2019

Prenup vs. an Irrevocable Trust to Protect Assets in a Divorce

Rocco V. Beatrice / December 7, 2019

The unfortunate truth in the United States today is that divorce is a 50% probability on average and if you or your spouse are in a stressful job such as a doctor, lawyer, or business owner, the number is more like 70%. Nobody likes to go into a marriage thinking about divorce, but with those statistics, it is difficult not to. The idea of pre-planning a divorce is typically difficult and distasteful using a prenup because of the sheer discussion. History shows that an irrevocable trust is stronger while at the same time emotionally easier to implement a protection strategy. Here are highlights followed by 25 actual cases throughout the country of divorces involving a prenup and an irrevocable trust. So let’s compare and summarize the highlights: The single most appealing advantage of an irrevocable trust over a prenup: YOUR FIANCEE DOESN’T HAVE TO KNOW AND DOESN’T HAVE TO SIGN ANYTHING! When there is an irrevocable trust involved, the court will only look to see if the assets in the trust are part of the marital assets and if not, the judge will exclude them. A prenuptial agreement can be challenged using many different strategies. A prenuptial agreement doesn’t protect against excessive child support. With an irrevocable trust, in most cases, you can pre-determine what assets go to your children, when they are given and under what circumstances. You can settle a challenge to a prenuptial agreement to avoid a long expensive divorce. With an irrevocable trust you hold the power to give whatever you want or nothing at all. Keeping the power in your hands can encourage the other spouse to settle for whatever they can get, thereby speeding up the divorce. A prenuptial agreement does not survive death. With an irrevocable trust, your assets will be used how you want them to be used with NO RESTRICTIONS. In other words, your spouse can’t acquire and spend your money on their new “friend” unless you allow it. Your children won’t be able to spend it away or lose it in a lawsuit. Your trust will continue to support whomever you want it to support and cut out those that you do not wish to support. Divorce Case Summaries – With Links to the Actual Cases Prenuptial Agreement Challenges: 1. Robbins v. Robbins, 39 Misc. 3d 1216 (Sup.Ct. New York 2013) A judge writes that “litigation over the validity and interpretation of prenuptial agreements is the bread and butter of divorce lawyers” in a case in which he refused to modify an agreement at the request of a wealthy husband. The agreement was signed two days before the wedding to protect the husband’s assets, but she successfully challenged it in the divorce as unfair. It is estimated that the wife was awarded an additional $4.2M in this case. 2. Stein v. Stein, 14 Misc. 3d 453 (Sup. Ct. Kings New York 2006) Prenuptial agreement executed 24 hours before the marriage successfully challenged by unrepresented wife. Court found that the failure of the husband’s signature to be properly acknowledged by a notary public for over seven years after he signed it was fatal to the validity of the agreement. It is estimated that the wife was awarded an additional $1.2M in this case. 3. In re Marriage of Melissa, 212 California App. 4th 598 (Ct of App. 2012) A spousal support waiver in a prenuptial agreement was invalid because state law at the time the agreement was signed did not allow such waivers. Subsequent changes in the law did not affect the waiver because prenuptial agreements are interpreted according to the law when signed instead of the law at the time of attempted enforcement. It is estimated that the wife was awarded an additional $2.35M in this case. 4. Herpich v. Estate of Herpich, 994 So. 2d 1195 (Florida. Ct. App. 2008) Couple married after their first marriage to each other ended in a divorce. Husband subsequently died. Widow tries to enforce a prenuptial agreement from their first marriage to protect husband’s children from another marriage from claiming part of his estate. Court rules that divorce judgment discharged and terminated the prenuptial agreement. 5. Iocovozzi v. Iocovozzi, 2013 New York Slip Op 4164 – NY: Appellate Div., 4th Dept. Entire prenuptial agreement declared void where spouse seeking to maintain its validity failed to perform a section directing the payment of moving expenses. 6. Rogers v. Gordon, 2012 N.J. Super. LEXIS 1385, 2012 WL 2196673 (New Jersey App. Div. 6/18/12) Although a provision in a prenuptial agreement waiving counsel fees enforceable as far as legal fees pertaining to equitable distribution, the court awarded fees to the wife’s attorney for work done on her behalf on the issue of alimony. The court ruled that the prenuptial agreement’s language was not clear enough as to waiving fees related to alimony. The wife was awarded an additional $35K to pay her divorce legal fees. 7. Thompson v. Butir (In re Parentage of Thompson), 2013 Illinois App (3d) 110905-U, 2013 Ill. App. Unpub. LEXIS 1200, 2013 WL 2488057 (Ill. App. Ct. 3d Dist. 2013) Appeals court affirmed judgment of the trial court ordering mother and father to share equally the cost of their son’s college education. Mother argued that trial court erred by taking into consideration the assets and income of her current husband because of language in their prenuptial agreement absolving the second husband from responsibility for support of the child of her first marriage. The agreement did not preclude the court from looking at assets and income available to the mother. 8. In re Marriage of Barry Bonds, 71 California. App. 4th 290, 83 Cal. Rptr. 2d 783, 1999 Cal. App. LEXIS 318, 99 Cal. Daily Op. Service 2661, 99 Daily Journal DAR 3459 (Cal. App. 1st Dist. 1999) Appeals court, in 1996, overturned the prenuptial agreement that wife signed before marrying baseball great, Barry Bonds. The appeals court ruling relied

