Pure Trust

The scam you hear about most is the so-called “Pure Trust” scam. This is a non-existing form of trust and goes by a slew of aliases including “Constitutional Trust,” “Patriot Trust,” “Business Trust,” “Common Law Trust,” “ Common Law Trust Organization,” “ Foreign Common Law Trust Organization,” and a host of other names. While the scam artists who push these have great-sounding reasons why they should protect you from creditors, the truth is that Pure Trusts are easily defeated by creditors on many theories, including:

• They are self-settled spendthrift trusts, expressly disallowed by all but a few states
• They have an illegal purpose (tax evasion)
• They are a sham
• Transfers to the trusts are fraudulent conveyances

In addition, the IRS chases down Pure Trusts with ease because they win virtually all of their cases involving these phony documents. The IRS can easily grab the assets to satisfy the taxes, interest, and usually heavy penalties awarded by the court. Don’t fall for this one—you’ll lose!

Asset Protection Consultants

Here, you will pay thousands of dollars for information on the benefits of setting up a Nevada corporation, set one up, and then turn around and advise others to do the same, helping them to set it up for a large fee, all without a license to practice law. You tell your “clients” that the corporations are creditor-proof, just as you were told.

Then, you have to hire your own lawyer when: (1) the tax bill for the entity comes due, and you didn't know how to advise your client about how to correctly structure and fund these entities; or (2) your client actually gets sued by a creditor, who adds you as a co-defendant on a civil conspiracy claim, or, worse, (3) your client gets sued by the U.S. government who then files money laundering charges against you. And you get all this for just a few thousand bucks!

Asset Protection Seminars

While there are many reputable planners giving seminars, the majority of those out on the circuit make their money either giving overly expensive seminars on the subject ($1500-$2500) or very cheap seminars ($25) where they sell expensive (but worthless) materials, forms, do-it-yourself asset protection kits, etc. These seminars even plant people (shills) who are paid by the seminar promoters, who will rush to take out their checkbooks or credit cards and make a beeline for the materials table with the aim of getting you to follow. Don’t do it. And don’t go. Professional Asset Protection Planners can help you in their office.

Institutes on Asset Protection

When you think of an institute, you think of a “think tank” where learned scholars sit around discussing important issues. Not here. Here you have only a bunch of marketers who call themselves an “institute” to give this impression, in order to fool you into believing they know what they are talking about. Then you come to them for advice and send all your friends. While this type of business is not illegal, it may certainly be misleading and cause you to pay a lot of money for little expertise.

Books on Offshore Trusts

Offshore trusts have a bad rap and for good reason. Most of them will not likely protect your assets from those to whom you owe a legal debt, including the IRS. And if they do, eventually you will find yourself in some trouble. There are many books and do-it-yourself kits on offshore trusts on the bookshelves. Many of these are ghostwritten and fail to educate the reader on the reality of the offshore trade. Be wary. Listen to a trusted attorney or financial planner and if they have a book to recommend about asset protection, follow their advice.

Offshore Accounts

We’ve all heard of Swiss Bank Accounts. There are some reputable banks with which you can do business in Switzerland and elsewhere, but there are many unscrupulous people who will take your money and tell you it’s safe when it’s not. When you set up one of these shady accounts with shady intentions outside the U.S., you may be doing so to basically declare that the money is not yours so your creditors cannot get to it. Then it grows tax-free, right? No problem, right? Not right. Here is what can happen and what happens quite often. The person you give your money to disappears with it and you can’t do anything about it because you’ll be prosecuted for tax evasion. Or, worse, the person who has your money extorts more money from you to keep him or her quiet about your tax evasion.

Don’t get suckered into this. For it to “work”, you cannot state that you have any interest in the account or report any interest earned. This means that you are committing tax evasion, which could cost you a lot of money in penalties and even land you in prison. And if the company or person to whom you gave your money decides to keep your money, there is absolutely nothing you can do about it. You can’t complain to the U.S. government whose taxes you evaded, or to the country where your money is because it is unlikely to admit that one of its offshore service providers was embezzling funds. And they may embezzle more money by threatening to otherwise turn you in to your own government for tax evasion.

The answer? Don’t do it! Trust your money only to a well-regulated bank or trust company.