Asset Protection planning course by Jacob Stein, Esq. Jacob Stein has taught over 600 seminars worldwide and this is the slide deck from his full-day asset protection planning course. Over the past fifteen years, thousands of attorneys, accountants and business owners have taken this class. The slide deck references page numbers to Mr. Stein's book, Asset Protection Planning for California Residents. The book, now in second edition, is available on Amazon.

1. ASSET PROTECTION PLANNING
Jacob Stein
Aliant, LLP
16000 Ventura Blvd. Suite 1000
Encino, CA 91436
+1 818-933-3838
jstein@aliantlaw.com
www.aliantlaw.com

2. Threshold Questions
• Identity of Debtor
• married or single; entity protection and exceptions
• Nature of Claim
• timing; prejudgment attachment; dischargeable in
bankruptcy
• Identity of Creditor
• creditor characteristics – aggressive, lazy, intelligent, etc.
• Nature of Assets
• liquid, real estate, residence, exemptions
Outline pp. 1-7
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Jacob Stein, Esq., 2016

3. Debt Collection
• Who will be sued?
• both spouses; entity owners
• Where will the creditor sue?
• Prejudgment attachment
• Collecting on judgments
• lien duration; writ of execution; writ of
attachment; title to property
• Debtor exam
• Wage garnishment
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Outline pp. 8-13
Jacob Stein, Esq., 2016

4. Fraudulent Transfers
• Transfers by debtor that reduce the amount of
assets reachable by a creditor
• Transfers involving actual intent to hinder, delay
or defraud any creditors
• badges of fraud
• business purpose / estate planning
• present and future creditors
• Transfers involving constructive fraud – less than
full consideration and debtor is insolvent
• Remedy / Good-faith exception
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Outline pp. 14-26
Jacob Stein, Esq., 2016

5. Planning in Context of Marriage
• Common law states – separate property not liable
for debts of other spouse; concept of marital
property on divorce
• Community property states – liable for debts of
either spouse
• Nevada – only debtor’s share of CP liable for pre-
marital debt
• Community property - acquired during marriage,
other than by gift or inheritance, analyze for titling
and commingling
• Determining nature of property
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Outline pp. 28-47
Jacob Stein, Esq., 2016

6. Entity Planning
• Sole Proprietorship/General Partnership
• simple, inexpensive, no protection
• Corporation
• centralized management, limited liability
• Limited Partnership
• limited liability for LPs
• LLC
• limited liability for all members
• LLP
• limited liability for all partners, except for malpractice
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Outline pp. 81-87
Jacob Stein, Esq., 2016

7. Choice of Entity
• Non-tax factors
• Economic flexibility – favors partnership type entities
like LPs and LLCs
• state statutes, structure, close corporations, Series LLCs and
LPs
• Liability protection – favors partnership type entities
• entity provides liability shield; exceptions
• charging order protection;
• buy-out rights; poison pills
• single-member LLCs; reverse piercing the veil
• Alter Ego Theory
• Choice of Jurisdiction
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Outline pp. 81-115
Jacob Stein, Esq., 2016

8. Choice of Entity
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Asset
Outline pp. 117
Corporation
Lawsuit
• Corporation owns valuable Asset, but also
manufactures and sells
• Exposes Assets to risks of product liability
Lawsuit reaches all corporate assets
Jacob Stein, Esq., 2016

9. Choice of Entity
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LLC
Asset
Outline pp. 117
Corporation
• Corporation continues to manufacture and sell
• LLC owns Asset and licenses to corporation
• Asset separated from liabilities
Lawsuit
Jacob Stein, Esq., 2016

10. Choice of Entity
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LLC
Corporation
AssetAsset
Individual Owner
Outline pp. 117
• Using LLC Charging
Order Protection for
Corporate Assets
• Corporate exit tax too high
to terminate corporation
• Issues: Number of
members to maximize
protection, working with S
corporations and using
foreign LLCs
Jacob Stein, Esq., 2016

