April 29, 2015
Mexico City, Mexico
Kim Dotcom is a giant in many senses of the word.
As the founder of file sharing website Mega Upload, he brazenly thumbed his nose at every international copyright law in existence.
He spent his fortune lavishly on the quintessential playboy lifestyle that most people only dream of, replete with Asian beauty queens and yacht parties.
But a few years ago the US federal government tried to put an end to it all, orchestrating a coalition of the willing to send paramilitary forces in an air assault invasion of Dotcom’s estate in New Zealand.
In the time since, he’s launched an even more secure version of a file-sharing site (Mega.co.nz), in which he and his staff have no knowledge of any files stored on their servers.
He’s also been locked in a multi-year court battle trying to get his assets back.
He just lost that battle, costing him a whopping $67 million.
This brings up a major point that few people ever think about until it’s too late—asset protection.
Most people don’t realize that there are dozens upon dozens of government agencies that can deprive you of your assets and freeze you out of your livelihood with just a single phone call.
No trial. No due process. Straight to execution.
Dotcom himself said the system “has allowed the US government to legally steal all of my assets without any trial, without any due process, without any test of the merits.”
Rather than crossing my fingers and hoping that rule of law will be upheld, personally I’d prefer to just take my assets out of their reach.
In order to do so there are various levels of asset protection that one can pursue, each providing varying degrees of security.
At the most basic level, you can establish a domestic limited liability company.
This is often enough to shield at least a portion of your assets from creditors if you are personally sued as the most they will receive in many cases is a ‘charging order’, or a claim on the profits of the LLC.
In practical terms this isn’t much of a victory at all.
Having said that, aggressive creditors and government agencies won’t be stopped by a domestic LLC.
So the next step up is changing jurisdictions to a foreign LLC, particularly in a place like Nevis or the Cook Islands.
A foreign LLC generally makes it extremely costly for creditors to come after you. And depending on the jurisdiction, they’ll still likely be left with very little.
Still, though, while a foreign LLC may be sufficient to defend against most private creditors, it’s still not enough to deter government agencies.
This is what makes a properly structured foreign trust the Rolls Royce of asset protection.
Properly structured trusts in jurisdictions like the Cook Islands have successfully fended off attacks from even the US government in the past.
Look, there is a stigma associated with asset protection. It’s as if only people who are guilty of some crime or fraud would seek to protect what they’ve earned.
This is total nonsense.
The state of the “justice” system today is pretty clear. You are not innocent until proven guilty.
Instead, they will confiscate all of your assets and any means you would have had to defend yourself, leaving you with nothing to prove your innocence.
Of course no one ever expects to be sued or to end up on the wrong side of some government agency’s list.
But if it ever does happen, your life will change overnight. So it might make sense to consider some options while they’re still available.