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Personal Wealth Retention In America
By Ray Chodos
American personal wealth inequality, the haves and have-nots. The United States population is economically polarized and continuing to grow further apart. While reliable personal wealth statistics are rare; according to government estimates, the top 1% of wealth holders’ control 39% of US privately owned wealth. The bottom 80% control less than 16%. This great disparity is not lost on trial judges, juries, disgruntled employees, consumers, shareholders or litigators. When a hard working bread winner reads about other families supporting a lavish life style on a million or more a month, it becomes difficult for him to be happy for the affluent. Thousands of individuals and businesses engage in proactive efforts to redistribute other’s wealth. America’s "litigation culture" of non-accountability for individual actions coupled with more laws and regulations than most people can keep up with leads to an unpredictable civil litigation system. Trial outcomes may hinge on subjective social perception more so than legal evidence or precedent. Lawsuit related redistribution proceeds equal 2.2 percent of the US gross domestic product ("GDP"). England, France, Canada are at 0.8 and in Japan, 0.5 percent of their GDP. (Business Week, Dec, 1995). Credit card debt has reached frightening levels as a percent of the average American’s disposable income. The current average outstanding balance is at $8,000 per each American family on average. There are 1.3 billion cards in current use, or an average of 4 cards per every man woman and child in the United States. Estimates are that 1 in five cards are “maxed out”. Credit card interest rates are among the highest of any source of funds and the government denies a tax deduction for the interest charges. Personal bankruptcies are at an all time high in 2002 there were more than 1.5 million declared. Corporate misdeeds are widely reported and add to public mistrust and scorn of businesses in general. More than 65 million anti-depressant prescriptions were written in 1998 in the US. When opportunity knocks, it isn’t difficult to understand why so many are ready to utilize the US legal system to improve their financial standing. Affluent families or companies rarely have ordinary citizen’s sympathy or empathy.

Taxation Relief

The primary benefit of asset protection planning is to insulate assets from unforeseen attack irrespective of the claimant’s motive. There is no substantive and legal tax obviation opportunity for US citizens in utilizing asset protection plans onshore or offshore. There are however tax minimization techniques that are legal and substantive available to US citizens unrelated to asset protection planning. As an example: Assets held by a limited partnership may qualify for a 35% or so valuation discount in calculating gift and estate tax. There are also large income tax minimization opportunities available in US Possession’s economic development programs available to US citizens. Effective professional planning integrates tax minimization with asset protection and estate planning. While the planning process is not inexpensive, fast or easy, living with a well designed plan generally is without sacrifice. The level of experience and breadth of specialization within the professional advisors has key impact on the planning efficacy and ease of administration. Sensible preventative approach rather than reaction to fear and intimidation. Even the most effective insulation programs are of limited value if the “event” preceded planning strategies. Most all worldwide legal systems will regard a plan implemented after the fact to be deemed a “fraudulent transfer”. For planning to be effective, well thought out and comfortable it must be engineered when no threat exists on the horizon. The mastery of asset protection, estate planning as well as tax minimization lies in the family becoming educated and adaptive to concepts rather than simply handing a problem issue over to an advisor to “fix” and then continue to do business as usual. Considering what is involved in becoming financially well off and how few of the world’s population ever achieve this state; can we afford not to understand asset protection planning? Learn from yesterday, plan for tomorrow, live for today.
Ray Chodos and Adam Chodos, Esq., CPA are members of the Wealth Preservation Group LLC, a Greenwich, Connecticut based planning organization specializing in wealth preservation, business succession, executive benefits, interacting with the legal and accounting communities. Find more information at www.WealthPreserve.com.
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