What is Asset Protection

Rocco V. Beatrice / October 31, 2019

Keys to an Asset Protection Plan Watch the video on What is Asset Protection Like this video? Subscribe to our channel. “LATE-R” is already too “LATE.” “If you’ve taken NO steps to protect yourself, your wealth, and your family from thieves, con artists, ruthless greedy lawyers, overzealous bureaucrats; you have underestimated the abilities of these shrewd, ruthless, invasive, money-hungry, predators.” – Rocco Beatrice, CPA, MST, MBA Definition: It’s the concept of protecting and preserving one’s assets from frivolous, illogical, ill motivated, more often than not, devastating catastrophic claims against your wealth, designed to destroy your current and future lifestyle. In short, they want what you’ve got and they want to inflict maximum pain. Asset protection has two goals: To make the enforcement of judgments against your protected assets virtually impossible, and To allow the “owner” of protected assets to retain engineered “control” over his assets Learn the 3 core secrets to protecting you assets by clicking here How Good Asset Protection can Protect Your Privacy: “Identity Theft” is the fastest growing financial crime in America – source: the U.S. Secret Service There are literally hundreds of ways to protect your assets. Some are just common sense. Don’t flash your money around; don’t talk too much at parties, etc. By implementing a properly crafted asset protection plan, your creditor will have to jump through several hoops, before he even finds your money. A contingent fee predator lawyer will want an easier target. There are approximately 950,000 lawyers. Just go through your own yellow pages. Most of them live on what they can “squeeze out of you.” Don’t become a statistic. Learn from other people’s mistakes. Learn how to become every contingency-fee lawyer’s nightmare. The Internet is spyware on steroids and can be used as invisible wealth snatchers. Information collection about you, your associates, your family, your finances, has been compromised by the enhancement of data gathering technology through the internet. “Even if you’ve got nothing to hide” your very basic privacy can be had for a few bucks by thieves, con artists, ruthless greedy lawyers, and overzealous bureaucrats. How “paranoid” are you? How “paranoid” should you be? the problem is not the zillion merchants collecting data about your spending habits. The problem is who’s collecting the data without your knowledge. And, for what purpose? A Good Plan will: Protect your current and future lifestyle Discourage litigation and promote settlements, in your favor Keep the ownership of your assets confidential and hard to find Eliminate the need of prenuptial agreements Internationalize your investments as a hedge against the unexpected surprise Spread out your control over your most valuable assets Help you in getting a fresh start, if you ever became insolvent in any of your other assets Hedge against potential political, economic, and personal instability Chartered Blueprint of Wealth Preservation and Steps to Protecting Assets: What are your financial goals? Think about each of your personal/business assets that you need or wish to protect Will there be domestic and/or international platform(s)? Select the legal entities: Ultra Trust® Limited