Some financial planners and attorneys recommend so-called asset protection trusts for wealthy lawsuit magnets such as doctors or lawyers. But this advice is highly controversial when the assets involved are held in IRAs.
J. Ben Vernazza, a certified public accountant with Overseas Oversight Group in Aptos, Calif., says his firm has created offshore asset protection trusts designed to put clients' IRA assets out of the reach of potential creditors.
"It is in the structure of what the IRA owns, and who owns it, where you can get asset protection," Vernazza said. "We feel our position is on solid ground."
Other experts disagree. Bill Norman, a Century City tax and estate planning attorney who sets up offshore and domestic asset protection trusts for clients, refuses to include IRA assets in such trusts because of uncertainties in the law.