Asset Protection in Anticipation of Foreclosure

Around the beginning of 2008, a trend began that forms the basis for this article. I began receiving a lot of inquiries from people who all had the same problem. They were losing investment and/or rental real estate to foreclosure or short sale, and they knew the foreclosure would not pay off their entire loan balance. They fully expected a deficiency judgment to follow foreclosure. Many of these individuals, as investors and independent business people, owned much or all of their retirement outside a creditor-protected retirement plan (401(k), etc.) They were also worried about losing their home or other assets to creditors. Their question to me was always the same: they had been caught with their pants down and had no asset protection plan. Now they were in trouble. Could anything be done?

In normal times, it would be difficult to protect these people’s wealth. This is because of what’s known as fraudulent transfer law. Any transfer a person makes after a creditor threat arises may be suspected as a fraudulent transfer, i.e. an attempt to thwart creditors. If the creditor proves the transfer was done to hinder, delay, or defeat that creditor, the transfer would be undone by a court, so that the creditor could then seize the asset. Therefore, gifting your home to your brother a week before a creditor gets a judgment against you usually doesn’t work.

However, these are not normal times, and there is hope for people in the situation I’ve described above. I must emphasize that implementing an asset protection plan after creditor threats have arisen is by no means bulletproof. Unless you flee the country with your wealth, there is always a chance that even the best plan may fall apart. Fraudulent transfer law can be applied up to 4 years after a transfer has occurred (in a few states such as California, the law may be used up to 7 years after the transfer.)

But here’s the good news: a good asset protection planner knows how to make it more difficult for a creditor to prove assets were transferred in a fraudulent manner. If they can’t prove the debtor’s intent was to thwart a creditor, then they can’t use fraudulent transfer law to reach an asset that’s no longer owned by the debtor. That means a creditor, if he wishes to undo an asset protection plan, will have to use circumstantial evidence to convince a judge that the debtor did a transfer with fraudulent intent. Doing so takes time and effort. And, it’s going to cost the creditor a fair amount in legal fees.

In today’s environment, many creditors (especially banks) don’t have enough resources to chase all their debtors. In fact, if your creditor is a bank, then you can almost be certain (at the time of this writing, at least) that they are overwhelmed with collection cases. Their collection attorneys are overwhelmed due to the flood of foreclosures that have swept across the U.S. They are busy enough just with foreclosures. It may be a year or two, or even longer, before they get to collecting on deficiency judgments. Yes, our economy is that bad.

If you have a solid asset protection plan in place, and you have or expect to have a deficiency judgment against you, then you have transformed yourself from ‘low hanging fruit’ to a hard target. Your creditors will not be able to just grab your assets. They must first prove your plan is a fraudulent transfer. They will have to put 10 ‘easy’ cases on hold in order to commit sufficient resources to undoing your plan. And, especially if the plan is good, they may be uncertain as to whether they can undo your plan even if they try.

Because you are now a hard target, a variety of things may happen. The creditor could walk away from the judgment it has against you (the best case scenario), or it could try and settle the deficiency with you for an amount that is much smaller than it might otherwise have been. Either of these two scenarios are a ‘win’ for you and your asset protection plan. There is still the chance the creditor may try and pierce your plan. But place yourself in your creditor’s shoes: if you have to drop 10 collection cases to chase after a hard target, what would you do? Probably, you’d choose one of the first two scenarios. Still, for those who wish to eliminate or minimize the third scenario (which may still be a win if your plan holds up), my suggestion is to do asset protection planning before you get in trouble. That is the best way to do the strongest planning. With that said, a good asset protection plan, even if implemented after creditor threats materialize, is often much, much, better than doing nothing. And in my experience, with regards to the scenario I’ve outlined above, and in regards to our current economic environment, it will probably work (I’m sorry that I have to be so particular here, but I don’t want anyone to misconstrue what I’m saying as a green  light to try and thwart all creditors in all circumstances!) There are, of course, situations where your creditor problems are too far along, too severe, and where engaging in planning would be a mistake. Often times a judgment call must be made on a case-by-case basis. If you have creditor problems, I will typically have an attorney look at your situation to see if asset protection is appropriate for you. If it is, I generally will implement a plan under attorney supervision. Among other things, this gives you the confidentiality of attorney/client privilege.

