damages. Owners mentioned that the payment of
damages nearly put them out of business, which affected them
for a long period of time as they worked to rebuild the
business and recoup their losses. |
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While sitting at a traffic light
waiting for the green light, you are slammed from the rear by a
drunk driver who never saw you and didn't even attempt to stop.
Clearly, you are an innocent victim with no fault in the accident.
