Asset Protection

November 12, 2014

What is the iPug™ Trust Your Family’s New Best Friend

We often get asked about the iPug™ Trust and how it can be so different than a traditional revocable trust or a standard irrevocable trust. The iPug™ takes the best parts of an irrevocable trust and mixes them with the best parts of a revocable trust to create a new type of irrevocable trust where you are in control and can make changes to the beneficiaries and management of the trust just like you can with a revocable trust.

Why Do People Love iPug™?

Because iPug™ Protects You and Your Family From:

Lawsuits
Nursing Homes
Those that want to take away what you worked hard for.
Children’s indiscretions, their spouses and divorce.

October 29, 2014

Revocable Trusts and Asset Protection

by David M. Goldman

Many times we get questions from clients asking if their revocable trust provides asset protection from creditors. The answer to this is the typical legal answer “It Depends”. That is it depends on who owes the money. In Florida a revocable trust can provide some limited protection against the creditors of your beneficiaries through a spendthrift clause, but it will not provide protection from the creditors of the person who creates the trust. Upon your death, the assets in your revocable trust are available to your creditors.

There is a new type of irrevocable trust that is similar to a revocable trust in terms of management, control, and no negative tax effects. This special irrevocable trust is called an IPUG and can be structured to provide asset protection for the items placed in the trust.

An IPUG can be designed to protect an entire asset, the principal, or the income from the asset. The most common design is to protect the entire assets. If you are concerned about protecting your assets from future creditors and the creditors of your children, an IPUG may be the right choice for you.

September 30, 2014

4th DCA and Charging Order Protection for Florida LLC

by David M. Goldman

In Florida, a multi member LLC, has asset protection characteristics. Prior to 2011, Florida law was not clear on whether a charging order was the exclusive remedy for a creditor of a member of a multi member LLC. Assets in a Florida multi member LLC are protected from the reach of the member’s creditors so that the debts of one member do not cause harm to the other members. Once a creditor receives a judgement, they can apply for a charging order and stand in line to receive distributions that are made to that member. Sometimes, it is difficult to find a lawyer who will take a case on a contingency basis against a multi member LLC. Even if a creditor is successful, the potential downside of not being able to collect on the judgement can be painful.

In Young v. Levy, the 4th DCA ruled that the trial court erred in entering a writ of garnishment upon the member’s interest in a multi member limited liability company because as of 2011 the charging order is the exclusive remedy that a creditor of a member of a Florida multi member LLC can obtain as per Florida Statute 605.433(5).

A Florida multi member LLC is not real asset protection like is available with some of our Florida Asset Protection Trusts, but the LLC can, in the right circumstances, give you the ability to wait out your creditors and make it expensive for them to try. This, in turn, can give you a great ability to negotiate a favorable settlement.

July 16, 2014

The Benefits of Creating a TAP Trust for Protecting Retirement Assets

by David M. Goldman

A TAP trust is an extremely versatile trust designed to hold a variety of assets. This type of trust helps the grantor avoid needless estate taxes without the restrictions of other trusts.

The TAP trust can hold a variety of assets that include: real estate, stocks, insurance policies, bonds, and a few other business interests. A TAP trust can even own an IRA after the grantors death.

A TAP trust can set up as a grantor, or non-grantor trust. This distinction will decide h A non-grantor trust is taxed like a separate taxpayer with all income directly taxed to the trust at a trust income tax rate. However as a grantor trust, all income is taxed on the personal income tax of the grantor at an individual’s tax rate.

June 23, 2014

You Thought the IRA was Protected From Your Kid’s Creditors!

by David M. Goldman

Last week, The Supreme Court unanimously ruled that the funds contained in an IRA are not protected from creditors after bankruptcy.

You may need to reevaluate how your estate plan deals with your IRA. If your beneficiaries live in Florida, this may not be a concern because the Florida Legislature has an IRA exemption statute which includes inherited IRAs. As it is difficult to predict where your beneficiaries will live at the time of your death, you may not be able to count on the Florida statutes to protect your beneficiaries.

We have recommended to make an asset protection trust the beneficiary of your trust to protect from the retirement funds from the loss that could be associated with creditors of our client’s beneficiaries (typically their spouse or children). Many have not seen the need for this and as a result, there may be many families using traditional beneficiary designations which place their retirement funds at risk.