11. Planning with Trusts
• Trust – requires a settlor, a beneficiary, a
trustee and trust property
• Ownership of property is split – trustee has
legal title, beneficiaries have equitable title
• Creditors can attach any asset that a person
owns or can exercise control over for his
own benefit
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Outline p. 48
Jacob Stein, Esq., 2016

12. Planning with Trusts
• Trust should be irrevocable – if revocable,
settlor deemed owner of trust assets
• Spendthrift provision – beneficiary
prevented from anticipating distributions
• Discretionary trust – trustee has discretion in
making distributions, can exclude
beneficiaries
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Outline pp. 49-55
Jacob Stein, Esq., 2016

13. Planning with Trusts
• Self-settled trust – settlor settles a trust for
his own benefit
• If more than one beneficiary, self-settled to the
extent of settlor’s benefit
• No asset protection benefits to a self-settled
trust
• In all other respects, self-settled trusts are
valid
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Outline pp. 51-52
Jacob Stein, Esq., 2016

14. Planning with Trusts
• DAPTs – referring to the 1997 and later trust
legislation in Alaska, Delaware, Nevada,
etc.
• Legislation allows self-settled trusts as a creditor
shield
• Trusts need to comply with certain requirements
• Choice of law; Full Faith and Credit clause
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Outline pp. 57-58
Jacob Stein, Esq., 2016

15. Foreign Trusts
• Foreign trust – any trust governed by the
laws of a foreign country
• Looking for jurisdictions with trust laws
favorable to settlors and beneficiaries
• Jurisdiction features – self-settled trusts are
effective, favorable fraudulent transfer laws,
does not recognize foreign judgments
• Favored jurisdictions
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Outline pp. 60-67
Jacob Stein, Esq., 2016

16. Foreign Trusts
• Issues to consider:
• Choice of jurisdiction
• Location of assets
• Time of funding
• Choice of trustee
• Contempt
• defense
• Anderson case
• Using LLCs to regain control
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Outline pp. 60-67, 78-80
Jacob Stein, Esq., 2016

17. Foreign Trusts
• Tax treatment of foreign trusts
• Every trust is a “foreign trust” for tax purposes,
unless meets the court test and the control test
• Court test and control test
• Grantor status
• Reporting requirements
• Forms 3520 and 3520-A
• Penalties
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Outline pp. 67-74
Jacob Stein, Esq., 2016

18. Retirement Plans
• ERISA qualified plans – Code Section 401 and
Department of Labor requirements
• Anti-alienation requirement defeats claims of all
creditors, other than the federal government and former
spouses
• Ability to rollover from IRA
• To qualify under ERISA, need a non-owner employee
other than spouse of owner
• Nonqualified plans – limited protection under
California private retirement plan statute; up to
$500,000 in Nevada; varies in other states
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Outline pp. 124-126
Jacob Stein, Esq., 2016

19. Comprehensive Example
Brown Family Balance Sheet
Value Debt
Residence $ 1 million $ 500,000
Medical Practice $ 4 million $ 500,000
Apartment Building $ 10 million $ 8 million
Brokerage Account
Cash $ 1 million
Securities $ 0.5 million
Retirement Plan $ 500,000
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Jacob Stein, Esq., 2016

20. Comprehensive Example
Transmutation Agreement Split
Dr. Brown Equity
Medical Practice $ 3.5 million
Retirement Plan $ 500,000
$ 4 million
Mrs. Brown Equity
Residence $ 500,000
Apartment Building $ 2 million
Brokerage Account $ 1.5 million
$ 4 million
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Jacob Stein, Esq., 2016

21. Comprehensive Example
• Medical practice – limited value to a creditor
• Retirement plan – if not an IRA - sheltered
from creditors
• Residence – consider a sale, an equity strip or a
QPRT
• Apartment building – contribute to an LLC,
single-member LLC issues
• Cash and securities – LLC or foreign trust
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Jacob Stein, Esq., 2016

22. Jacob Stein
Aliant, LLP
16000 Ventura Blvd. Suite 1000
Encino, CA 91436
+1 818-933-3838
jstein@aliantlaw.com
www.aliantlaw.com
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LinkedIn: linkedin.com/jacobsteinesq