A few years ago, I discovered how easy it is to find out that everything you own could be consumed by legal fees in defending yourself from a lawsuit even though you have endeavored to do your best for a customer or client. 

Because it could easily happen to you, I'd like to share that story with you. 

I'm a CPA/tax consultant and I was part of a team of financial and legal professionals who were working to help a family minimize the potential estate taxes on an estate of about $4 million. The client was about 80 years of age and was single. 

We put together a relatively novel combination of advanced estate planning devices including a family limited partnership and private annuity. Everything was proceeding as planned, although it was taking much longer than expected. 

Then the taxpayer died, unexpectedly.

I was asked to help with the estate tax return. I valued the estate based on my belief that about 70% of the estate had been legally removed from the estate. The lawyers assured me that everything we had done was completed and that there were no loose "strings". 

The return was selected for audit in record time. I think it never found it's way to a file before being assigned to an agent. (As an aside, we found that the IRS estate tax agent was extremely well informed and very well qualified.) 

When the IRS agent examined the estate tax return, he uncovered a document signed by a probate judge twenty days before the taxpayer died. The legal procedure authorized by the judge was not binding until thirty days after it was signed. 

We had been assured by legal counsel that this document was not essential to our estate plan or the valuation of the estate. But the IRS agent disagreed. Our lawyer wanted to litigate the issue. After consultation with some other lawyers, the executor for the estate decided to settle with the IRS. The IRS agreed to waive any penalties for under valuation of the estate. The executor of the estate agreed to pay the taxes that would have been due if all the assets were still owned by the taxpayer when he died.

Actually, there wasn't any "delay" in getting anything signed because none of us had any reason to be concerned about how long the client might live. (We should have been.)

The family didn't really lose anything other than the savings we had tried to help them secure. And ... we had made it clear before we started that we were pursuing an aggressive strategy that might not work. 

Even so, some of the family members were ready to sue someone. They didn't, but I had more than a few sleepless nights trying to recall if there was anything any of us did (or failed to do) that could result in losing the case if we were sued. And even if we could win in a lawsuit, it would cost us a lot of legal fees and time. 

Obviously, I wouldn't be mentioning this incident if I felt I had been personally negligent in any way in this case. I've been helping people with tax problems for over twenty years, and this was the first time I came really close to being sued - even though I feel I exercised extreme diligence on behalf of the family. 

It could happen to anyone who provides any kind of advice, sells any kind of product or provides any kind of service.

Are you really safe and protected from being sued? 

In today's legal environment, I don't believe ANYONE is really safe from being sued. 

Most people seem to think that insurance protects them. 

I've since discovered that insurance is actually a magnet for lawsuits. If you have ample insurance coverage, you are a most tempting target for a lawsuit. The lawyer representing a plaintiff would much rather get a quick settlement from an insurance company than to spend the time and money to sue you. 

But when you have substantial assets, you are a huge target.

Actually, anyone can sue you for almost any reason. Being negligent has virtually nothing to do with it.

• People can sue you because they are mad at you for some reason that you believe is totally baseless.
• Thousands of confusing federal and state laws give people opportunity to find some reason to sue you.
• The Americans With Disabilities Act is an open invitation for nearly anyone to sue you.
• If you own any real estate that has environmental contamination, you could be liable for the entire cost of cleaning it up.

All of those laws and words give power and opportunity to anyone who would rather find a way to take your assets from you than to make the same money through honest labor. 

And there are a growing horde of legal predators who are looking for people to sue. If you have any assets or any insurance, they will eventually look into your background for any possible justification to sue you. 

A medical magazine reported that some lawyers have stopped "chasing after ambulances" for victims. Now they look for affluent doctors in high risk specialties and then try to discover who their past patients were. They then contact those patients to see if they are really, really happy with the care they received from the doctor. When they find a disgruntled (or greedy) patient, they have an opportunity to sue the doctor.
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What can you do to protect yourself?

You can do what I did. 

You can spend many hundreds of hours and a few thousand dollars learning everything you can about asset protection. 

Or ... you can subscribe to my newsletter, The Jacobs Report On Asset Protection Strategies for less than I pay for a single book or technical journal. 

At the time of the incident described above, I was writing and publishing a newsletter called The Jacobs' Report On Investment and Retirement Tax Strategies. In addition to my work as a tax consultant, I'm an author and publisher of tax information. I've been an avid student of the tax laws for more than twenty years. With that background, I have more than an average grasp of the legal and tax aspects of partnerships, corporations, trusts and most of the other devices that are used for asset protection. 

