What Are the Legal Fees for an Asset Protection Plan?

The legal fees for asset protection planning is a very important question for our clients. There is often a large disparity in fees among attorneys for similar legal work.

This is true in the field of asset protection as it is in all other areas of the law. Your attorney fees for litigation or divorce or any transaction will vary widely simply depending on whom you have hired. Some lawyers bill the heck out of a case and some don’t. It is also true that the amount of your legal fees are not generally related to the competence or experience of your lawyer. Whether your attorney is good or bad is not the factor that determines the amount of fees you will be charged. The belief that the amount of legal fees correlate with an attorney’s experience and quality is a popular mindset and many attorneys take full advantage of the fallacy (as do other professionals such as investment advisors and physicians).

The Wall Street Journal ran a story about offshore asset protection and legal fees several years ago. Here is a quote about fees.

“Asset-protection trusts don’t come cheap. Offshore asset-protection trusts can cost anywhere from $20,000 to $50,000 to set up, plus annual administrative fees of $2,000 to $5,000 and asset management fees of about 1% on the assets placed in the trust.”

Now, it is true that offshore asset protection trusts involve considerable thought and planning. Lately, in particular, the offshore trust companies have added many new layers of compliance and due diligence in response to FATCA which requires substantial documentation about a client’s background and financial affairs.  And it is true that asset protection is a highly specialized field, requiring expertise in tax law, international business and the law of trusts.  You will need good legal advice to select the proper jurisdiction, the right bank and trust company and to properly document the plan. But, the types of fees suggested in the Wall Street Journal article are way out of line, far beyond what could be reasonable under almost any circumstances. Fifty thousand dollars is fifty hours of time at $1,000 an hour. What could they be doing?

I can’t imagine spending that type of time or money on any client. And my understanding is that over the last twenty years we have created more offshore trusts than any other firm in the country. So we are very experienced and know what we are doing. Perhaps having a very streamlined and efficient process for creating offshore trusts gives us an advantage over less experienced attorneys.  In most cases, the range of legal fees for our clients for these types of offshore trusts has been between $10,000 and $15,000. Maybe 10% of our clients fall outside that range.

In addition to legal fees, offshore trustee companies charge for their services. The annual administrative fees for offshore trusts are generally at the low end of the amount stated in the Journal article, in the range of $2,500 currently.  The trustee companies we work with charge a reasonable fixed fee for services and are certainly not based on a percentage of assets in the trust. If you place trust funds in a managed investment account, the financial institution will charge a percentage of assets similar to what a client would pay to a U.S based investment advisor.

The point here is pretty clear. As with all legal work, there is a big discrepancy in fees for all types of asset protection plans-domestic as well as offshore. Holding down your legal costs means selecting a highly qualified, experienced attorney with a reasonable fee structure. Most attorneys will tell you in advance how much they will charge for particular services, so obtaining this information is something that you can and should do if costs are a concern in the process.

Buying Forms to Set-Up an Asset Protection Plan