Liability Company (LLC) Foreign Limited Liability Company (FLLC) or Foreign entities such as: Foreign Bank Account, International Business Company, Foreign Trust, Foreign Security Trust Steps to Asset Protection (Expounded): Your financial goals should be: Protecting Assets / wealth preservation Defer your Capital Gains Taxes Defer, reduce, possibly eliminate your “Income Taxes.” Eliminate “Probate Jail” and Eliminate ALL your “Inheritance Taxes.” Determine your personal and/or business assets which may include: Personal residence Personal checking Certificates of deposits Investment accounts Broker stock accounts Other real Estate Life insurance policy(ies) Automobiles, boats, planes, collectibles, antiques Individual retirement account(s) Inheritance #1, Inheritance #2 Business #1 Cash, Accounts receivable, Inventory Equipment, Goodwill, Other assets Business #2 Partnership interest #1 Partnership interest #2 Note: Same planning applies for each of your business assets What are your financial goals: Domestic or Foreign/International Your financial goal(s) points: 1,2,3 & 4 OR combinations of 1+4 OR 2+4 OR 3+4, etc. Domestic Platform(s): Irrevocable Trust or Revocable Trust Grantor Trust or Non-grantor Trust Living Trust Insurance Trust Personal Residence Trust *Ultra Trust® Corporation General Partnership Limited Partnership Family Limited Partnership *Limited Liability Company (LLC) *Family Limited Liability Company (FLLC) *Customized Hybrids, i.e. LLC, Family LLC, Limited Partnership, Family Limited Partnership or General Partnership is owned by an UltraTrust® * = My preferred structures Foreign Platform(s)1 (please read note – 1) Foreign Bank Account International Business Company Foreign A/P Trust Foreign Security Trust Foreign Limited Liability Company (FAPT) Offshore Uni Trusts Offshore Mutual Fund International Trading Company Multi-Currency Bank Deposits Swiss Annuities Foreign Credit Card Foreign Stock Trading Account Registered Foreign Office Registered Foreign Sales Facilities Note – Use “Good” planning NOT “Secrecy.” Rely on “Law” NOT “Secrecy.” 1**Watch out for Foreign and Offshore Scams & Practitioners** There’s a thriving industry of “offshore practitioners” advising IRS definition of “U.S. Person” to set-up offshore bank accounts and other financial structures thinking that they have “just become NON-U.S. Taxable.” They persuade the U.S. Persons to trust the “Iron Clad” secrecy laws of the jurisdiction and not to report ownership of their funds or structures to the Internal Revenue Service and other agencies. This is pure and simple tax fraud and gets many U.S. Persons in trouble. WARNING: Complexity(ies) of U.S. laws requires many tax reporting and other various reporting requirements. Protect yourself, make absolutely sure that you seek competent professional expert legal, accounting, and tax advice before you consider implementing your foreign A/P plan. Contact Estate Street Partners and get the facts for proper U.S. reporting procedures. Authorities are looking for NON-COMPLIANCE, not for those who report and comply. We believe in full disclosure. If there’s no reporting form, we make-up our own and file. To my knowledge, there are no laws prohibiting you from protecting your hard-earned money with offshore international structures, as long as you file

