First let us reiterate the APS™ “Standard of Care:”
“Rated” advisors shall incorporate asset protection planning into the advice given to all clients.”
Instead of trying to write in paragraph form how an attorney can breach the SOC, we will simply list some examples which will make is self evident.
The standard will vary depending on the “Rating” of the advisor. The better an advisors “rating,” the higher standard they shall have to live up to.
Example: a simple estate plan.
Mr. Green, age 40, had his estate plan done by a local law firm. Mr. Green disclosed that he is married, has two minor children, has a $75,000 brokerage account, a rental property worth $100,000 owned in his own name, and only $100,000 term life policy on his life. He earns $150,000 a year and has a home worth $400,000 with very little debt in a state where there is no or little homestead protection.
The typical mortgage or real estate broker will NOT help their clients with any planning outside of selling them a mortgage, selling their home or helping them purchase a home.
The fact pattern is a bit different for a mortgage or real estate broker. The APS™ does not expect such an advisor to have the knowledge that attorneys, CPAs/accountants/EAs or financial planners have. They could have such knowledge if they take an educational course on “advanced” asset protection planning, but we don’t necessarily expect it.
What we do expect a mortgage or real estate broker to be able to do is provide basic asset protection advice to their clients if “Rated” by the APS™. A “Rating” for a mortgage or real estate broker will usually be of the “C” class, but that is still going to allow such an advisor to significantly help their clients with asset protection.
Think about it, when a client contacts a mortgage or real estate broker, they are typically dealing with properties of between $100,000-$1,000,000+. Don’t those assets need to be protected? Doesn’t the mortgage or real estate broker many times get a look at a client’s finances before a real estate closing?
What advice is typically given by a mortgage or real estate broker on the topic of asset protection? That’s a simple answer: NONE.
What advice should a “Rated” advisor give to our Mr. Green? Simple advice such as the following:
1) The brokerage account is exposed to lawsuits and needs to be protected.
2) The rental property is exposed to lawsuits and creates liability which exposes the rest of Mr. Green’s estate to creditors. The property should be protected from other creditors and insulated so it doesn’t cause liability to the rest of Mr. Green’s estate.
3) The home’s equity is not protected. The client should be made aware of the various ways to protect the home from creditors (debt shield, IDGT, etc).
If the mortgage or real estate broker has a “Rating” of “AA” or “CO” or “CG” or “COG,” then more sophisticated planning advice should be giving.
Summary
Providing quality advice to clients on asset protection is not difficult. If you surf this website, you will find out for yourself that there is nothing inherently difficult about asset protection planning.
The problem is that beside the Wealth Preservation Institute through the CWPP™ and CAPP™ courses and several of the Founders and Advisors Board Members of the APS™ through their books, no one educates on the topic of “asset protection.”
“Rated” advisors have proved to the APS™ before becoming “Rated” that they have the requisite knowledge and under the “Standard of Care” put forth by the Society, “Rated” advisors have a duty to use this knowledge to help their clients.
This again, is the reason the APS™ was created. To protect the public and to point out them those advisors who truly can help them implement a comprehensive and complete asset protection plan.