Strategies for Protecting Wealth
by Darrell Aviss

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Asset Protection

Scenario – To deter frivolous lawsuits, a high profile business owner wanted to diminish the value of his personal holdings to be less appealing to potential litigants.

• 1.
  We established a series of trusts to hold the business owners personal and commercial real estate, private jet, yacht, and collections of fine art, jewelry, and watches valued at US$54 million.
• 2.
  We arranged for the appraisal of his assets and then obtained loans against the property for their full value through a commercial bank.
• 3.
  We created another trust to invest the assets from the loans in an insurance-dedicated fund (IDF) and named someone else the beneficiary on the trust, further dissociating the business owner from the assets. If the IDF, invested in a series of underlying hedge funds, outperforms the loan rate, the business owner will make money while his assets are protected from creditors and litigants.
• 4.
  The bank, in turn, sold a promissory note for the loans to a second hedge fund. Creditors will be able to identify the bank, but not the hedge fund, creating another layer of anonymity for the business owner.

Result – Securing loans against the business owners property effectively “strips” the equity from his assets, leaving them encumbered and no longer an attractive target.

Scenario – A popular band was planning an open-ended world tour. The amount of liability coverage they could access through conventional means was considered insufficient by the band members and their management team; everyone was concerned about placing themselves and their assets at risk.

• 1.
  We formed an offshore captive insurance company and funded it with US$11.8 million of the band’s money.
• 2.
  Through the captive, the appropriate amount of traditional liability insurance was purchased for the band at a cost of $US4 million.
• 3.
  We placed the remaining US$7.8 million, a reserve for claims and settlements, in a principal protected structured note to minimize the risk of underperformance.
• 4.
  The assets in the note were leveraged up to four times, allowing a total of $US31.2 million to work as an investment.

Result - The tour ended after 30 months with no mishaps or legal action and the captive insurance company was dissolved. The investment had generated an additional US$3.6 million, which was distributed to the band members.

Scenario – A number of unaffiliated physicians – each with a history of lawsuits – were seeking ways to further protect themselves.

• 1.
  We established a series of self-settled trusts in select jurisdictions around the world.
• 2.
  The group of participants was identified and we worked with each physician to liquidate a portion of their assets.
• 3.
  The assets were distributed across the trusts and a set of algorithms tied to exchange rates was used to control the ongoing movement of assets between trusts.
• 4.
  Our existing relationships with local fiduciaries will provide access to the assets, if needed.

Result – Money in movement is difficult to find and quantify, which can help shield the physicians and their assets from unsubstantiated legal action. Participants are ale to withdraw their assets at any time without disrupting the collective effort, which will continue as long as deemed necessary.