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South Dakota – Making Lemonade out of a Lemon

I wrote of the economic decline of the US, from the world’s 3rd to the 18th most free economy in 10 years,  in last week’s column. I ended the column wondering if the US would reverse its slide to economic mediocrity. The 2012 election makes it very clear that our slide to a more government controlled economy will not abate anytime soon.  Free market proponents and capitalists will need to forget about what was, or what should be, and focus on the lemon that is.  You need to take appropriate action to protect yourself, your families, and your investments.

If history was any indicator (and it wasn’t) the President would have lost handily.  Rarely, and never in our lifetime, has a sitting President overcome so many negative economic issues to win reelection. The take away here is that the US has fundamentally changed. There is a growing disdain for people who have wealth and a notion that they “owe” society for their success.  This attitude underlies a national desire for a European style welfare system.

This fundamental change ( and it didn’t happen overnight) in the US has many ramifications.  One is that if you have wealth, you do not want to appear as if you do. If you have not done so, you need to get serious about good asset protection planning which can provide a firewall against those that feel they deserve your wealth more than you do.

South Dakota has the best asset protection statutes in the country.  It’s also one of the few states that is friendly toward wealth accumulators as it has no individual or corporate income taxes, no estate taxes, no franchise tax and no personal property taxes.  It also boasts the second best economy in the nation.

Maybe you should get serious about relocating to South Dakota?  The lemonade here really is better!

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8 Responses to South Dakota – Making Lemonade out of a Lemon

  1. Jeff November 8, 2012 at 8:50 am #

    I have been a lifelong Republican who has been alienated by my own party. I disagree with you Rick. Republicans CAN win with a message of individual initiative and smaller government. They CAN’T win when controlled by right wing Mullahs who support ignorant candidates. Candidates who say women can’t get pregnant when raped and deny the laws of science. Government-sponsored discrimination is not OK, even if the person is gay. Guess what Mitt, I do care that our oceans are rising! And the social agendas of the Rick Santorums and Paul Ryans of the Republican party scare the hell out of me! What does it say about a party whose hero is Ronald Reagan, yet in today’s Republican party he would be considered too liberal to win the party’s nomination?

  2. Dowell November 8, 2012 at 9:13 am #

    Why whip up all this fear and hysteria? Back in the Eisenhower era we had much higher taxes on high incomes and inherited wealth and the economy did much better than of late. Now, China has better public schools, transportation and infrastructure than we do. How will that play out in the next few decades?

  3. Rick Kahler November 8, 2012 at 12:22 pm #

    Jeff and Dowell, thanks for your comments!

    Jeff, I hear you and agree with you about the alienation and shrinking tent of the Republican Party. However, I don’t think we can win the message of individual initiative and smaller government. Those days are behind us and a new normal has emerged. Sorry to be the pessimist here….of course, I see it as being a realist. :-)

    Dowell, having visited China, I would not want to be arguing that China’s transportation and infrastructure is superior to the US. Maybe their schools are, but not the former!

    My focus of this post is much narrower.

    Rhetoric and hysteria aside, the US just elected a President whose core message was the rich don’t pay their fair share, are not responsible for their success, and are largely what is wrong with the US. We have never seen “the rich” (defined as anyone earning over $200,000 a year) the brunt of such overt demagoguery in our lifetime.

    Friends of mine who work with Congress people tell me that the hatred (their term) toward those who have money is palpable and shocking at their town hall meetings.

    Here is the point I am making, they demagoguery of the rich resonated with the electorate. While most of my peers and clients would say this is “un-American” I am suggesting it now is totally American. America is changing. The way we view government, health care, and social security is changing. I am not suggesting it’s for the good or bad, but the national view is much different toward those issues than 20 or 30 years ago.

    Back to protecting what you have. My firm has incorporated asset protection planning for our clients for the last 20 years. The trend we see toward greed and envy in the US didn’t start overnight even though the flames were fanned in a most overt manner in the last election.

    Granted, the politics of greed and envy are a foundation of many political systems. There really isn’t much new here in human history. What is new is that it’s not the historical norm in the US, which was founded as a country that valued individual freedom above the interests of the group. Accumulating wealth was once a national goal, something that was desired, and something that was a positive accomplishment.

    The national attitude is changing and people who are fortunate enough to accumulate wealth (defined as having a net worth over $1,000,000) need to not be naive and realize that they are a target. It isn’t the billionaires that are the targets, it’s the “millionaires and billionaires” that are the recipients of this negative projection. You and I know there is a huge difference between a million and a billion, but the average citizen does not.

    So my message is one of taking personal responsibility to protect what you’ve worked so hard to accumulate. Liability insurance is a good first defense, but it can easily fail (denied claims, not enough, unpaid premiums, a bankruptcy). You need to take further action to protect yourself, and surprise, South Dakota is a great place to find proactive statutes to help you do that!

  4. Richard Colman November 8, 2012 at 1:02 pm #

    The response is very interesting. Rick wrote a column highlighting how economically the 44th president should have been run out with a rail. He spoke about “rarely and never in our lifetime has a sitting president overcome so many negative economic issues…” Actually not in Rick or my life time, but FDR had a worse economic environment and people stuck with him because they blamed Hoover and the Republicans for that economic mess. I think we witnessed the same thing. Then you add the right wing Republican nonsense about Rape and anti Hispanic rhetoric and Obama becomes a shoe-in!

    However, the lemonade part is true! I am seriously considering setting up a South Dakota trust because we do have rumblings of class warfare.

    thanks for providing the platform.

    • Rick Kahler November 8, 2012 at 1:21 pm #

      Rich, I am sure you know this, but SD APTs just got better. Now there is just a 2 year fraudulent transfer period as of July 1,2012. Also, if you sue a SD APT and lose you must pay attorney fees. There are several other new provisions too technical for this space or my aging brain that you would also appreciate.

      Also, SD LLCs have some of the best protections in the US.

  5. Pat November 10, 2012 at 11:01 pm #

    I do think the message of small goverment and individual accomplishment can work with even liberal democrats like myself.

    The venom towards more well off people (whether real or percieved) seems to stem from seeing CEOs with billions, yet the ‘little guy’ being laid off, their hours cut or health care dropped.

    It can seem frustrating to see companies in trouble, yet the top brass still being showered with money and the Republicans more than happy to support that, giving the impression they don’t care about the working class.

    While ‘fairness’ isn’t exactly a constitutional right, if people felt there was a greater sense of responsibility and self-awareness coming from the top of the economic ladder down, perhaps folks wouldn’t be quite so quick to resent them.

  6. Bob November 12, 2012 at 4:56 am #

    Rick, my practice focuses exclusively on middle income clients. Asset protection, in the sense that you are speaking about, really isn’t my focus. Most of my clients are either young families or older people who are just retiring and have modest 6-figure nest eggs.

    I agree that we are headed for extremely hard economic times. Although “millionaires and billionaires” may be in the crosshairs, there is going to be massive damage done to my clients. I’m working with a couple in their late 60’s with a few hundred thousand 401(k) dollars that they are rolling into an IRA. Their decision is fraught with danger and I just don’t have a good answer for them. Stocks, bonds and cash all have their own unique perils. There simply is no “safe” haven. Because we are not just facing an economic decline, but rather a potential “shift” in economic underpinnings, I can’t even look them in the eye and tell them that all will be well in the long run.

    For the first time ever, I hate my job. I feel like I’m leading lambs to a slaughter.

    It’s funny that you mentioned it, but moving to a state where people aren’t as obsessed with voting themselves “other people’s money” actually has crossed my mind.

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