Holistic Approach to Creditor Protection
Based on individual circumstances in each case – no magic bullet.
Factors include client’s risk tolerance, willingness to relinquish control and cost.
Use of various creditor protection techniques can be cumulative.
Cost of most successful asset protection programs can be less than one year’s premium on malpractice insurance.
The document provides an overview of homeland security funding in the United States. It discusses how funding is allocated across federal departments and agencies based on strategic goals to prevent terrorism, protect infrastructure, respond to incidents, and strengthen foundations. The Department of Homeland Security receives around 50% of total homeland security funding and allocates it across agencies like Customs and Border Protection, the Transportation Security Administration, Immigration and Customs Enforcement, and the Coast Guard. The document also outlines resources for small businesses seeking homeland security contracting opportunities.
This document discusses investing in prevention services for vulnerable people through supported housing models. It describes exempt accommodation, which provides extra care and supervision to tenants, allowing them to receive enhanced housing benefits and be exempt from some welfare reforms. Intensive housing management is discussed as another prevention approach that maintains independent living through additional support services. Social and financial return on investment is highlighted as an important framework for evaluating prevention strategies.
Powerpoint, adapted from a powerpoint available on the web by the Texas Department of Insurance. Review of the basic types of insurance and their reasons.
The document discusses various types of insurance, including life, general, health, and property insurance. It provides definitions and classifications of insurance, explains concepts like premiums and insurers, and gives examples of specific insurance policies and plans like health, home, and renter's insurance. Key details covered include classifications of insurance, definitions of terms, common policy elements and exclusions, health insurance initiatives and schemes in India, and importance of property and health insurance.
The document provides an introduction to various concepts in insurance including the life insurance contract, principles of insurance, utmost good faith, insurable interest, and different types of insurance policies like term insurance, whole life insurance, endowment policies, and annuities. It explains that a life insurance contract is a valid legal agreement between the insurer and insured where the insurer agrees to pay claims on the happening of an insured event in exchange for premiums paid by the insured.
The document provides an introduction to key concepts and terminology in insurance law, including the definition of risk, risk management, insurance terminology such as policies and premiums, the concept of risk pooling, classifications of insurance, and the requirement of insurable interest. It also summarizes the nature of insurance contracts as governed by contract law and regulated by states, how applications and provisions work, and types of defenses insurers can raise.
The document discusses long-term care costs and options for covering them. It describes MoneyGuard Reserve, a universal life insurance product that allows policyholders to access the death benefit for long-term care costs while providing a money-back guarantee or death benefit. The product helps protect retirement assets from long-term care costs and allows assets to be passed to heirs if care is not needed.
The document discusses marital deduction and bypass trusts, also known as A-B trusts. These trusts give the surviving spouse access to assets but minimize estate taxes, often eliminating them entirely at the first spouse's death. Assets are placed in a marital trust and bypass trust, with the marital trust receiving the marital deduction and bypass trust assets avoiding tax at the second death. The document provides details on unified credit amounts, qualifying requirements for different types of trusts, and considerations for using marital deduction trusts.
The document provides an overview of homeland security funding in the United States. It discusses how funding is allocated across federal departments and agencies based on strategic goals to prevent terrorism, protect infrastructure, respond to incidents, and strengthen foundations. The Department of Homeland Security receives around 50% of total homeland security funding and allocates it across agencies like Customs and Border Protection, the Transportation Security Administration, Immigration and Customs Enforcement, and the Coast Guard. The document also outlines resources for small businesses seeking homeland security contracting opportunities.
This document discusses investing in prevention services for vulnerable people through supported housing models. It describes exempt accommodation, which provides extra care and supervision to tenants, allowing them to receive enhanced housing benefits and be exempt from some welfare reforms. Intensive housing management is discussed as another prevention approach that maintains independent living through additional support services. Social and financial return on investment is highlighted as an important framework for evaluating prevention strategies.
Powerpoint, adapted from a powerpoint available on the web by the Texas Department of Insurance. Review of the basic types of insurance and their reasons.
The document discusses various types of insurance, including life, general, health, and property insurance. It provides definitions and classifications of insurance, explains concepts like premiums and insurers, and gives examples of specific insurance policies and plans like health, home, and renter's insurance. Key details covered include classifications of insurance, definitions of terms, common policy elements and exclusions, health insurance initiatives and schemes in India, and importance of property and health insurance.
The document provides an introduction to various concepts in insurance including the life insurance contract, principles of insurance, utmost good faith, insurable interest, and different types of insurance policies like term insurance, whole life insurance, endowment policies, and annuities. It explains that a life insurance contract is a valid legal agreement between the insurer and insured where the insurer agrees to pay claims on the happening of an insured event in exchange for premiums paid by the insured.