Asset Protection, Divorce, Irrevocable Trust, Prenuptial

Asset Protection in Divorce: How to Protect Assets From Divorce

Rocco V. Beatrice / September 7, 2019

Will learning about asset protection in divorce be a waste of time if you live in a community property state? How does one protect assets before or during a divorce? Common steps to divorce asset protection for gifts, family heirlooms, and real estate. You will need to consult with a divorce lawyer, professional appraiser, and estate planner. Definition of Equitable Distribution and fair market value of assets in divorce. Watch the video on Like this video? Subscribe to our channel. How to protect your assets during a divorce? Protecting assets through a divorce can be a complex financial process further complicated by the emotional devastation. If you are going through a divorce it may be important to you to determine ahead of time what your assets are and how you will protect them from your spouse. The first step will be to hire a lawyer familiar with the laws for dividing property in your state. Good legal council will prove invaluable in defending your claims to property and can give you names of appraisers and accountants to help your case. Your divorce lawyer will also assist you on how to remove any Powers of Attorney granted to your spouse for control of your property and finances. There are several steps you should consider when trying to protect your assets during Divorce: Identify everything that was given to you as a gift or family heirloom. Identify community property. Hire a professional appraiser. Figure out how you will split retirement and physical assets. Identify Gifts and Family Heirloom to Protect Assets During Divorce A camera will prove to be your best friend during a divorce. You should make a list of all items which were given to you before and after the wedding and take pictures of these items prior to removing them from the residence. Once you have compiled your list you should remove all your personal items to a location not easily accessible to your spouse. Your spouse will be within their rights to claim any items you leave behind in the residence and do not immediately claim. If you or your spouse left the residence voluntarily, either of you is entitled to return at any time and retrieve belongings. If locks have been changed, except in the case of a court order, you are within your rights to have a locksmith open the doors. Your next step will be obtaining, if possible, written proof of who gave you the items and when they were received. Community Property Assets Community property of assets refers to the belongings shared by you and your spouse, such as the furniture, pots and pans, etc. It is important to take pictures of these belongings as well before you remove the items you wish to claim as your own. Photographs are especially valuable if there are expensive items you would like to have but did not have the ability to move and you feel your spouse may try to take them. All photographs should be kept in a secure location not readily accessible by your spouse. Hire a Professional, Independent Appraiser for Divorce Asset Protection Division of property during a divorce is determined by the fair market value of the disputed items to ensure one party is not being favored over the other during settlement. An appraiser will be necessary to determine accurate estimates, although you should consult your lawyer on finding a qualified individual. Using the same accountant who handled your assets in the past may seem suspicious and a court may order another appraisal or rule in favor of your spouse’s accountant. It is critical that an appraisal be straightforward and unbiased for the protection of assets during Divorce. Estate Planner Consultation to Divide and Protect Assets During Divorce When considering how to divide assets prior to divorce settlement, it is wise to consult a professional estate planner or financial analyst. For example, if you are thinking about selling your home it may be wise to do so prior to settlement since you are entitled to deduct up to $500,000 of the sale from capital gain taxes. Selling the home after the divorce is final and reduces your benefit to only half of the sale price. Retirement assets and stocks should also be discussed. If you and your spouse choose to split the retirement benefits you must sign a Qualified Domestic-Relations Order (QDRO) which notifies the pension sponsors how to pay the benefits. Although you cannot take stocks in your spouse’s name you may be entitled to the proceeds once they are sold. Exceptions to the Rule on Divorce Asset Protection Some states, such as New York, are known as “equitable distribution” states. “Equitable” mean “fair” and assets will not be divided right down the middle based on their fair market value. Division of assets according to New York Divorce law states that all property obtained prior to the marriage still belongs to the individual and all property obtained afterwards will be distributed by the court based on established guidelines. The factors a court considers in equitable distribution states for divorce assets are: The difference in income and property from when the marriage began to the date divorce was filed. The age of both individuals and how long they were married. The needs of a parent who has won full custody of children involved (i.e. will they need the house to properly care for the child?) Any loss of pension or inheritance. What contributions the parties made to acquire the property. Future earning potential of both parties. Tax consequences. If you are considering divorce it is wise to consult a lawyer as soon as possible to ensure the protection of your assets and help you understand your rights as they pertain to individual state law. Estate Street Partners is available for consultation on how to protect your assets

