Our current tax regime could undergo substantial change in the coming years. Politicians from the fringes of both parties want to revamp how our government funds itself through taxation. While it’s incredibly unlikely that anything truly significant will change, it’s enough to make the more paranoid among us curious how we can protect our assets from the IRS.
If you believe you see patterns where others do not, and think the man on the radio is talking directly to you, this list is for you.
MyBankTracker sat down with Alfred Polizzotto III, partner of Brooklyn’s Polizzotto and Polizzotto firm. He’s been practicing law in Brooklyn for two decades, and with his experience in estate law and financial planning, he offered some advice for people seeking asset protection. That said, he is a lawyer and a financial planner, and only recommends legal options for asset protection. For the most part, that limits his advice to No. 1 on our list: trusts.
While a traditional prepaid card requires a substantial amount of paperwork due to PATRIOT Act rules — including giving up your Social Security number — a gift card does not. We aren’t aware of any reloadable gift cards, so you’ll typically be limited to $250 per card. There’s nothing stopping you from buying as many of these as you like. Go all over town, buying prepaid gift cards, and you’ll certainly look like a lunatic to the cashiers — that, or a generous and prolific grandparent — but you’ll have stashed a lot of cash away where someone might not look. If you can only fit $1000 into four cards, however, you have to ask yourself if you think four debit cards is any less conspicuous than ten $100 bills. Still confused? Here is some additional information to understanding prepaid debit cards.
That said, there are more, um, exotic options when it comes to prepaid cards. Foreign debit card companies operate outside of PATRIOT Act jurisdiction, and can keep substantially more cash on your card, totally anonymously — of course, for a price. Take, for example, the Sovereign Gold Card: you can store up to $10,000 on it at any time, anonymously, and load up to $240,000 to it a year, but it costs about $200 just to activate it.
Carry one around and you’ll join the ranks of all the drug traffickers and terrorists who use prepaid cards to move illicit money around. Now we only trust drug traffickers and terrorists as far as we can throw them, but there are some things you can trust them to do right, usually. Among them is covering a paper trail.
For those who want to do things completely by the book, and have considerable means at their disposal, there are trusts. Trusts are Mr. Polizzotto’s specialty. Parents of means might put some of their money in a child’s name by creating a trust with their children as beneficiaries — this also helps sidestep gift and estate taxes. The assets in a trust are not the parents’, but the parents can still exert a bit of parental control on the assets. While we typically think of the trusts as protecting the offspring of the wealthy from their own drug and Faberge egg habits, that’s not always the case says Polizzotto.
“They can get divorced, they can die, they can develop bad habits, they can become spendthrifts, and that money that you thought was secure could end up being diminished or dissipated, even through no fault of the child.”
For asset protection purposes, irrevocable trusts are the way to go. They provide what he called “the walls that protect assets from [outsiders].” Creditors cannot take that money from you if they come looking, because it simply is not yours.