The document provides an introduction to key concepts and terminology in insurance law, including the definition of risk, risk management, insurance terminology such as policies and premiums, the concept of risk pooling, classifications of insurance, and the requirement of insurable interest. It also summarizes the nature of insurance contracts as governed by contract law and regulated by states, how applications and provisions work, and types of defenses insurers can raise.
The document discusses long-term care costs and options for covering them. It describes MoneyGuard Reserve, a universal life insurance product that allows policyholders to access the death benefit for long-term care costs while providing a money-back guarantee or death benefit. The product helps protect retirement assets from long-term care costs and allows assets to be passed to heirs if care is not needed.
The document discusses marital deduction and bypass trusts, also known as A-B trusts. These trusts give the surviving spouse access to assets but minimize estate taxes, often eliminating them entirely at the first spouse's death. Assets are placed in a marital trust and bypass trust, with the marital trust receiving the marital deduction and bypass trust assets avoiding tax at the second death. The document provides details on unified credit amounts, qualifying requirements for different types of trusts, and considerations for using marital deduction trusts.
This document provides an overview of title insurance. It discusses what title and title insurance are, when title insurance may be needed, what types of losses it covers and does not cover, how to purchase it, and what to do if you need to make a claim. Specifically, it notes that title insurance protects against unknown title defects, liens, and other issues affecting ownership. It also outlines that residential policies cover homes and condos, while commercial policies cover other property types like offices and stores. The document advises reading policies carefully to understand coverage and exclusions.
This document discusses the key concepts of insurance. It defines insurance as a legal contract between two parties where one party agrees to pay a fixed amount of money if a particular event occurs, in exchange for regular payments from the other party. The document outlines several principles of insurance, including insurable interest, utmost good faith, indemnity, and subrogation. It also explains the benefits of insurance for both individuals and businesses. Laws governing the insurance industry in India are discussed, along with some major players in the life and general insurance sectors.
The document discusses homeowner insurance policies. It defines homeowner insurance and explains that policies provide property coverage, liability coverage, and other coverages. It outlines the main types of home insurance policies including basic, broad, special, renter's, and premier forms. It details the typical coverage areas in home policies and underwriting guidelines insurance companies use.
Insurance is a risk management relationship where the insurer agrees to bear the burden of potential losses for the insured in exchange for premium payments. Key aspects include the insured party, insurer, insurance policy contract outlining coverage and limits, and insurable interest requirement. There are various categories of insurance such as individual vs group, personal vs commercial, and liability vs property/casualty. Common types of insurance include auto, health, disability, life, homeowner's/renter's, fire, business liability, and professional liability.
The document discusses proper claims handling to avoid bad faith claims. It provides an overview of Ohio's bad faith standards, the framework for proper claims handling including policyholder duties of notice and cooperation and insurer duties to defend and provide reservation of rights letters. It also discusses key elements of claims investigations and examples of bad faith results from claims handling contexts.
This document outlines learning objectives for a lecture on separation agreements. The objectives cover the nature and purpose of separation agreements, how they are developed, their key components, the differences between merged and surviving agreements, and the role of courts in approving, modifying, and enforcing separation agreements. The paralegal's role in preparing separation agreements is also addressed.
1) The proposal form contains questions for the proposed insured to answer regarding their personal details, risk details, medical history, and previous insurance experience.
2) By signing the proposal form, the proposed insured represents that their answers are true and will form the basis of the insurance contract.
3) If it is later found that the proposed insured provided false or fraudulent statements, it would constitute a breach of contract on their part.
The document discusses various asset protection strategies that can be incorporated into estate planning. It outlines 6 key strategies: 1) insurance, 2) asset protection trusts, 3) limited liability companies, 4) retirement accounts, 5) marital and credit shelter trusts, and 6) gifts to irrevocable trusts. It provides details on how each strategy works and its benefits. It emphasizes that asset protection planning should be woven into estate planning to better protect clients' assets from creditors.
This document summarizes asset protection strategies for physicians. It discusses how physicians are at high risk of creditors and lawsuits due to their occupation. It then outlines various solutions to manage this risk, including proper titling of assets, exemption planning, use of trusts, LLCs and partnerships to protect assets. It cautions that offshore trusts should not be used solely to avoid taxes or hide assets, as that may constitute fraud. Finally, it stresses that developing a comprehensive asset protection plan before creditors arise can help manage risks.
Sentinel Solutions provides asset protection services. The document summarizes key asset protection techniques including insurance, statutory protections like homestead exemptions, and asset placement through entities like trusts. It notes that while asset protection plans can make assets harder for creditors to access, plans cannot be intended to defraud creditors. The summary highlights the main risks that asset protection seeks to mitigate and outlines some basic strategies without endorsing any particular approach.