Irrevocable Trust

Irrevocable Grantor Trust: 8 Advantages of Choosing it as Your Family Trust

Rocco V. Beatrice / August 8, 2019

“What is the origin of an Irrevocable Grantor Trust being used as a Family Trust, and how can it help me?” We get many calls every week asking “what is a family trust, where did they originate, how could they help me?” There are many types of “family trusts.” Some are specifically for the purposes of holding real estate such as a real estate family trust, and some designed to hold only life insurance like an irrevocable life insurance trust (ILIT) and others are for more general purposes. In general, although the use of a family trust dates back a few centuries, lawyers and estate planning firms have mostly overlooked the irrevocable grantor trust as a preferred instrument for this purpose. While most ill-advised attorneys tend to promote the revocable living trust, we, along with most asset protection attorneys are of the opinion that an irrevocable grantor trust makes the best family trust in most circumstances, and the following eight reasons explain why. Benefits of a Family Trust #1 – An Irrevocable Grantor Trust Protects Assets King of British Empire creates feudal taxes in the likeness of estate taxes. Creating a postmortem real estate family trust was one of the earliest purposes of trusts upon their establishment in the 15th century. The historically controversial King Henry VIII of England did not like the use of trusts too much; in those days, feudal taxation was excessive to the point that the Crown supported the appropriation of property as soon as knights passed away. In this case, early real estate family trusts were created upon the execution of wills, which meant that relatives could benefit from land that could not pass to the Crown. King Henry VIII was not in agreement with this practice and thus prohibited these real estate family trusts by royal decree; upon his passing due to health issues related to obesity, the English Court of Chancery reauthorized the use of trusts. Learn the 3 key to uncompromising asset protection by clicking here Although feudal taxation would be gone long before the fall of the British Empire, it survives in spirit in the form of estate taxes. This taxation standard is the basis of the idiom about there being nothing certain but death and taxes, for it is true that even the dead are required to pay tax in the absence of legal instruments such as an irrevocable grantor trust in today’s world. Estate taxes are present at both the federal and in many states at the state level. Essentially, these are death taxes, a vestige of the Henry VIII days that seeks to collect revenue even after the taxpayer shuffles off this mortal coil. Modern statutes are not draconian in this regard; some exemptions and the use of an irrevocable grantor trust are allowed. In situations like these irrevocable trust advantages are outstanding. An irrevocable grantor trust basically serves the same purpose as they did when real estate family trusts were created in the midst of the Renaissance period: to protect property and assets from the claims of third parties, including the tax authority. In the past, these third parties were the Crown, the feudal lords, the lenders, and potential usufructuary actors who would jump at the chance of claiming a piece of a knight’s property once he passed away. The modern versions of these third parties in the United States would be the Internal Revenue Service (IRS), the state revenue collection agencies, creditors, opportunistic or frivolous plaintiffs, and even gold diggers. Irrevocable trust advantages go beyond the estate tax. A modern irrevocable grantor trust can do more than simply avoiding the payment of death taxes; they can provide individuals and their loved ones with guaranteed income while effectively transferring property and assets to heirs in a manner that is more efficient than traditional wills. Asset protection attorneys dedicated to estate planning and wealth management have been known to recommend about a dozen trust structures to families; however, only a properly written, executed, and funded irrevocable grantor trust is known to provide “bulletproof” protection if they are properly structured and managed. Any irrevocable grantor trust broken in the last 150 years of litigation, the only ones broken were ones that had issues with how they were written, executed, or funded. Benefits of a Family Trust #2 – Irrevocable Trust Advantages Include Providing Ideal Ownership Situations What are other examples of irrevocable trust advantages? It all boils downs to a legal theory known as the “burden of ownership.” There is no question that we live in highly litigious times. Frivolous lawsuits that seek to establish a claim over property or assets are filed every day, and this is a situation that is often magnified after death. A good example in this regard would be legendary musician Prince, whose unfortunate death was followed by numerous siblings and half siblings coming forward to meet under contentious circumstances as they suspected that the late Minneapolis star did not leave do any estate planning what-so-ever, not even a will. A graphic map of the number of torts per state. (click on image to see larger detail. 383KB) Legal analysts and asset protection attorneys following the Prince case have commented that the burden of ownership is something that will haunt his estate for years to come as his survivors continue to fight in court. In the absence of an irrevocable grantor trust, Prince Roger Nelson’s estate will pay a huge estate tax with relatives ready to file claims for the remainder that establish his ownership of assets and their rights as heirs apparent. The burden of ownership is what makes frivolous lawsuits happen in the first place. The first legal hurdle that a plaintiff must clear is that of establishing that the respondent actually owns the assets or property being claimed. The case cannot move forward and should be dismissed when the court finds that the lacks

Asset Protection, Irrevocable Trust

What’s an Asset Protection Trust?

