The economic slowdown and the litigation explosion are forcing professionals and small business owners to focus upon ways to protect their savings, investments and other accumulated assets that become attractive targets for hungry trial lawyers. In the U.S. legal system, the deck is stacked in favor of the plaintiff and against the defendant. Because this fact encourages the filing of spurious lawsuits, the average business owner or professional will be sued several times during his or her lifetime and therefore faces the possibility of being on the receiving end of a ruinous judgement. Failure to plan for that contingency can result in the instant loss of a lifetime's accumulated wealth. Once a suit has been filed or one is anticipated, the law will not allow you to move your assets, so acting now while the waters are calm is imperative.
How does one minimize the chances of losing assets? By becoming
a smaller target. How does one become a smaller target? By
shrinking the size of one's estate so that one is no longer the legal
owner of the assets to be controlled and enjoyed. The first thing
you must do is get as many assets out of your personal name as
possible. One of the best ways to do this is to transfer your
money, investments, and assets into a corporation, which is a
legal entity that you control.
Most trial lawyers will tell you that using a U.S. Corporation for
liability protection and privacy is not worth the certificate it's
printed on. U.S. corporate documents are public information and any
good search firm can find bank accounts, investments, real estate
and other assets held by the corporation. The U.S. corporate veil
is routinely ignored and lawsuits are generally filed against the
corporation and any beneficial owners.
By forming a corporation offshore you have a legal entity to hold
assets that only you know who the beneficial owner is. All the
information gathering agencies and services that help trial lawyers,
ex-spouses, ex-business partners and creditors will not be able to
find your accounts and assets, therefore, making you a very poor
prospect for a lawsuit. This is how you become a small target.
An offshore corporation can conduct any type of business in the
U.S. that a U.S. corporation can, so you sacrifice nothing for having
complete privacy and a corporate veil with real teeth in it. Even
if your offshore International Business Company (IBC)
becomes involved in a lawsuit, the local Supreme Court does not
recognize U.S judgements against a company incorporated in their
jurisdiction. A plaintiff would have to hire a local attorney
(there are no contingency fees) and try to convince the local
Court to hear the case. The local Courts will not rule in
favor of the plaintiff if it can be shown that the assets were moved
before the judgement was filed. Once the plaintiff sees the uphill
battle involved plus the enormous cost out of their own pocket,
they will probably reevaluate the merits of even filing a lawsuit
or will settle for a fraction of the settlement they may have
pursued in a U.S. court.
This is why more and more doctors, professional business people and
small businesses are using offshore corporations to lower their
liability insurance coverage, which can save them tens of thousands
of dollars each year in premiums. Small businesses can also use
offshore corporations to reduce or eliminate state income (franchise)
taxes and give them other alternatives to insurance coverage
that have become too expensive to carry.