This document provides an overview of living trusts, including:
- Living trusts allow beneficiaries and trustees to avoid probate and distribute assets privately after death. They define heirs, trustees, and terms of distribution.
- Revocable living trusts can be changed during the settlor's lifetime, while irrevocable trusts cannot. There are also several sub-types of living trusts.
- Creating a living trust requires defining distribution of assets after death. They provide legal protection for passing ownership of assets.
- Taxation of living trusts depends on whether assets are held or distributed before or after the primary trustee's death. Proper planning is required to minimize taxes.
The document summarizes key provisions and implications of Georgia's new Trust Code, which took effect on July 1, 2010. It applies to all trusts, including those created before or after the effective date. The new Code automatically grants broad powers to trustees but more limited powers to personal representatives. It also establishes new requirements for notifying qualified beneficiaries of a trust's existence and providing reports in the absence of language stating otherwise. The implications for a client's existing estate plan are that testamentary provisions may need to be reviewed and clarified to ensure they are interpreted consistently under the new Code. Oral trusts are no longer recognized, so the client's oral irrevocable life insurance trust would need to be committed to writing.
In the event of a bankruptcy, the debtor or trustee may opt to take legal action in order to recover money or property that was transferred by the debtor prior to going bankrupt. These actions, whereby such transfers are effectively reversed, are referred to as “avoidance actions.” In this webinar, the expert panel discusses the applicable provisions of the Bankruptcy Code, common avoidance actions, and key considerations when planning for and defending against these actions.
Part of the webinar series: COMPLEX FINANCIAL LITIGATION 2022
See more at https://www.financialpoise.com/webinars/
The document provides an overview of trusts, including:
1) A trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries according to the trust terms. It involves a settlor, trustee, beneficiary, and sometimes protector.
2) Trusts are created by transferring assets to a trustee during life or at death. They must have a definite beneficiary, trustee duties, and the trustee and sole beneficiary cannot be the same person.
3) Trustees must administer trusts prudently, solely in the beneficiaries' interests, and avoid conflicts of interest. Common trust types include spendthrift, QTIP, bypass, and crummy trusts used for gifting.
Estate planning is designed so that your hard won assets are controlled in a way that you choose in case of incapacity and death and to protect against claims either from family members or creditors.
LifeHealthPro - Heres why cash value life insurance is a superior productJose Ariel Taveras
The document discusses the advantages of cash value life insurance over term life insurance and other financial assets. It outlines three main categories of advantages for cash value life insurance: 1) Tax advantages, such as tax-free growth of cash value and tax-free death benefits; 2) Financial advantages, as life insurance is designed using actuarial models to provide guarantees and potential increases in death benefits; and 3) Legal advantages, like state legal protections and guarantees of insurers. The document promotes cash value life insurance as a superior financial product compared to alternatives due to these inherent advantages.
Bankruptcy basics: What every lawyer should knowMichael Sheridan
Michael Sheridan is a chapter 7 and chapter 13 Minnesota Bankruptcy Attorney. Michael outlines the basics of bankruptcy at a Continuing Legal Education seminar.
Embedded video of the presentation can be found at: https://wmitchell.adobeconnect.com/_a1011281558/p4rm0zjl0uw/?launcher=false&fcsContent=true&pbMode=normal
Bankruptcy basics: What every lawyer should knowMichael Sheridan
Bankruptcy Basics provides an overview of different types of bankruptcy proceedings including Chapters 7, 9, 11, 12, 13, and 15. It summarizes key aspects of each type of proceeding such as the creation of a bankruptcy estate, the roles of trustees and judges, eligibility requirements for debtors, the automatic stay and discharge process, and factors involved in Chapter 7 and Chapter 13 filings. The document also outlines issues related to assets, debts, exemptions, preferences, objections, and additional resources for bankruptcy information.
This document provides an overview of title insurance. It discusses what title and title insurance are, when title insurance may be needed, what types of losses it covers and does not cover, how to purchase it, and what to do if you need to make a claim. Specifically, it notes that title insurance protects against unknown title defects, liens, and other issues affecting ownership. It also outlines that residential policies cover homes and condos, while commercial policies cover other property types like offices and stores. The document advises reading policies carefully to understand coverage and exclusions.
This document discusses the key concepts of insurance. It defines insurance as a legal contract between two parties where one party agrees to pay a fixed amount of money if a particular event occurs, in exchange for regular payments from the other party. The document outlines several principles of insurance, including insurable interest, utmost good faith, indemnity, and subrogation. It also explains the benefits of insurance for both individuals and businesses. Laws governing the insurance industry in India are discussed, along with some major players in the life and general insurance sectors.