Rocco V. Beatrice / July 25, 2019

What are asset protection trusts? Watch the video on Like this video? Subscribe to our channel. An “A/P TRUST” is nothing more than an unchangeable (irrevocable) to the outside world “CONTRACT” between the person who wishes to protect his property (the Grantor) the person who will manage the money (the Trustee) for the benefit of all Beneficiaries which may include the Grantor, his spouse, children and grandchildren. The Contract requires the transfer of property from the original owner (Grantor) to a legal entity for the purpose for which the Contract was created. Learn the 3 core secrets to successful wealth protection by clicking here What’s the distinction between Grantor, or Non Grantor? A Grantor Trust take a special place within the tax code and for tax purposes is treated as a disregarded legal entity. The disregarded entity is “Income Tax Neutral” meaning that the original Grantor retained strings attached so that for purposes of the IRS he retains the property in his complete control, thus he did nothing for the purpose of protecting your property. Income tax benefits and income tax expenses are retained by the Grantor, thus he pays income taxes on the income of the entity. It’s a “pass-through” to his form 1040 i.e. real estate tax deduction and mortgage interest deduction on his person income tax return. Revocable or Irrevocable, what does that mean? Revocable is when the original person with the property transfers (repositions) the property to the entity with strings attached. The Grantor, the Trustee, and the beneficiary are the same person. Effectively you have kissed yourself on the hand and blessed yourself as the Pope. A revocable trust does absolutely nothing for protect your wealth. Many lawyers recommend revocable versions for avoiding probate, recognizing that the entity is not worth the paper it’s written on for protecting assets against frivolous lawsuits and the avoidance of estate taxes. An irrevocable version is when the Grantor (the person with the money) gives-up complete control to an independent Trustee who in turn will use his judgment as Trustee to manage the property for the beneficiaries. The fiduciary relationship of the Trustee is to the protection of the assets at any cost. The Trustee must protect and must diligently invest under the prudent man rules, he cannot ever deal for himself. The courts do not look favorably on dereliction of duties while serving as Trustee. An irrevocable version is the only significant method to protect assets and for avoiding frivolous litigation, avoiding the probate process, avoiding estate taxes, and is the only device for avoiding the mandatory spend-down provisions for qualifying into a nursing home. A domestic irrevocable A/P entity when combined with a Limited Liability Company is an impenetrable fortress, short of a foreign entity. A foreign entity is the Rolls Royce of asset protection – it’s expensive to set up and maintain, while the domestic irrevocable version with an LLC is the Tesla – not inexpensive to set up, but very low maintenance costs while providing 99.8% of the protection of the foreign version. Asset Protection Trust – What Is It and Why You Need One You spend years building your life—carefully managing finances, growing a business, buying property, saving for retirement. But all it takes is one legal issue, one creditor, or one lawsuit to threaten everything. That’s where an asset protection trust comes into play. Most people don’t think about protecting their assets until they feel at risk. By then, it’s usually too late. A properly established asset protection trust helps you prepare long before any threat arrives. It’s not about hiding money. It’s about being smart with how you own it. Understanding the Basics Simply put, an asset protection trust is a state-of-the-art legal way that literally separates Your assets from you. You still get the benefits of your properties; however, on the technical side, it is not your direct ownership anymore. Such a difference leads to a much lower possibility that people who already have issues with you, be it creditors or litigants, can get their hands on the contents of a trust. For instance, it would be a savior for a doctor, an entrepreneur, a real estate investor, or someone from a hazardous field—basically, any person who is in the line of fire of facing a lawsuit or financial problems. Some benefits include: Keeping assets out of reach from lawsuits Helping preserve wealth for your children and grandchildren Reducing exposure during divorce or business disputes Keeping your estate private and out of probate