What I discovered from my intensive research on asset protection is that there is a huge amount of misinformation, nonsense and outright lies being disseminated about this complex subject. 

There's also a lot of honest disagreement among experts. 

The foundation of most asset protection plans is the establishment of one or more family limited partnerships. Some advisors prefer the use of limited liability companies. For those who are retired and want a secure income, a charitable trust may be the best arrangement. Some types of qualified retirement plans offer excellent asset protection - but others expose your retirement assets to the claims of creditors. Life insurance is an excellent asset protection device in most states. But if you prefer an annuity contract, you may need to get a Swiss annuity. For those who have high levels of risk exposure and substantial assets, the "final step" is an offshore trust

Despite my extensive background in tax law research and consulting, some of the legal disputes about asset protection among the experts involve legal issues where I need some help. 

It seemed there was a need for an objective source of "bottom line" information about asset protection for consumers, written in the plainest language possible. Because I knew there wee both advantages and disadvantages for each type of asset protection, I wanted to be able to present both sides of the issues instead of just promoting or selling a specific solution. I felt I could deliver that kind of helpful information, but I knew I needed some help from people with advanced legal training in asset protection. 

So I put together a team of well qualified advisors to help me analyze various asset protection devices. 

Early in 1993, I contacted Bill Comer, author of Freedom, Asset Protection & You, to ask if he would be willing to help me as an editorial advisor for a newsletter on asset protection. I had been enormously impressed with his book and I knew some of the people who had contributed chapters to his book. He generously agreed to help and has been a superb source of reliable information. 

Jeffrey Verdon, an attorney who specializes in asset protection had contributed a chapter to Bill's book. I had met Jeffrey a few years earlier and become acquainted with him, so I asked him if he would help me. He has a masters degree in tax law and has worked in the estate & trust tax area for many years. 

I've known Dr. Mark Skousen, Editor of Forecasts & Strategies, ever since we both worked as editors of sister newsletters for Kephart Communications. (I was the Editor of a tax letter called Tax Angles.) Mark is a Ph.D. in economics, and I regard him as one of the most knowledgeable economists in the country. Because of my interest in finding ways to deal with economic contingencies, I asked Mark if he would be an advisor to my newsletter and he agreed. 

Glenn Sowdersis a tax attorney and CPA in the Kansas City area, (where I live) and I've found him to be a fountainhead of valuable information about self defense from IRS challenges. Because much of my newsletter deals with complex tax matters, I asked Glenn if he would be willing to help and he has been a valuable advisor since the newsletter was launched. 

Shortly after I first announced my newsletter on asset protection, I received a call from Gideon Rothschild in New York. It turns out that he is a lawyer, CPA and CFP who specializes in asset protection and related tax law. He volunteered to contribute some articles and when I later asked if he would like to be an editorial advisor, he graciously agreed. He is a generous source of excellent information on the subject. 

When I wrote a two part series on the use of charitable trusts for asset and tax protection, I turned for help to Scott E. Blakesley, an attorney with the firm of Husch & Eppenberger in Kansas City. I knew that he was an expert on charitable tax and estate planning and that he had served as the President of the Midwest Chapter of the Planned Giving Society. I've since found him to be very knowledgeable on a wide range of estate tax and trust matters. 

About a year ago, I received an advance review copy of a book on asset protection by Mark Warda, an attorney who writes and publishes a series of legal self help books for the general public. Because he's also a writer/publisher, I asked Mark if he would be willing to be an advisor  for my newsletter and he generously agreed to do so. 

Then I began to exchange email correspondence with J. Richard Duke, an attorney who specializes in international tax law. He's been an extremely generous source of helpful information on the complex tax rules relating to offshore investments, trusts and businesses by US citizens. We have recently agreed to co-author a book for the general public about these subjects. So I asked Richard to join my group of editorial advisors and he generously agreed to do so. 

Last, but far from least, I got acquainted with Richard L. LeVine through his participation in my public form on asset protection and offshore topics. Richard is an immigration and tax attorney in Chicago with an impressive knowledge of asset protection topics. I was looking for an attorney in Chicago to help me present a tax seminar for my subscribers and after getting acquainted with Richard through email correspondence, I took a chance and asked if he would like to the co-presenter for a full day tax seminar with me. He agreed and we've since done two seminars. I've found him to have an impressive and broad knowledge of asset protection, tax and related international legal topics. 