The document discusses homeowner insurance policies. It defines homeowner insurance and explains that policies provide property coverage, liability coverage, and other coverages. It outlines the main types of home insurance policies including basic, broad, special, renter's, and premier forms. It details the typical coverage areas in home policies and underwriting guidelines insurance companies use.
Insurance is a risk management relationship where the insurer agrees to bear the burden of potential losses for the insured in exchange for premium payments. Key aspects include the insured party, insurer, insurance policy contract outlining coverage and limits, and insurable interest requirement. There are various categories of insurance such as individual vs group, personal vs commercial, and liability vs property/casualty. Common types of insurance include auto, health, disability, life, homeowner's/renter's, fire, business liability, and professional liability.
The document discusses proper claims handling to avoid bad faith claims. It provides an overview of Ohio's bad faith standards, the framework for proper claims handling including policyholder duties of notice and cooperation and insurer duties to defend and provide reservation of rights letters. It also discusses key elements of claims investigations and examples of bad faith results from claims handling contexts.
This document outlines learning objectives for a lecture on separation agreements. The objectives cover the nature and purpose of separation agreements, how they are developed, their key components, the differences between merged and surviving agreements, and the role of courts in approving, modifying, and enforcing separation agreements. The paralegal's role in preparing separation agreements is also addressed.
1) The proposal form contains questions for the proposed insured to answer regarding their personal details, risk details, medical history, and previous insurance experience.
2) By signing the proposal form, the proposed insured represents that their answers are true and will form the basis of the insurance contract.
3) If it is later found that the proposed insured provided false or fraudulent statements, it would constitute a breach of contract on their part.
The document discusses various asset protection strategies that can be incorporated into estate planning. It outlines 6 key strategies: 1) insurance, 2) asset protection trusts, 3) limited liability companies, 4) retirement accounts, 5) marital and credit shelter trusts, and 6) gifts to irrevocable trusts. It provides details on how each strategy works and its benefits. It emphasizes that asset protection planning should be woven into estate planning to better protect clients' assets from creditors.
This document summarizes asset protection strategies for physicians. It discusses how physicians are at high risk of creditors and lawsuits due to their occupation. It then outlines various solutions to manage this risk, including proper titling of assets, exemption planning, use of trusts, LLCs and partnerships to protect assets. It cautions that offshore trusts should not be used solely to avoid taxes or hide assets, as that may constitute fraud. Finally, it stresses that developing a comprehensive asset protection plan before creditors arise can help manage risks.
Sentinel Solutions provides asset protection services. The document summarizes key asset protection techniques including insurance, statutory protections like homestead exemptions, and asset placement through entities like trusts. It notes that while asset protection plans can make assets harder for creditors to access, plans cannot be intended to defraud creditors. The summary highlights the main risks that asset protection seeks to mitigate and outlines some basic strategies without endorsing any particular approach.
This document provides an overview of living trusts, including:
- Living trusts allow beneficiaries and trustees to avoid probate and distribute assets privately after death. They define heirs, trustees, and terms of distribution.
- Revocable living trusts can be changed during the settlor's lifetime, while irrevocable trusts cannot. There are also several sub-types of living trusts.
- Creating a living trust requires defining distribution of assets after death. They provide legal protection for passing ownership of assets.
- Taxation of living trusts depends on whether assets are held or distributed before or after the primary trustee's death. Proper planning is required to minimize taxes.
The document summarizes key provisions and implications of Georgia's new Trust Code, which took effect on July 1, 2010. It applies to all trusts, including those created before or after the effective date. The new Code automatically grants broad powers to trustees but more limited powers to personal representatives. It also establishes new requirements for notifying qualified beneficiaries of a trust's existence and providing reports in the absence of language stating otherwise. The implications for a client's existing estate plan are that testamentary provisions may need to be reviewed and clarified to ensure they are interpreted consistently under the new Code. Oral trusts are no longer recognized, so the client's oral irrevocable life insurance trust would need to be committed to writing.
In the event of a bankruptcy, the debtor or trustee may opt to take legal action in order to recover money or property that was transferred by the debtor prior to going bankrupt. These actions, whereby such transfers are effectively reversed, are referred to as “avoidance actions.” In this webinar, the expert panel discusses the applicable provisions of the Bankruptcy Code, common avoidance actions, and key considerations when planning for and defending against these actions.
Part of the webinar series: COMPLEX FINANCIAL LITIGATION 2022
See more at https://www.financialpoise.com/webinars/
The document provides an overview of trusts, including:
1) A trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries according to the trust terms. It involves a settlor, trustee, beneficiary, and sometimes protector.
