The Ethical Side of Asset Protection Planning

Many clients are concerned with safeguarding their wealth during their lifetime, also known as asset protection planning (APP).  APP goes beyond traditional estate planning, and focuses on minimizing estate and inheritance taxes, avoiding probate and providing for heirs.  Accordingly, estate planners are expected to have knowledge of asset protection stratagems, including the use of asset protection trusts (APTs).  Many practitioners avoid APTs, fearing this is unethical.  However, that fear unfounded as it is usually based on lack of knowledge in the area.

Attorneys must examine cases and ethics opinions of the state in which they practice as individual states take slightly different approaches to what constitutes ethical representation.  All states have statutory provisions exempting certain assets from creditors’ claims, and more than 15 states have enacted domestic asset protection trust (DAPT) legislation.  This legislation supports the position that APP is ethical.  Even though APP is ethical, it can be practiced unethically.

The key to an ethical practice is to know your client and state laws.  Once you have determined whether a client may be represented in an APP matter, you must avoid communication failures, especially allowing unreasonable client expectations. 

See Patricia Donlevy-Rosen, Ethical Considerations in Asset Protection Planning, Wealth Management, Sept. 3, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.