Michigan Asset Protection Planning as a Countermeasure to the Rise of Federal Asset Seizures

An article on the front page of the August 22, 2011, Wall Street Journal describes the government’s expanding rights to seize a person’s assets. The article is replete with examples of how innocent parties are destroyed if they are simply in the wrong place at the wrong time. Some 400 federal statutes empower the government to take assets from convicted criminals as well as people never charged with a crime.

Take the case of Raul Stio, a New Jersey businessman. The Internal Revenue Service, suspicious of Mr. Stio’s bank deposits, seized more than $157,000 from his account. He has never been charged with a crime.

The government alleges that Mr. Stio’s deposits to the account were structured to illegally avoid an anti-money laundering rule that requires a cash transaction of more than $10,000 to be reported to federal authorities. Indeed, Mr. Stio had made many deposits to the account though none exceeded $10,000. Nonetheless, the pattern of deposits created a mere possibility of illegal activity which triggered the government’s action.

I am frequently asked why an honest and honorable citizen, without any existing creditors and a low probability of incurring future debts, would want or need to implement an asset protection strategy. My response is that our financial world abounds with hazards . . . be they catastrophic litigation, tax claims and unwarranted seizures to name just a few. They can also ask Mr. Stio if he would have engaged in asset protection planning if he knew that he would become a victim of a federal seizure. His answer is fairly obvious. In point of fact, in fiscal year 2010, there were more than 11,000 non-criminal forfeiture cases.

It is no surprise that seizure statutes are vigorously enforced. State and local law enforcement agencies that work with Washington to seize assets get to keep up to 80% of the proceeds. Do you think a local agency might get carried away knowing they may have an opportunity to keep 80% of what is seized?

My Michigan asset protection practice contemplates a wide range of potential threats. There are structures that we use to secure assets and put them out of the risk of federal, state or local authorities. At a minimum, clients taking advantage of asset protection planning will have the wherewithal to fight improper and unjustified seizures . . . unlike many innocent victims who find that all of their assets are seized or frozen leaving them without access to funds necessary to mount a challenge.

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