2) Trusts are created by transferring assets to a trustee during life or at death. They must have a definite beneficiary, trustee duties, and the trustee and sole beneficiary cannot be the same person.
3) Trustees must administer trusts prudently, solely in the beneficiaries' interests, and avoid conflicts of interest. Common trust types include spendthrift, QTIP, bypass, and crummy trusts used for gifting.
Estate planning is designed so that your hard won assets are controlled in a way that you choose in case of incapacity and death and to protect against claims either from family members or creditors.
LifeHealthPro - Heres why cash value life insurance is a superior productJose Ariel Taveras
The document discusses the advantages of cash value life insurance over term life insurance and other financial assets. It outlines three main categories of advantages for cash value life insurance: 1) Tax advantages, such as tax-free growth of cash value and tax-free death benefits; 2) Financial advantages, as life insurance is designed using actuarial models to provide guarantees and potential increases in death benefits; and 3) Legal advantages, like state legal protections and guarantees of insurers. The document promotes cash value life insurance as a superior financial product compared to alternatives due to these inherent advantages.
Bankruptcy basics: What every lawyer should knowMichael Sheridan
Michael Sheridan is a chapter 7 and chapter 13 Minnesota Bankruptcy Attorney. Michael outlines the basics of bankruptcy at a Continuing Legal Education seminar.
Embedded video of the presentation can be found at: https://wmitchell.adobeconnect.com/_a1011281558/p4rm0zjl0uw/?launcher=false&fcsContent=true&pbMode=normal
Bankruptcy basics: What every lawyer should knowMichael Sheridan
Bankruptcy Basics provides an overview of different types of bankruptcy proceedings including Chapters 7, 9, 11, 12, 13, and 15. It summarizes key aspects of each type of proceeding such as the creation of a bankruptcy estate, the roles of trustees and judges, eligibility requirements for debtors, the automatic stay and discharge process, and factors involved in Chapter 7 and Chapter 13 filings. The document also outlines issues related to assets, debts, exemptions, preferences, objections, and additional resources for bankruptcy information.
This document defines and explains common real estate investment terms in plain language to help readers better understand real estate investing. It defines terms like mortgage, closing costs, equity, adjustable-rate mortgage, and others. The definitions are concise but thorough, explaining each term and providing examples. The overall document aims to demystify real estate investing terminology.
Linkedin web ny inherited retirement assetsCarol Buckmann
The document discusses creditor protection of inherited retirement accounts after the Supreme Court's ruling in Clark v. Rameker. It summarizes that the Court determined inherited retirement accounts are not protected from creditors of beneficiaries. To protect inherited accounts, beneficiaries should be trusts rather than individuals. The document provides details on properly structuring an accumulation trust to qualify it as an account beneficiary and maximize tax benefits while providing creditor protection.
Defending Against Bankruptcy Avoidance Actions (Series: Complex Financial Lit...Financial Poise
In the event of a bankruptcy, the debtor or trustee may opt to take legal action in order to recover money or property that was transferred by the debtor prior to going bankrupt. These actions, whereby such transfers are effectively reversed, are referred to as “avoidance actions.” In this webinar, the expert panel discusses the applicable provisions of the Bankruptcy Code, common avoidance actions, and key considerations when planning for and defending against these actions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/defending-against-bankruptcy-avoidance-actions-2021/
This document discusses frequently asked questions about asset protection. It explains that asset protection planning is necessary due to the litigation explosion and rising jury awards. Asset protection strategies aim to legally insulate assets from potential future creditors or make assets difficult for creditors to access. The document outlines various Florida exemptions that protect certain assets, such as homesteads, wages, retirement plans, and life insurance. It also discusses asset protection entities like limited partnerships and offshore asset protection trusts that can provide stronger creditor protection than exemptions alone. The document stresses that while asset protection is best done preventatively, it may still provide benefits even when creditors are already present.
This document discusses asset protection strategies and frequently asked questions about protecting assets from lawsuits. It explains that anyone can be sued so planning is important. Asset protection involves legally shielding assets using exemptions like homestead protections or entities like limited partnerships and offshore trusts. The best solution is a customized plan considering individual circumstances, developed with legal and financial advisors, as planning should occur before any lawsuits are filed.
Title insurance protects homeowners and lenders against errors in property ownership records. It insures the legal owner against losses from defects in the title that occurred prior to purchasing the property. There are two main types of title insurance - an owner's policy that protects the homeowner and a lender's policy that protects the mortgage lender. Title companies examine public records like deeds and wills to eliminate risks, but some hidden issues can still arise after purchase. Title insurance will defend against legal claims from issues like forged documents that impact the owner's title to the property.