Which brings me to our next question: is it moral to set up an asset protection plan to dodge creditors? You’ll have to answer that question for yourself, but here’s how I see it: if, for example, you have $1 million in the bank and you have a $400,000 deficiency judgment against you, then I will not help you avoid that debt. You can pay the debt off and still be fine, and next time you’ll know not to be so aggressive with your investment activities.

But for those who are trying to keep from losing their retirement or their home, I’d like to quote Thomas Jefferson. He said:

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”

Wow, that Jefferson was smart! He predicted, over 200 years ago, what banks would do to us. Actually, he had merely studied history, and had seen greedy bankers do this all before. Yes, bankers are more sophisticated now, but they are still up to their same old tricks.

And on a tangent note, here’s what Pres. Andrew Jackson said about bailouts:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”

The foregoing is not a perfect fit for our times, but I’m sure you see how this quote remains relevant today. Our current government not only allows corrupt bankers to persist, it bails them out.

Stay safe and prosperous!

Sincerely,

Ryan Fowler

www.pfshield.com

800-798-2008

When is it too late for asset protection?

Generally speaking, it’s too late to do asset protection once you have a judgment against you, unless you have an arrangement to pay off the judgment (and follow through with that arrangement) and are merely planning in order to safeguard assets against future creditors.

Doing asset protection planning to thwart collection attempts post-judgment may result in you and your asset protection planner being fined by a court! Don’t do it!

Doing asset protection in anticipation of a judgment, bankruptcy, or divorce is often (not always) possible, albeit tricky, even if the storm clouds are already on the horizon. However, there is always a risk that such planning may fail due to fraudulent transfer law.  It’s much, much better to do the planning before such threats arise, because then the possibility of committing a fraudulent transfer is negligible. Nonetheless, doing asset protection after threats arise may often still be effective – but be careful! Egregious or blatant planning may result in fines and penalties. My rule of thumb is if creditor clouds are on the horizon, retain an attorney and have him hire the planner, so that attorney/client privilege covers the plan’s implementation. It’s a good idea for a planner to work under your attorney, regardless. PF Shield maintains attorney relationships in several states, so if you need an attorney, let us know as we’ll refer one to you.

Related Links:

• What is a fraudulent transfer?
• What is the UFTA and why is it so important to asset protection?
• What are some asset protection pitfalls that could get me in trouble?

Take Your Wealth Offshore Before It’s Too Late!

Note: This is the 2nd part of a 2 part series. To read the first part of this series, click here.

In my last newsletter, I talked about going offshore in order to reduce the impact the coming economic super-storm will have on your wealth. This article will focus on three likely consequences of that storm: hyperinflation, exchange controls, and possibly the nationalization of retirement accounts. Let’s start with hyperinflation.

Historical examples of hyperinflation abound. Take post-WWI Germany, for example. The German government had massive reparation debts to pay as a result of the war. Initially inflation was not an insurmountable problem, with the German mark holding somewhat steady at around 60 marks per U.S. dollar through the first half of 1921 (note however that the ratio of marks to dollars in 1914 was only 4.2 to 1). However, the “London Ultimatum” of May 1921 made things much worse, due to the fact that it demanded, beginning August 1921, annual payments of $2 billion gold marks plus 26% of the value of Germany’s exports. Germany had nowhere near enough money to make payments under such a plan, which was supposed to last until 1984, so it printed massive amounts of fiat currency.

This started a severe inflationary trend, which caused a mass panic. This led to a hoarding of living necessities. This in turn caused a shortage of said necessities, which led to higher prices, which led to more panic and hoarding, and so on. The end result was a vicious, self-reinforcing cycle of runaway hyperinflation. Consequently, by December 1923 the mark had devaluated so much that the mark to U.S. dollar ratio was 4.2 trillion to 1.

Our current federal debt, when one includes unfunded liabilities, is well over $53 trillion and rising by trillions of dollars each year (for a better grasp of the magnitude of our debt, visit http://www.usdebtclock.org.) Will $53 trillion+ in debt lead our government to print inconceivable amounts of paper fiat money in an attempt to pay off that debt? What will be the consequences of this debt (which includes our “official” national debt of over $13 trillion), the cost of the Iraq War, and the $12.7 trillion in allocated bailout and stimulus spending? Would the foregoing lead China and other countries to dump their multi-trillion U.S. dollar holdings? China and the IMF have already talked about replacing the dollar as the world’s reserve currency, either with an all-new international currency, or with a basket of currencies which would include the Japanese Yen, the Chinese Yuan, the Euro, and gold. This alone would likely cause a massive dumping of dollars worldwide and hyperinflation in the U.S. Time will tell for sure, but if history is any indicator, the answer to at least some of these questions is almost certainly yes, and a “yes” to any of the above means disaster and hardship on a biblical scale.