These are the experts and legal advisors on whom I rely for help in the highly complex legal swamp land known as asset protection. This area of law involves the tax law, estate and probate law, trust law, business law, bankruptcy law and international law. There aren't many lawyers who are willing to put in the time to become qualified in all of these complex areas of law. 

With their help, my newsletter on asset protection provides a combination of research information and news to keep you up to date on new developments that affect your asset protection plans. 

We can't prevent someone from suing us if they are mad at us or because of a dozen other reasons that have nothing to do with the quality of our products or services. All it takes is one slight slip or even a mistake by an employee or someone else with whom we are working.

However, there are solutions to protect our assets from lawsuits and to discourage people from suing us. The solutions involve the use of complex legal concepts and structures, with even more complex tax rules. 

There's an old cliche' that the only people who don't make mistakes are those who don't take any chances or don't do anything. I like to work on the cutting edge of what's possible and legal because it's more interesting and exciting. 

If I'm not willing to lose a lifetime of work because of a single mistake, does that mean I should give up and quit working? If that's the case, all the businesses in this country would have to quit. Frankly, I don't intend to quit working because of the threat of a future lawsuit. And buying more insurance will just make me a more attractive target. 

My forte' for the last twenty five years has been to explain complicated tax laws in plain English for the benefit of taxpayers and clients. I've become known as a technical writer who focuses on good news and solutions instead of on bad news and obstacles. 

With my varied background in financial and tax matters, I examine the various asset protection devices in terms of the full spectrum of financial issues including taxes, investment diversification and management, estate preservation, risk management and business considerations. As part of that process, I spend time talking to my editorial advisors and other experts about various controversial issues. 

I've never been afraid to ask a "stupid question" because I've found a long time ago that asking questions is the only way I can get answers to the questions. I'm also not inclined to try to show other people how smart I am when I'm trying to find out how smart they are. Like the t.v. character Columbo, I've been known to pretend that I don't know as much as I really do about a subject in order to get a better feel for how well informed an expert is on the subject we're discussing. 

So I spend about 30 to 50 hours every month learning everything I can about the latest asset protection strategy. With my monthly newsletter on asset protection strategies, I share with you what I have learned and am continuing to learn. 

If you could afford to spend about 300 to 400 hours a year learning everything you can about asset protection, you would not need my newsletter. 

If you wanted to spend in excess of $3,000 a year on various books, magazines and newsletters about asset protection, you would not need my newsletter. 

If you had the time to establish a friendly relationship with many of the leading experts in this subject, as I have, you would not need my newsletter. 

But ... if you don't want to spend that much time and/or money doing it yourself, you can "hire me" to do it for you for $145 a year by subscribing to my newsletter. That's the price for a full year of Asset Protection Strategies, by regular mail.

And ... if you decide you don't want to continue your subscription for any reason, you can cancel anytime within the next six months for a full refund. 

Our catalog provides subscription information. You can subscribe by sending us a check in the U.S.  mail, by calling us with a Visa/Master Card authorization - or you can use our secure online order system to order with Visa or Master Card. 

Please don't put it off. 

Vernon K. Jacobs 

P.S. The really good lawyers who work in the asset protection area charge up to $300 an hour. A full year of my newsletter costs less than about 10 minutes of their time. And my newsletter keeps you up to date after you have set up an asset protection plan. The laws keep changing and you have to keep changing to adapt to the new rules. 

P.P.S. By the way. I sponsor an email Q & A service for my subscribers. I'm happy to answer your questions (via email) as long as I can share the question and the answer with my other subscribers.

Further details about protecting your assets from future lawsuits  are available in our subscriber's web site. Changes in the tax laws and various federal and state laws affecting various asset protection devices are provided in our monthly newsletter on Asset Protection Strategies.

NOTICE: This Information is intended only for educational purposes and may be regarded as controversial by some legal experts. Readers should consult with a qualified  professional who is familiar with their specific financial and tax circumstances before adopting any ideas that are discussed in this article.

About the author:

Vernon Jacobs is a CPA/CLU who works as a tax author and consultant.  He  sponsors and moderates a free discussion group on asset protection and offshore topics.  His email address is vkj@rpifs.com.  He can be reached by phone or fax at (913) 362-9667.

Your suggestions for improving this web site are most welcome.