Dr. Robert Hetsler is the Managing Director of QDRONOW, a firm specializing in dividing retirement accounts in divorce cases. As a CPA and valuation analyst, Dr. Hetsler is often retained as an expert to accurately value retirement benefits accumulated during marriages and assist in preparing qualified domestic relations orders to divide these assets between spouses. Dr. Hetsler has extensive experience testifying as an expert witness and preparing valuations and orders for the division of various retirement plans, including 401(k)s, pensions, and military retirement, in thousands of divorce cases.
Similar to Protecting A Clients Assets. A Holistic Approach (00125483 1) (20)
QDRO Mistakes class taught at Florida Coastal School of law in November 2014
Protecting A Clients Assets. A Holistic Approach (00125483 1)
1. PROTECTING A CLIENT’S ASSETS:
A HOLISTIC Here
Text APPROACH
BARRY P. SIEGAL
70 W. Madison, Suite 1500 Northbrook Office:
Chicago, IL 60603 633 Skokie Boulevard
Phone: 312-263-2300 Northbrook, IL 60062
Fax: 312-263-0939
Email: bpsiegal@golanchristie.com
2. Asset Protection Planning
Background
Text Here
A. WHO SHOULD BE CONCERNED ABOUT CREDITOR
PROTECTION?
• Physicians and other professionals
• Real estate developers and investors
• Commodity traders
• Members of corporate boards
• Any person who is exposed to liability
3. Asset Protection Planning
Background (cont.)
Text Here
Physicians and other Professionals
• Increased cost of malpractice coverage is causing
many physicians to under-insure or go “naked”.
• Judgment creditors increasingly following personal
assets of service providers.
• State laws regarding tort limits only apply to non-
monetary damages - physicians still exposed to
multi-million dollar claims.
4. Asset Protection Planning
Background (cont.)
Text Here
Real Estate Developers and Investors
• Many transactions require personal guarantees
• Real estate may have undisclosed environmental
issues
• Corporations and LLC’s don’t offer absolute
protection; i.e., piercing corporate veil.
5. Asset Protection Planning
Background (cont.)
B. Holistic Approach to Creditor Protection
Text Here
• Based on individual circumstances in each case – no
magic bullet.
• Factors include client’s risk tolerance, willingness to
relinquish control and cost.
• Use of various creditor protection techniques can
be cumulative.
• Cost of most successful asset protection programs
can be less than one year’s premium on malpractice
insurance.
6. Asset Protection Planning
Background (cont.)
C. Avoid “Fraudulent Transfer” Attack
• Any asset protection vehicle can be avoided if
Text Here
creditors can prove that transfer of assets was
“fraudulent” with regard to transferor’s creditors.
• Two tests:
• Objective Test – transfer made when transferor
is insolvent or transfer causes insolvency
• Subjective Test – transfer is made with the intent
to hinder, delay or defraud any creditor without
receiving equivalent value
7. Asset Protection Planning
Background (cont.)
How to Avoid Fraudulent Transfer Attack
Text Here
• Asset protection planning should be carried out
when no significant creditors who cannot be paid
from client’s remaining assets
• There should be valid non-creditor protection
purposes for engaging in the proposed transactions;
such as estate tax planning
• Advisor should protect herself by getting affidavit of
solvency
8. Asset Protection Planning
Techniques and Strategies
A. Transfer of Assets
Text Here
B. State and federal law exemptions
C. Family limited partnerships and limited liability
companies
D. Protecting business assets
E. Domestic asset protection trusts
F. Off shore trusts
9. Asset Protection Planning
Transfer of Assets
A. Transfers to Spouse
• Standard estate planning typically dictates that assets at least
Text Here
equal to federal estate tax exemption be owned by each
spouse.
• Spouse having greatest creditor exposure should own exempt
assets (see below) and other spouse should own non-exempt
assets
• Caution: avoid reclassifying assets as spouse’s separate
properties. (We have clients sign a letter agreeing that any asset
transfers are strictly for estate planning purposes and do not
change character of assets).
10. Asset Protection Planning
Transfer of Assets (cont.)
B. Gifts to Children
• Utilize annual gift tax exclusion
Text Here
• $5,120,000 lifetime exemption
Note: this opportunity may disappear on 1/1/13
• UTMA accounts
• 529 Plans – Illinois law recently changed to protect Section
529 Plan assets if: (a) not transferred to defraud creditors;
(b) transferred within 12 months prior to judgment, only
annual gift tax exclusion protected; (c) if transferred
between 12-24 months prior to judgment, twice annual
exclusion is protected
• Irrevocable gift trusts (2503(c) or Crummy trusts)
11. Asset Protection Planning
Transfer of Assets (cont.)