Hyperinflation would mean the general populace’s savings are wiped out. This means IRAs, 401k accounts and other retirement funds become almost worthless, because the dollar they are based on becomes almost worthless. Furthermore, hyperinflation typically leads to a system-wide financial panic and a depression or extremely deep recession. It also involves a massive sell-off of non-essential liquid assets in an attempt to purchase necessities, which are then used for bartering since the currency has become a hot potato no one wants. There goes your investment portfolio, along with the stock market in general.

So how does one minimize the effects of hyperinflation, a severe U.S. depression, or other problems that may arise when the super-storm hits? The short answer is: get your wealth out of the U.S. dollar, into investments that retain their value during economic upheaval, and as far away from the U.S. economy as possible. There are several ways to do this:

• Invest in direct ownership of select commodities (preferably in foreign markets), especially agriculture and fuel-based commodities;
• Invest in gold, silver, and certain other precious metals (Australia’s Perth Mint is especially attractive, see www.perthmint.com.au);
• Invest in stable foreign currencies;
• Invest in stable foreign markets. We must note that, however, an economic crisis in the U.S. will have major repercussions for most of the rest of the world; the aftermath of the 2008 credit crisis makes this evident. Still, there were some countries, such as India, that seem untouched by the financial crisis of 2008 and its aftermath. We expect these countries to fare similarly when the economic super-storm hits.

Up to this point you may be wondering: why should I go offshore to do the foregoing? Can’t I just buy gold and silver, or commodities, or foreign currencies, and own them in the U.S.? This could be dangerous, because at some point I believe we will be subject to exchange controls, and we may also be subject to gold and silver confiscation, much like the gold confiscation program imposed by the federal government in 1933. See Figure 1, below.


FIGURE 1: CONFISCATION OF PRIVATE PROPERTY WITHOUT DUE PROCESS OF LAW? SO MUCH FOR THE 5^TH AMENDMENT IN TIMES OF CRISIS!

WHAT ARE EXCHANGE CONTROLS?

“They [the U.S. government] are going to have currency controls and exchange controls and limit the amount of money you can take overseas… the description of a free country is one where you can leave with your money when you please. That is going to get harder and harder.” – Congressman Ron Paul (R-TX)


Exchange controls are a government’s attempt, during a currency crisis, to have its cake and eat it, too. During such a time, a government wants its citizenry to keep using its currency in order to keep it in demand. This facilitates the stabilization of prices. At the same time, the government wants to pay off overwhelming debt without curtailing its massive deficit spending. This requires the printing of huge amounts of fiat currency, which inexorably leads to currency devaluation. As you might guess, although overprinting currency always leads to devaluation, the governments of the world are often stupid enough to think they can defy the laws of mathematics by using exchange controls.

Often when a government implements exchange controls, it requires the exchange of foreign currencies at government-mandated rates. Usually, exchanges may be done legally only via a government agency or government-regulated bank. The rates are always extremely unfavorable. A currency that may have a 2 to 1 rate on the open market (for example, 2 units of a foreign currency buy 1 U.S. dollar) may have a government-mandated 5:1 rate. A recent example of exchange controls is Iceland which, after its currency took a nosedive, imposed strict controls that, among other things, require citizens and businesses to submit all foreign currency to a domestic financial institution for exchange into Iceland Kronas. The exchange rates were, of course, substantially below market rates. This is obviously a disaster for anyone subject to such controls.

If your money remains in the United States, it is all but guaranteed to lose value when the super-storm hits and, if exchange controls are imposed, your wealth may very well be stuck in a trap with no way out. But if you prepare now, there is a way out, which we reveal later in this article.


COULD THE U.S. GOVERNMENT CONFISCATE YOUR RETIREMENT?

