PROTECTING YOUR ASSETS Release No. 7

Transcription

1 PROTECTING YOUR ASSETS Release No. 7 Everything you need... New Section on Property Agreements Includes Prenuptial and Post-Marital Property Agreements for Community Property & Separate Property States New Section on Maryland s New Spendthrift Trust Statute Up-to-Date Informaton: State-by-State Homestead Statutes Comprehensive List of Best-to-Worst States for Homestead Exemption State Asset Protection Statutes Asset-by-Asset Guide to Protection Business Entities: Structure, Liability & Asset Protection Properties Nongrantor Asset Protection Trusts Insurance Trusts Sample Assignments Taxation of Trusts Invaluable Information: Gifts In Trust Types of Asset Protection Trusts Outright Gifts Statutory Exemptions Fraudulent Conveyances Transfer of Assets Ineffective Asset Protection Methods Bankruptcy Research Taking Too Long? Take advantage of our free software. Fillable, interactive forms Access full text of cases and statutes in seconds Direct links to helpful websites Powerful search features View entire contents of the book Knowles Publishing, Inc. Fort Worth, TX

2 PROTECTING YOUR ASSETS: A PRACTICAL GUIDE FOR ASSET PROTECTION IN THE UNITED STATES A. PURPOSE OF ASSET PROTECTION B. THE ASSET PROTECTION PLAN 1. The Comprehensive Plan 2. Goals and Objectives 3. The Uncollectible Individual C. TYPES OF CREDITORS 1. Business Creditors 2. Personal Creditors 3. Family Creditors by WAYNE HAGENDORF CHAPTER I INTRODUCTION TO ASSET PROTECTION D. TYPES OF ASSETS 1. Business Assets 2. Personal Assets 3. Liability versus Nonliability Generating Assets E. TRANSFER OF ASSETS 1. Proper Documentation 2. Community Property versus Separate Property 3. Fraudulent Conveyances F. DOMESTIC VERSUS OFFSHORE ASSET PROTECTION G. PRACTICAL APPROACH A. OUTRIGHT GIFTS CHAPTER II TRADITIONAL ASSET PROTECTION METHODS B. CHANGE IN OWNERSHIP TITLE 1. Individually 2. Tenancy by the Entirety 3. Community/Separate Property 4. Joint Tenancy With Rights of Survivorship 5. Tenancy in Common C. GIFTS IN TRUST D. BUSINESS ENTITIES KNOWLES PUBLISHING PAGE 1

3 E. PROPERTY AGREEMENTS 1. Prenuptial Property Agreement 2. Post-Marital Property Agreement F. INEFFECTIVE ASSET PROTECTION METHODS 1. Concealing Assets 2. Secret Arrangements 3. Sucking Out the Equity G. PRACTICAL APPROACH Appendix A-1 Appendix A-2 Appendix B-1 Appendix B-2 Prenuptial Property Agreement Community Property State Prenuptial Property Agreement Separate Property State Post-Marital Property Agreement Community Property State Post-Marital Property Agreement Separate Property State A. SOLE PROPRIETORSHIPS AND PARTNERSHIPS 1. Sole Proprietorships 2. Partnerships B. LIMITED LIABILITY PARTNERSHIPS 1. Structure a. Formation/Duration/Purpose b. Governing Law c. Operation/Management d. Taxation e. Termination 2. Liability a. Liabilities of the Company b. Liabilities of Partners (i) To Creditors of the LLP (ii) To the LLP or Other Partners 3. Asset Protection CHAPTER III BUSINESS ENTITIES C. LIMITED PARTNERSHIPS AND FAMILY LIMITED PARTNERSHIPS 1. Structure a. Formation/Duration/Purpose b. Governing Law c. Operation/Management d. Taxation (i) Passive Activity Losses (Federal) (ii) Self-Employment Income (Federal) (iii) State Taxation e. Termination 2. Liability a. General Partners b. Limited Partners KNOWLES PUBLISHING PAGE 2

4 c. Corporate General Partner d. Limited Liability Limited Partnership 3. Asset Protection 4. Family Limited Partnerships D. CORPORATIONS ( C and S ) 1. Structure a. Formation/Duration/Purpose b. Governing Law c. Operation/Management d. Taxation e. Termination f. Differences Between a C Corporation and an S Corporation (i) Formation (ii) Terminating Tax Status 2. Liability a. Liability to Third Parties (i) Veil-Piercing Theories b. Erroneous Distributions c. Fiduciary Duties 3. Asset Protection a. The Protection b. The S Corporation Solution c. The Limitations E. LIMITED LIABILITY COMPANIES 1. Structure a. Formation/Duration/Purpose b. Governing Law c. Operation/Management d. Taxation e. Termination 2. Liability a. Liabilities of the Company (i) Liabilities to Third Parties (ii) Liabilities to Members and Managers b. Liabilities of Members (i) To Creditors of the LLC (a) General Rule (b) Piercing the LLC Veil (c) Agency Theory (ii) To the LLC and Other Members (a) Liability for Contributions (b) Liability for Distributions (c) Liability for Return of Capital Contributions (d) Suits Among Members (e) Fiduciary Duties (iii) To Judgment Creditors (Charging Orders) KNOWLES PUBLISHING PAGE 3