August 31, 2013

Florida Asset Protection

by David M. Goldman

One of most common topics we discuss with our business and estate planning clients is asset protection. The best time to do asset protection is when you do not have any known or potential creditors. Unfortunately, this is often the least likely time to consider protecting your assets.

Today we have some innovative trusts that provide asset protection without the risks, expenses, and IRS compliance associated with Foreign ssset protection trusts or Domestic asset protection trusts (DAPT). A domestic asset protection trust is a trust created under state statute (not in Florida) which purports to protect the assets while still giving you access to the assets when there are no creditors. Unfortunately many states will not recognize the protections when there are assets which are located in another state. For example if you have your Florida property or bank account in a Nevada or other state’s DAPT, it is likely that a court in Florida may not offer you the protections you have expected.

Unlike a DAPT which relies on another state’s laws, our Florida Asset Protection Trust is an IGAP Trust which is based on statutory and common law principles regarding Trusts and Property and can be structured to protect the principal or principle and income of the property being held by the trust. The IGAP trust has no adverse tax consequences like some trusts do because it is taxed just as if you owned the property yourself. In addition some asset protection trusts lose the ability to increase the basis in the assets to the value at your death, but the IGAP Florida asset protection trust does not have this problem and receives the same tax treatment as if you owned the property yourself.

May 9, 2013

The Future of Estate Planning: The Multigenerational Life Plan

by David M. Goldman

Over the last year I worked with an intern in our office of a Law Review article for Texas Tech University. This article describes problems with current estate planning and takes the premise that most estate planners have become lazy because of advancements in technology. That is, most only ask their clients about issues that their software is capable of addressing. We identify 6 primary areas that are not addressed in most estate plans:

Firearms;
Digital Assets;
Asset Protection;
Life Planning;
Controlling from the Grave; and
Pets

The citation for the article is
David Goldman & Charles Jamison, The Future of Estate Planning: The Multigenerational Life Plan, 5 Est. Plan. & Community Prop. L. J. 1 (2012).
Continue reading

May 4, 2013

Taking Advantage of the Liberal Asset Protection Laws in Florida

by David M. Goldman

Each state has different asset protection laws. Florida’s asset protection laws are considered one of the most liberal ones. Therefore, it is a good idea to discuss your case with an estate-planning attorney with expertise in asset protection to take advantage of the liberal asset protection laws of Florida. Florida’s asset protection laws apply to permanent residents and people in other states with property in Florida. Florida’s asset protection laws are based on several legal sources: the Florida Constitution, Florida Legislature, and common law. Courts also establish asset protection through their interpretation of provisions of the constitution, statutes, and common law.

Florida assets protection laws provide many options to protect your assets from creditors. People anticipating substantial civil judgments often move from other states to Florida to become a resident for asset protection purposes. For example, OJ Simpson took advantage of Florida’s asset protection by purchasing a large estate in Florida in part to avoid creditors.

4 Key Asset Protection Exemptions for Florida Residents

September 7, 2012

Last Will and Embezzlement

by David M. Goldman

New movie about financial exploitation of the elderly.

September 5, 2012

Life Estate Deeds May Put Child’s Interest In Home At Risk to Creditors

by David M. Goldman

In Florida many parents create Life Estate Deeds with their children in an attempt to avoid Probate on their homes. A Florida Life Estate Deed is a document which changes the ownership of a home or other piece of real estate. Essentially it creates a present interest and a future interest. A traditional life estate would say something like this, ” I give my self and my spouse the right to live in the home as long as either of us shall live and the remainder to my child or children.”

This example would create a future interest that vests now in the child or children and a present interest or right to use the home for the parents or grantor. While there are many potential problems like loss of tax basis, penalties and interest for failure to do gift tax returns, loss of eligibility for nursing home coverage because of the gift, the issue we are concerned about here is the risk that the home could be lost to the creditor of the child or one of the children.

Here is how it works. If the child or children do no live in the parents home, it is not their homestead, even if they do live in the home, it cannot be their homestead because they do not have a present interest in the home. Remember the child or children only have a future interest in the home. A creditor can levy against that asset just like any other. There are tables that determine the value of a future interest based on the age of the parents, their life expectancy, and the current interest rates.