In 2009, Argentina confiscated the retirement funds of its citizens as an emergency measure to save its government from crushing debt. Could the same happen in the U.S.? It’s certainly possible. Consider this:

• We already have a government-sponsored retirement plan called Social Security. Unfortunately, all money that flows into the Social Security Trust Fund is routinely stolen by our federal government and replaced with “IOUs”. How in the world will our government repay these IOUs when the baby-boomers retire and start to collect social security income? If you guessed “by printing an endless supply of fiat money”, I would say you’re on the right track.
• Congress has, on at least one occasion, discussed the nationalization of 401k and other qualified retirement plans by converting them to government-controlled “Universal Government Accounts” (UGAs) which are administered directly by the federal government. How much would you like to bet that these funds will be (mis)handled just like Social Security is?
• In January 2010, President Obama proposed a bill that would require all businesses to offer automatic IRA accounts to its employees. But the real kicker is 10% of the funds in these accounts must be invested in U.S. treasuries. In a sense, 10% of these accounts would be nationalized. Is this the beginning of a slippery slope towards nationalization of your retirement?

Those not well-versed in history may scoff at the likelihood of exchange controls or retirement account nationalization. After all, aren’t we the Land of the Free, the Home of the Brave? While we still have some of our freedoms, let’s remember what our federal government is capable of:

• An income tax bracket of 91% or more (imposed on wealthy individuals from 1944-45 and 1951-1963).
• Confiscation of all investment-grade gold in 1933 (and it was illegal to own such until 1975).
• Routine confiscation of real estate, boats, cash, and other property under federal drug confiscation laws, with no due process whatsoever. Only 20% of those whose property is confiscated are ever charged with a crime.
• The forced imprisonment of 120,000 Japanese-American citizens, without trial and without any evidence of any crime having been committed, during World War II.

We don’t know for sure whether retirement funds will be nationalized, but wouldn’t you rather be safe than sorry? Do you prefer an ounce of prevention or a pound of cure?


HOW TO PREPARE

Before doing anything else, I strongly recommend you buy a year’s supply of food and cooking fuel. Storing a couple weeks’ worth of water is a good idea as well. I also recommend getting a few thousand dollars worth of silver (which is much more spendable in small amounts than gold) and store it in a safe place (do not store it in a bank’s safe deposit box!) And of course, you should have a reliable semi-automatic pistol and rifle with several hundred rounds of ammunition, in case you ever need to defend yourself. When the super-crash hits, crime will certainly increase exponentially.

But what about protecting your life’s savings? The best way to protect your liquid assets is to place at least a portion of it offshore, where it will be outside of the U.S. government’s jurisdiction and not subject to exchange controls, confiscation, or other unconstitutional schemes. Simply opening a foreign bank account is not enough. People have done such in the past and, when push comes to shove (in the event of a lawsuit or other matter that leads to a courtroom) a judge typically orders one to repatriate foreign assets. Failure to comply leads to civil contempt, which means you find yourself in jail until you comply with the order. In one case, In re: Lawrence, Mr. Lawrence found himself in prison for nearly seven years for failing to repatriate offshore assets.

The only way to insulate yourself from a repatriation order is to put your wealth in an asset protection structure that can survive an attack by the federal government. And, case law has shown us that you must do this before you find yourself in hot water. One court case, U.S. vs. Raymond and Arline Grant (S.D.Fla. 06/17/2005) shows us that doing this is possible. The IRS went after Arline for $36 million in back taxes owed by her deceased husband (unfortunately for Arline, she and her husband filed joint tax returns, which made her liable for his unpaid taxes). Despite their best efforts, including an attempt by the IRS to throw Arline in jail for failing to repatriate foreign assets, Arline not only stayed out of jail but her wealth also stayed safely offshore. To be fair, there have been a handful of offshore trusts that did not fare as well when challenged, but there were three key differences between the trusts that failed and Arline’s trust, which passed the ultimate test with flying colors:

• The trust beneficiary did not retain control over trust assets,
• The trust was carefully drafted (although, in my book Asset Protection in Financially Unsafe Times, I discuss how Arline’s Trust could have been drafted better), and
• The trust was set up long before creditor problems arose (the courts have ruled that setting up an offshore trust after creditor threats arise, so that you are unable to repatriate those assets, constitutes a “self-created impossibility” to comply with a repatriation order. Judges can and have thrown debtors in prison for such shenanigans.)

The fact of the matter is, offshore trusts and other offshore structures have worked countless times, if they are set up before creditors come knocking. I have seen cases where a creditor had a $1 million legal fund available to try and pierce an offshore structure. That creditor failed. I saw another $10 million claim slip away quietly after the creditor found out the the defendant had an “old and cold” asset protection plan in place. At this point in time, it is 100% legal to go offshore (however you must generally disclose that you are doing so to the government.) At some point I believe it will no longer be legal to do this. If you wait until then, it will then be too late to protect yourself.

