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Wealth Preservation

Asset protection is not a matter of keeping assets secret or hidden from prying eyes. Since the late 16th century, hiding assets has never been a legally effective way of shielding them from creditors. If and when a debtor is forced to disclose the extent of his assets he must disclose everything. The penalties for doing otherwise can be severe.

A creditor can reach any asset owned by a debtor, with few exceptions, but he cannot make a claim on assets that are not owned by the debtor. Consequently, the focus of all asset protection planning is to remove the debtor from legal ownership of assets, whilst, as far as possible, retaining the debtor’s enjoyment of the assets.

A properly structured asset protection plan allows a debtor to disclose the nature and the structure of the asset protection plan quite openly and honestly and with impunity.

Over the years, numerous legal structures in many jurisdictions have been developed to divorce legal title to assets from control and enjoyment and these vehicles include trusts, foundations, limited partnerships and limited liability companies. These legal entities are often situated offshore to take advantage of fiscal neutrality and robust legal systems. Jersey and Switzerland are ideally placed to provide the structures needed.

BILLING & COLLECTION COMPANY ( BICOCO )

A Billing & Collection Company ( BICOCO or “Bee-Koh-Koh” ) is a company that is inserted between a business and its customers to facilitate the billing and collection of accounts receivables. The company is used to lawfully divert profits from the business. The goal is to keep the business from accumulating profits that would be available to creditors of the business.

The BICOCO can also be structured with other planning such that the diverted profits are moved outside of the business owner’s estate.

The BICOCO is a much preferred alternative to so-called Accounts Receivable Financing Programs a/k/a Leveraged Compensation Arrangements, since there is no interest cost, nor is the client forced into purchasing an annuity as collateral. And unlike Accounts Receivable Financing Programs, the BICOCO does work to provide substantial asset protection and wealth accumulation advantages.

(((See http://www.risad.com/pat_asset_protection_bicoco.htm for this and other information)))

The BICOCO Advantages
Traditional

A/R Financing Programs

Accounts receivable are protected from creditors
Protection is highly uncertain

Future receivables are also protected
Protects existing A/Rs only — no protection for future receivables after creditor executes on existing A/Rs and forces foreclosure

No loan / Credit unaffected
Program requires loan of significant percentage of value of A/Rs. Substantial credit must be used to obtain the loan that will purchase the annuity product

No payments required / No effect on liquidity, and wealth built up in the BICOCO may be used to solve short- or long-term liquidity needs
Monthly payments required whether business has liquidity to make payments or not, and liquidity is reduced by amount of loan payments

No third-party can discontinue the arrangement
Bank can call loan on A/R financing program at any time, thus causing the program to terminate and exposing assets

Not a fraudulent transfer
Usually a fraudulent transfer

Significant potential estate tax advantages
Value of plan trapped in owner’s estate

Not a tax shelter
Where business is deducting the interest paid on the loan, this is possibly a tax shelter

No requirement to purchase any life insurance or annuity product
Purchase of annuity or life insurance product absolutely required to provide loan collateral

Easy to unwind
Difficult to unwind / promoters usually charge significant fees upon termination

It is these reasons why the BICOCO has become the preferred choice among sophisticated clients and advisors to the deeply-flawed A/R financing programs.

The BICOCO is available to new and existing clients of our firm. Please contact us for more information.