5 c. Liabilities of Managers (i) To Creditors of the LLC (a) General Rule (b) Exceptions (ii) To the LLC and Members (a) Duties and Standard of Care (b) Breach of Duties 3. Asset Protection a. Inside Out Protection b. Outside In Protection c. Single Member LLCs F. PRACTICAL APPROACH 1. Summary of Entities and Level of Protection a. Entities With No Asset Protection Attributes (i) Sole Proprietorship (ii) Partnership b. Entities With Moderate Asset Protection Attributes (i) Limited Liability Partnership (ii) Limited Partnership c. Entities With Greater Asset Protection Attributes (i) Corporations (ii) Limited Liability Companies 2. Utilizing Business Entities A. INTRODUCTION B. HOMESTEAD EXEMPTIONS C. WAGE EXEMPTIONS D. RETIREMENT PLAN EXEMPTIONS E. OTHER STATUTORY EXEMPTIONS CHAPTER IV STATUTORY EXEMPTIONS Appendix A-1 Appendix A-2 Appendix A-3 Appendix B List of Homestead Exemptions (From First to Worst) List of Homestead Exemptions (Alphabetical) Homestead Exemptions Wage Garnishment Exemptions KNOWLES PUBLISHING PAGE 4

6 CHAPTER V ASSET PROTECTION TRUSTS A. INTRODUCTION B. TYPES OF ASSET PROTECTION TRUSTS 1. In General 2. Nongrantor Asset Protection Trusts a. Irrevocable Trusts (Children s Trusts) b. Irrevocable Life Insurance Trusts c. Irrevocable Tax Planning Trusts (Retained Interest Trusts) 3. Grantor Asset Protection Trusts 4. Living Trusts versus Asset Protection Trusts C. TOOLS OF ASSET PROTECTION TRUSTS 1. Irrevocable Provision a. Definition b. How It Works c. Sample Provision 2. Discretionary Distribution Provision a. Definition b. How It Works c. Sample Provision 3. Spendthrift Provision a. Definition b. How It Works c. Sample Provision 4. Other Provisions a. Trust Protection Provision b. Fleeing Cause c. Extension Provision D. SITUS/CHOICE OF LAW OF TRUSTS E. OFFSHORE VERSUS ONSHORE (DOMESTIC) TRUSTS 1. Introduction 2. Definitions 3. Factors to Be Considered a. Safety b. Comfort c. Confidentiality d. Costs e. Control 4. Taxes (Reporting Requirements) a. Onshore Trusts b. Offshore Trusts c. Criminal Penalties d. The Foreign Account Tax Compliance Act (FATCA) F. DOMESTIC SELF-SETTLED SPENDTHRIFT TRUSTS 1. Introduction 2. Nevada Spendthrift Trusts KNOWLES PUBLISHING PAGE 5

7 3. Alaska Spendthrift Trusts 4. Virginia Spendthrift Trusts 5. Missouri Spendthrift Trusts 6. South Dakota Spendthrift Trusts 7. Hawaii Spendthrift Trusts 8. Delaware Spendthrift Trusts 9. Rhode Island Spendthrift Trusts 10. Ohio Spendthrift Trusts 11. Tennessee Spendthrift Trusts 12. Wyoming Spendthrift Trusts 13. Utah Spendthrift Trusts 14. Maryland Spendthrift Trusts 15. United States Constitutional Issues a. Full Faith and Credit Clause b. Supremacy Clause 16. Application of Domestic Self-Settled Spendthrift Trusts in Other States a. Trust Validity b. Applicable State Law c. Conflict of Law versus Difference in Law d. Court Overruling a Trustee s Discretionary Authority e. Settlor s Indirect Control of Trust by Directly Controlling Trustee f. Trustee Removal By Courts KNOWLES PUBLISHING PAGE 6

8 G. TAXATION OF ONSHORE (DOMESTIC) TRUSTS 1. Introduction 2. Grantor Trusts 3. Tax Treatment of Grantor Trust a. Income Payable for Grantor s Benefit b. Definitions c. Grantor s Control Over Beneficial Enjoyment d. Administrative Powers Retained by Grantor e. Power to Revoke f. Reversionary Interests 4. Tax Treatment of Nongrantor Trusts a. Filing Requirements Form 1041 b. Computation of Income and Deductions for Trusts c. Taxation of Beneficiaries 5. Nevada/Alaska Spendthrift Trust: State Income Tax Avoidance H. PRACTICAL APPROACH Appendix A Appendix B Appendix C Nongrantor Asset Protection Trust Insurance Trust Spendthrift Trust Acts CHAPTER VI FRAUDULENT CONVEYANCES A. INTRODUCTION B. UNIFORM FRAUDULENT TRANSFER ACT 1. Definition 2. Transfer 3. Future Creditors 4. Intent to Defraud (Badges of Fraud) 5. Consequences of a Fraudulent Transfer C. BANKRUPTCY 1. Introduction 2. The Bankruptcy Act a. In General b. The Bankruptcy Estate c. Insolvency d. Fraudulent Conveyance Rules e. Discharge D. PRACTICAL APPROACH KNOWLES PUBLISHING PAGE 7

9 A. INTRODUCTION CHAPTER VII ASSET-BY-ASSET GUIDE TO PROTECTION B. TANGIBLE PERSONAL PROPERTY C. COLLECTIBLES: ART, COINS, JEWELRY, ETC. D. RETIREMENT ACCOUNTS E. WAGES F. BANK/BROKERAGE ACCOUNTS G. RESIDENCE H. OTHER REAL ESTATE: NONRENTAL I. RENTAL REAL ESTATE: COMMERCIAL OR RESIDENTIAL J. BUSINESS K. LIFE INSURANCE L. TOYS: CARS, BOATS, PLANES, ETC. M. INTANGIBLE PERSONAL PROPERTY: ROYALTIES, COPYRIGHTS, TRADEMARKS, DOMAIN NAMES, ETC. N. INHERITED ASSETS Appendix A Sample Assignments KNOWLES PUBLISHING PAGE 8