Although we can’t predict for certain how things are going to pan out in the U.S., if history is any indicator, much or all of what we’ve discussed is likely to occur. One thing is certain: we have painted ourselves into a corner and there will be a day of reckoning. It will be a horrifying day for those who are unprepared. Considering the magnitude of what we face, along with the history of how governments deal with such crisis, doesn’t it make sense to prepare by placing at least a portion of your wealth out of harm’s reach while it is still safe and legal to do so? In addition, you will be protected from lawsuits, and you may also be protected from (depending on your circumstances when you initiate the planning) divorce, a business gone bad, bankruptcy, unforeseen tax problems, and other threats as well.

To your asset protection and financial success,


W. Ryan Fowler

Chief Consultant, Founder

www.PFShield.com

Why Go Offshore?

Note: This is the first in a 2-part series. To read the 2nd part of this series, click here.

The question I’d like to answer today is: why go offshore? After all, a plethora of asset protection and estate planning options are available domestically. I myself routinely implement a wide variety of both domestic and offshore plans.

Some people think going offshore is a bit scary. People see markets such as Hong Kong, Brazil, or Singapore as being the Wild West of investing, when really they are anything but. Let me ask you: have you noticed that, when adjusted for inflation, the U.S. stock market is worse off today than it was 10 years ago? Many other markets have realized huge gains in the last 10 years. Thus, the real question we should be asking is not “why go offshore”. Rather, we should ask “who in their right mind would keep their money in the U.S. over other far more lucrative markets and currencies?”

There are several reasons why one might want an offshore asset protection, estate, and investing strategy over a domestic one, for example:

• Stronger protection arising from the fact that your assets are no longer in the U.S.;
• Broader investment opportunities with higher yield potential, from markets with stronger economies than the U.S. (such as Brazil, Russia, India, and China, a.k.a. the “BRIC” countries and other emerging markets);
• Not having to worry about a U.S. court suddenly changing its mind as to how much protection your domestic structure actually has (this recently happened with regards to Florida LLCs, both single member and multi-member, in the landmark Florida Supreme Court case Olmstead v. FTC, which I’ll discuss in a future article);
• Purchasing a foreign life insurance policy with less overhead and ‘drag’ than may be available in the United States.

One way to illustrate the benefits of going offshore (besides to protect your assets, of course) is to compare the performance of the Japanese Yen vs. the U.S. dollar since January 2000. In January 2000, 1 Yen would buy 0.0094846 U.S. dollars. As of January 2011, 1 Yen would buy 0.0120764 U.S. Dollars. In other words, if you would have merely taken your U.S. dollars and placed them in the Yen, you would have, in 11 years, realized a gain of 27.3%. Had you invested in Euros in the same time period, you would have realized a gain of 31%. Swiss Francs would have netted you 62.2%. Even the Canadian dollar would have netted you a 46% return. It’s not that these currencies have grown in value, mind you. They’ve actually decreased in value somewhat, thanks to inflation. But, the U.S. dollar has decreased in value much more. This trend will increase exponentially at some point in the near future, which brings me to my next point.

You see, none of the above is the greatest reason to go offshore. The reason that overshadows all others is this: an enormous financial storm is coming to the United States. When this storm hits, you will want at least some of your wealth offshore, i.e. far away from ‘ground zero’. Some people think the storm has already hit, and indeed our country is currently in a very deep recession, perhaps even a depression. But what we are experiencing now is only a precursor. The macroeconomic fundamentals comprising the underpinnings of the U.S. economy point to an even worse dilemma that is likely less than a decade away, or even just a year or two away.

Perhaps David Walker, who was until 2008 the U.S. Comptroller General, described what’s coming best when he said:


“People seem to think the government has money… the government doesn’t have any money… The factors that contributed to our mortgage-based subprime crisis exist with regard to our federal government’s finances… The difference is that the magnitude of the federal government’s financial situation is at least 25 times greater.” — David Walker, 7/17/2008 [emphasis is ours].


