It seems safe to say that coronavirus has affected nearly every aspect of our lives these days. It has shut down the economy, kept us confined to our homes, and has been completely dominating the news. What else could there be to do other than watch the constant reports about the numbers of hospitalized and dead? How can we avoid falling into a rut of fear about an uncertain future?
Well, I would argue that there is plenty to do. In fact, now is the perfect time to work on planning a strategy for the future. Yes, right now. If this crisis does nothing else, it should be a demonstration of how important it is to have a sound, comprehensive asset protection strategy. Why? Because this crisis will eventually end, but the necessity of having a long-term financial perspective will not. This is imperative for dealing with any other world crises that may come our way in the future. Our current situation demonstrates the plausibility of such crises quite well and while there is no need to panic, being well prepared is essential.
How Does One Go About Devising an Asset Protection Plan?
Step 1 -
The first step to composing a good asset protection strategy is to review any structures you may already have in place while keeping a specific focus on one element that can vary widely from individual to individual — risk profile. That is to say that the outlook on risk of a schoolteacher who has saved income for 30 years may be different than that of a physician who has been practicing for 15 years so far.
Step 2 -
The next step is to look at the individual’s investments or holdings. Do these existing investments take the need for liquidity into account? Have these investments only been made in dollars or have they included the use of other currencies? I believe that the advent of the coronavirus crisis has made these questions much more apparent as many may seek concrete ways to protect their families from the ever more realistic possibility of bank closures and a decrease in the value of the dollar.
Step 3 -
Nothing is certain except for death and taxes.
The third step is that while keeping an optimistic view of the future is necessary, taking a sober look at how to prepare for the inevitable is equally necessary. The old adage made famous by Benjamin Franklin of nothing being certain except death and taxes is as true as ever. A good asset protection plan requires you to properly plan your estate and to decide where your money should go when you are no longer here. To do so, you should have enough assets diversified away from the dollar and perhaps a few offshore.
Step 4 -
Last and far from least, you should think about where you may like to live and work as you get older and approach retirement.
These four steps are the key to putting together a strategy. Once the strategy is composed, however, the actual implementation does not need to be complicated, and the timeframe for doing so could range from a few days to perhaps no more than a month.
A major factor to consider when setting up the schedule is the nature of the elements of the strategy. Setting up a corporate structure could take a few days while a trust could take about a month depending on its complexity. Corresponding bank accounts may take from several weeks to several months depending on jurisdictions. (Some of these jurisdictions require that you physically travel there to open the account.) Residency and citizenship solutions could take from several months to several years.
The choice of the structures and strategies employed by the plan will be made in coordination with the particular needs of the client. If a client expresses concern about a major lawsuit on the horizon, jurisdictions that more swiftly facilitate the establishment of a trust structure immune from lawsuits may be selected. If the client seeks expatriation with the current tax year, then jurisdictions that offer the possibility of residency or citizenship within the given timeframe would be selected (keeping in mind that such locations may incur a higher cost).
If nothing else, this crisis has demonstrated to us the things that we cannot control. These will always exist. It is for that very reason that we must therefore focus on what we can control, which is helpful in taking charge of one’s emotions as well as for mental health. We all have the ability to be proactive and to use this time to design a healthy strategy at the least. Having such a plan concretely in hand can go a long way towards giving us the confidence and peace-of-mind necessary to move forward as soon as we begin to emerge from lockdown.