Asset protection insurance
A proper asset protection strategy prevents creditors from gaining access to assets. The basic areas of need encompassing asset protection are: litigation and creditor protection, sovereignty protection, succession and intergenerational plans, currency and cash flow protection, and freedom to deal with one’s assets.
Asset Protection Insurance - API
Once assets are within the API (asset protection insurance) if those assets are ever attached successfully, the insurance will replace those assets at the lower of book or market value. Pursuant to an API policy the client irrevocably transfers title of the assets to the insurance company, whom in turn, will administer the policy. The applicant may appoint their own Financial Advisor to make investment recommendations. If assets are attacked their ownership will be vigorously defended, and, if these assets are stripped or attached, the lesser of full market value or book value of the API assets will be paid to the Beneficiaries.
API provides three distinct services needed to effectuate the process; asset protection & a succession structure, a custodial account & sophisticated investment management, and asset Insurance. An API policy can run for at least 100 years (the corporate version has a specific maturity or event inspired terminus). The policy allows an applicant to list up to five lives to be insured.
API is similar to a trust in some ways as there is a protector involved and the policy operates like a corpus with basic elements of a foundation structure as well. It is relatively inexpensive insurance allowing access to quality banks and financial institutions. API simply insures the assets and uses other third parties to aid in the management of the assets.
API has all of the advantages of trusts and foundations but adds insurance coverage to replace assets. The main premise allowing API to work effectively is the policies process and application. Api reuires an irrevocable declared disposition of client assets into the policy. The key words are "irrevocable" and "declared". The cornerstone of API is that there is no hiding of the assets and the simple transfer of assets into the policy will cause taxation issues when the assets are vended in. This is a product solely for asset protection. The process requires an irrevocable declared disposition of the assets this transparency allows for the use the law to protect the assets inisde the API. Critical to the legal process is that ownership has legally and validly changed hands. Unless the client has falsified the API application process, the inherent ability of economic predators to attach this asset is minimized at law significantly.
Creating an asset protection strategy will offer very limited protection against litigious situations where the event causing the problem occurred prior to setting up the strategy. This is true for any legal, declared strategy,only future oriented protection can be achieved through API. At the end of the day, API insures the assets from all economic predators, a superior solution to simply a structure. There is the sanctity of knowing the assets are insured and that they will be defended for generations. Most important, is the ability to control in a tighter fashion intergenerational dispositions and role-over, of assets such as shares of a private business or payments for an unborn child’s education generations to come. API in itself will generally not offer enhanced taxation benefits and will likely be, at best, tax neutral as this is not its design. The API strategy can be used with most tax planning options such as (in the US) a Charitable Annuity Trust or Deferred Annuity Trust.
In order for API to truly work and assets to be insured, the assets must change from their current ownership arrangements. In addition, the API application procedure requires submission of a large quantity of due diligence collected on associated and affiliated entities, liabilities both contingent and other. API can hold cash and marketable securities within the policy portfolio. What is unique about AP is the fact that it can insure almost any type of asset; securities of any nature, real estate, intellectual property, all forms of royalty streams, shares of a private business, operating businesses, antiquities and even other insurance products.
There are a variety of situations under which an API Policy will not pay out; fleeing debtors, tax evaders or persons involved in any form of criminal or unsavory activities. API clients vary; doctors, lawyers, and all forms of professionals in risk occupations,entrepreneurs,entertainers/athletes, persons with low priced shares looking to go public, replacing prenuptial agreements, and family business wealth or assets. The most unusual API uses have been in the area of protecting corporate assets (especially intellectual property). The API has been applied to protect all forms of intellectual property from film and record rights, patents and technology licenses to royalties from Oil, gas, and mining, as well as income streams on pending transactions (insuring a third party gets paid or that proceeds are insured).
In sum, API insures against policy assets being attacked successfully by economic predators. If attacked the assets will be defended, and if attached, the lesser of full market value or book value will be paid to the Beneficiaries. The completed API Application process creates an irrevocable declared asset protection structure. The client will irrevocably transfer title of the assets to the Insurance Company. The assets will be at all times administered and by regulated and accountable independent institutions. The idea is to avoid the complexities of asset protection by offering insurance against asset losses.
[http://www.mondaq.com/article.asp?articleid=57710 Barbados, Offshore, Asset Protection Insurance As An Alternative To Trusts And Foundations]
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