Tax and asset protection laws are very complicated – especially in the US. It takes years of formal schooling and on-the-job experience to become competent. Unfortunately, some professionals use their specialized knowledge to make money by selling bad asset protection advice.
Within the international arena, the most common bad asset protection advice you’ll find comes in the form of unnecessary and complex structures.
Risk
Complex structures are only needed when someone has an increased risk of being sued.
But many complex structures are sold to retired dentists and restaurateurs living off their savings and Social Security checks. They don’t face the same risks as a high-profile plastic surgeon who could get sued for millions any day of the week.
Your structure should account for the risks you actually face.
Why Do People Buy Complex Structures?
Some advisors are a bit academic and egotistical. They want to draw up a fancy structure that looks good on paper.
Most frequently, many advisors are actually just entity salesmen. Even if they have the proper credentials, they make their money by selling entities and the associated incorporation fees.
Complex structures cost more than simple ones.
They involve multiple entities. For example, a foreign trust, a private trust company, and several foreign LLC’s owned by the trust.
Drawbacks of Unnecessary Complexity
Even if an advisor comes up with a structure that is perfectly legal, it can still be bad asset protection advice.
Suppose a complex structure saves you $10,000 in taxes and costs $20,000 to set-up.
Would you break even after two years?
No.
The entity salesmen don’t adequately prepare their customers for the costs of maintaining complex structures. The administrative fees alone can be very expensive. The tax returns and financial reporting filings could easily cost more than what the structure might save you in taxes!
Sometimes, the best option is to simply pay the taxes.
Need Help?
Want to get some no-nonsense advice?
Our advice is based on your best interest. We’ll even tell you if you don’t need a structure at all.
Our consultants are ready to help you create a new structure or restructure an existing one.