C. Other transfers
Text Here
• Grantor Retained Annuity Trusts (“GRAT”)
• Intentionally Defective Grantor Trusts (IDGT”)
• Qualified Personal Residence Trust (“QPRT”)
• Charitable Remainder Trusts (“CRT”)
Caution: since law isn’t clear, best practice is to set up
trust in debtor-friendly state, like Delaware or South
Dakota.
12. Asset Protection Planning
State and Federal Law Exemptions
A. Choice of Domicile
B. Text Here
Tenancy by the Entirety
C. Life Insurance and Annuity Policies
D. Qualified Employee Benefit Plans and IRAs
13. Asset Protection Planning
State and Federal Law Exemptions (cont.)
A. Choice of Domicile
Text Here
• Consider establishing domicile in “asset-
protection friendly state,” such as Florida, Texas
or Wyoming
• Establishing domicile requires physical presence
during majority of year plus other indicia of
residence (driver’s license, voting, statement of
intent)
14. Asset Protection Planning
State and Federal Law Exemptions (cont.)
B. Tenancy by the Entirety
• Specific form of joint tenancy ownership. In Illinois deed must
Text Here
specify “tenancy by the entirety”
• Only applies to principal residence
• Protects property against claims of creditor of either spouse, not
joint creditors
• Only applicable to married couple. Loses protection after death
of either spouse or divorce
• Illinois law now authorizes revocable living trusts of married
spouses to own property as tenants by the entirety
• U.S. Supreme court has held that even when property held in
tenancy by entirety still subject to lien for federal taxes. U.S. v.
Craft, US 274, 283 (2002)
15. Asset Protection Planning
State and Federal Law Exemptions (cont.)
C. Life Insurance and Annuity Policies
• Illinois law exempts life insurance proceeds payable by reason
Text Here
of insured’s death, as well as cash value of life insurance and
annuities, if beneficiary is spouse or child, parent or other
dependent, whether or not right to change beneficiary or
access cash value reserved by insured 735ILCS 5/12-1001
• Exemption appears to be all-inclusive, even for variable, high-
cash value and interest sensitive products
• Safest approach is to have policy owned by irrevocable life
insurance trust.
16. Asset Protection Planning
Background (cont.)
D. Qualified Employee Benefit Plans and IRAS
Text Here
• The Employment Retirement Income Security Act of 1974
(“ERISA”) provides for rules regarding certain pension,
profit-sharing and 401(k) plans for the benefit of a
company’s employees, where the plan meets certain
requirements.
• Vested amounts which are not subject to immediate
payout are not subject to creditor claims (Patterson v.
Shumate, 504 U.S. 753 (1992).
• ERISA does not give creditor protection to plans that only
cover the business owner, but no other employees.
17. Asset Protection Planning
State and Federal Law Exemptions (cont.)
4. Exceptions to general rule include:
• Qualified domestic relations orders involving
Text Here
payments in divorce proceedings
• Voluntary and non-voluntary assignments of benefit
payments
• Security for loans to participants subject to
limitations of IRC Section 9975(d)(i)
• Offsets of benefits against amounts owed to the plan
for crimes or breaches of fiduciary duty involving the
plan
• Enforcement of federal tax lien against plan benefits.
18. Asset Protection Planning
State and Federal Law Exemptions (cont.)
5. IRA’s:
Text Here
• Protection generally governed by state law
• Illinois law contains an exemption for individual IRA’s and
rollover IRA’s
• Under federal law up to $1 million in value (adjusted for
inflation) is exempted from bankruptcy estate
• Status of “inherited IRA” is somewhat unclear, although a
number of cases recently granted exemption to inherited
IRAs, both under state law and in bankruptcy, since a form
of “retirement” account. See e.g. In re Nessa, 426 BR 312.
Illinois bankruptcy case law is still that inherited IRA’s not
exempt. In re Taylor, 206 WL 1276400 (BK CD ILL)
19. Asset Protection Planning
Limited Partnerships (“LPS”) and
Limited Liability Companies (“LLCS”)
Text Here
A. Purposes: Consolidate ownership and
management of assets
• Shift income to lower bracket taxpayers
• Shift future appreciation to other family members
• Preclude double taxation incident to C corporations
• Eliminate technicalities of S corporation status
• Limit liability of business creditors to assets of the entity
20. Asset Protection Planning
LPS and LLCS (cont.)
B. Limiting Individual Creditor’s Rights Against
Assets of LP or LLC
Text Here
• Rights of a creditor of a partner or member determined by state
law of the domicile of the entity
• Judgment creditor of a partner or member typically obtains a
court order which allows creditor to obtain assets of LP or LLC
• Many states, like Delaware, provide that charging order is
“exclusive remedy” that creditor has with respect to LLC
• Creditor in “exclusive remedy” state is in the position of assignee
and can only receive distributions when made
• Judgment creditor, for income tax purposes, stands in shoes of
limited partner, and must recognize income allocated to partner
or member (Rev. RUL 77-137, 1977-1 C.B. 178).