25 times greater than the 2008 crisis? One may find that hard to believe, much less comprehend. But before planting your head in the sand and writing off Mr. Walker as a raving lunatic, consider this: until 2008 Mr. Walker was the federal government’s chief accountant. If anyone is qualified to talk about our government’s financial state, it is him. Furthermore, he is not the only respected individual who’s sounding the alarm. We highly recommend everyone watch the 2008 documentary IOUSA — it’s perhaps the scariest film ever made. It features commentary by multi-billionaire Warren Buffett, former Federal Reserve chairman Alan Greenspan, former U.S. Treasury Secretary Paul O’Neill, U.S. congressman Ron Paul, former Federal Reserve chairman Paul Volcker, and Bob Bixby of the Concord Coalition. It is a must-see. (At the time of this writing, you may watch a 30-minute version of IOUSA for free online at: http://www.iousathemovie.com)

The underlying premise behind this movie is that federal entitlement programs such as Medicaid, Medicare, and Social Security (which comprise almost 40% of all federal spending) will, in the next decade or less, spiral hopelessly out of control. The 2008 $700 billion bailout (only one of several bailouts that total over $12.7 trillion) and the cost of the Iraq War further exacerbate the matter. Nevertheless, the worst culprit by far is entitlement spending. Entitlement spending woes arise largely because of a demographic anomaly known as the baby boom generation. This term refers to a period in U.S. history marked by a sharp increase in births arising from unprecedented economic prosperity. The bad news is, as of 2008, the baby boomers became eligible to collect early retirement benefits, and a few years later they’ll be eligible to begin collecting full benefits. What does this mean to the federal budget? As popular CNN commentator Glenn Beck puts it, it means a $53 trillion financial “asteroid” will hit us sometime next decade. Mr. Beck refers to this threat as an asteroid because, just like an asteroid hitting earth could wipe out all life on the planet, this asteroid could wipe out all wealth in the U.S., something not even the Great Depression managed to do.

Specifically, this asteroid arises from, according to the 2007 Financial Report of the United States, “[the] federal government’s total liabilities and unfunded commitments for future benefits payments promised under the current Social Security and Medicare programs”. Note that in the 2000 report, these obligations were a “mere” $20 trillion. If these obligations grew by $33 trillion in only 7 years ($8 trillion because of so-called “conservative” President George W. Bush’s signing of the Medicare-D prescription medication program into law), how much will they grow in the future?

Even President Obama is aware of this problem. Here is an excerpt from a 2009 C-Span interview where he admits how bad things really are:


SCULLY: “You know the numbers, $11 trillion debt, a national deficit of $1.7 trillion. At what point do we run out of money?”

PRESIDENT OBAMA: “Well, we are out of money now. We are operating in deep deficits… This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue…

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...” [emphasis is mine.]


What will happen when this asteroid hits? No one can say with 100% certainty. However, if history is any indicator we have a good idea of what will probably occur: stagflation (severe inflation in a recession or depression) or more likely hyperinflation coupled with an economic collapse (or near-collapse) and the federal government’s bankruptcy. Also, the government will likely respond to the crisis with exchange controls. There has also been talk in congress of nationalizing qualified retirement plans, such as 401k plans, and replacing them with “Universal Government Accounts” – a trick that would be stolen from Argentina, which nationalized its citizen’s retirement plans in 2009.

We’ll discuss hyperinflation, exchange controls, and the potential nationalization of your retirement in more detail in the next newsletter. For now, let me leave you with this: our government is overwhelmed with debt, and in the coming years our debt load will grow exponentially worse. It will crush our nation. The government can only sell so many treasury bonds and only raise taxes so high. The only other option will be to monetize the debt by printing massive amounts of fiat money. This is a trend that has happened in many, many countries throughout history; 30 nations in the 20^th century alone experienced hyperinflation and its devastating effects. Historically, hyperinflation is often followed by exchange controls. Exchange controls are the confiscation of precious metals (gold, silver, etc.; note that our government once already confiscated our gold in 1933) and foreign stable currencies, or restricting the exchange of such currencies at rates far below actual market rates. The only way to legally avoid the fallout from hyperinflation and exchange controls is to legally place your wealth outside of the U.S. government’s reach before these contingencies occur. And, if you have the power to unilaterally repatriate such assets, moving wealth offshore by itself won’t work, as you’ll likely be subject to a law or court order requiring repatriation of your wealth back to the U.S. In addition to moving wealth offshore, you’ll need an offshore trust (OAPT) or some other foreign structure that, when properly implemented and maintained, has a history of surviving severe creditor threats. We will discuss all this in the next letter.

To your asset protection and financial success,


W. Ryan Fowler

Chief Consultant, Founder

www.PFShield.com