21. Asset Protection Planning
LPS and LLCS (cont.)
C. Series LLC statues provides:
1. Text Here
Some states, like Illinois, provide for a form of LLC,
known as Series LLC – set up pursuant to Articles of
Organization
2. Articles create separate legal entities (series), for
separate assets or businesses but at a much lower cost
in filing fees, legal fees, etc.
3. Assets owned by each series are protected against
creditors of other series
22. Asset Protection Planning
LPS and LLCS (cont.)
Advantages:
Text Here
• Lower filing fees and annual fees with Secretary
of State
• Lower legal fees, since able to use single
operating agreement
• If each series is set up as a subsidiary of parent,
then considered “disregarded entities” and only
one income tax return is required
Note: Important to keep separate records and
segregate assets to avoid liability exposure
23. Asset Protection Planning
Protecting Business Assets
A. Separate different forms of assets
Text Here
• Professionals frequently maintain all assets involved in
practice within same entity. All assets subject to claims of
business creditors
• Real estate, equipment, and other fixed assets should be
owned by separate entities, then lease to professional
practice
• Ownership in other entities can be gifted to family
members
24. Asset Protection Planning
Protecting Business Assets (cont.)
B. Strip Equity from Practice Assets
• Largest asset in professional practice is typically accounts
receivable Text Here
• Value of accounts receivable can be “stripped” by
obtaining bank loan secured by interest in accounts
receivable
• Loan will normally be guaranteed by professional owner
and loan collateralized by other assets (such as
investments)
• Loan proceeds paid to business owner as loan or
compensation who then transfers funds to creditor
protected vehicle
25. Asset Protection Planning
Domestic Asset Protection Trusts
A. History
• Self-settled trusts historically cannot be sheltered from
creditors Text Here
• Applicable law based upon language in trust, and
connection with state in question (for example, situs of
trustee, administration of trust)
• Thirteen states have adopted statutes that offer creditor
protection for assets transferred to a trust established
under the law
26. Asset Protection Planning
Domestic Asset Protection Trusts (cont.)
B. General Requirements
• Trust must be irrevocable and unamendable by Grantor
Text Here
• All or a portion of property must be located in the
jurisdiction where trust located. Typically, this is member
interest in investment LLC
• One of the trustees must reside in state where trust
located. Some states require bank or trust company
• Some of trust administration including maintaining trust
records, must occur in state where trust is located
• Most states prohibit requirement that all income be
distributed to grantor or that grantor can direct
distribution of trust
27. Asset Protection Planning
Domestic Asset Protection Trusts (cont.)
C. Flexibility
• Trust can name third party as trust protector with ability
Text Here
to change trust, in fiduciary capacity, remove trustee or
move to another jurisdiction
• Grantor can typically have investment authority
• Grantor can retain power to change trustee to someone
other than himself or “subordinate person.”
• Some states allow Grantor to veto distributions
• Income sprayed among grantor, spouse and children
28. Asset Protection Planning
Domestic Asset Protection Trusts (cont.)
D. Concerns
• Grantor must give up control over distributions
•
Text Here
Bank will usually make requested distribution, but implied
agreement will negate creditor protection
• Distributions should be based on documented need
• Grantor should have other sources of income
• Currently no cases supporting validity of trust established in a state other
than state of residency
• Some people argue that full-faith and credit clause of the U.S.
Constitution will enable court in one state to obtain trust funds in
another state
• Battley v. Mortenson, Adv. D. Alaska, No. A09-90036-DMD, May 25, 2011.
Court held that new bankruptcy act was meant to restrict state law and
establishment of self-settled trust could be deemed evidence of intent to
defraud, even though grantor was solvent.
29. Asset Protection Planning
Foreign Asset Protection Trusts (“FAPT”)
A. Structure
• Similar to DAPTS
• Text Here
Foreign trustee/trust protector
• Right to move trust to different jurisdiction
30. Asset Protection Planning
FAPT (cont.)
B. Advantages
• Lack of jurisdiction by U.S. Courts
• Lack of comityText Here
• Litigation commences de novo
• Need to retain local attorney
• No contingent fees
• Loser pays winners legal fees
• Fraudulent transfer rules
• Level of proof – beyond a reasonable doubt
• Creditor must prove transfer was fraudulent as to him
• No full faith and credit
31. Asset Protection Planning
FAPT (cont.)
C. Disadvantages
• Cost usually significantly higher
• Text Here
Distrust of U.S. courts
• Use of contempt power
• Concerns over political and economic stability of
country and/or banks