Divorce, Estate Planning

5 Estate Planning Horrors to Avoid In Your Divorce

Rocco V. Beatrice / May 5, 2019

“A person who never made a mistake never tried anything new” – Albert Einstein. You do not want to make these mistakes. Estate planning frequently takes a backseat to emotion in a divorce. Even when both parties agree that ending their relationship is the best solution for their marital woes, divorce can be an emotionally and financially excruciating experience. Regardless of how much you might think you have prepared for the roller coaster ride that your life becomes during, and immediately after a divorce, nothing can fully prepare you for it. Avoid the 5 estate planning mistakes: 1. Making it difficult to identify separate property. Some states have established two classifications of property in a divorce: separate and marital. Marital property is real or personal property acquired during the marriage or property acquired together by the parties prior to the marriage. Marital property is subject to distribution by the court in a divorce action. Separate property is usually defined as property acquired prior to the marriage by one of the parties that retains its identity as belonging to one of the parties. Separate property is not subject to distribution by a court as part of a divorce. Problems occur when courts cannot identify property as being separate. For example, a home purchased and owned by a person prior to a marriage could lose its status as separate property if marital funds are used to pay the mortgage or do renovations on the home. Placing separate property in an irrevocable trust established prior to a marriage can eliminate or minimize questions concerning the legitimacy of a claim that property is separate rather than marital. Homes and businesses are properties that can be transferred to an irrevocable trust to retain their separate status because ownership is in the name of the trust and not the individual. Irrevocable trusts that were created before the marriage or even jointly during the marriage most likely will NOT count as marital assets. Often a wealthy person, prior to marriage, may place a bulk of their assets in an irrevocable trust to avoid having the awkward prenuptial conversation and still protect the assets in the event of divorce. 2. Failing to change your life insurance beneficiary. A life insurance policy is a contract between you and the insurance company. You agree to pay your premiums in return for which the insurance company agrees to pay a specified sum of money on your death to the beneficiary you name in the policy. The insurance company is obligated to pay the person whose name you list as the beneficiary even if that person is your ex-spouse. A recent case Maretta v. Hillman, 722 S.E.2d 32 (Va. 2012), proves just how big this problem can be. A federal employee designated his wife as a beneficiary, divorced and remarried. He then died leaving everything to his current wife. His ex-wife however claimed the over $100,000 in life insurance and his current wife took him to court. Virginia has a law stating that, upon divorce, the ex-wife is no longer considered a beneficiary on life insurance policies. This was a federal policy, however the Supreme Court ruled in favor of the ex-wife. This could also be a good time to evaluate your life insurance needs. If you do not have children, you might not need as much insurance as when you were married. 3. Forgetting to revoke a power of attorney. Remember those forms you filled out at the attorneys office when you created your will? Most likely, one of them was a power of attorney. This form gave your now ex-wife power to take care of your finances probably at any time, but at the very least when you become incapacitated. The laws in a handful of states (but not most) terminate a power of attorney upon divorce, which names a spouse as the attorney in fact. This is not, however, the case in all states. The best course of action is to review your power of attorney with your legal advisor to determine the effect your divorce will have on it. 4. Thinking a divorce cancels provisions in your “Will” pertaining to your spouse. Many married couples name each other in their last will and testament as the executor and leave all or the bulk of their estates to each other. A divorce does not cancel or invalidate portions of your will pertaining to your spouse. It is up to you to change your will with a codicil that amends an existing will but does not terminate it, or you can prepare a new will and destroy the old one. Some people become confused when they hear that the law in their state automatically terminates a person’s rights to inherit property from a divorced spouse. Such laws pertain to situations in which a person dies intestate without leaving a valid last will and testament. If you have a last will and testament, you must change it on your own to avoid having your former spouse share in your estate. If you have an irrevocable trust, however, that does not name your ex-wife as beneficiary, you don’t have to do anything. A revocable trust, however, was most likely divided during the divorce already! 5. Not contacting financial institutions. Most people remember to close joint checking and savings accounts or at least arrange to remove their former spouse from the accounts. It is surprising how many divorced individuals forget to notify financial institutions about making changes to the places that hold typically the big money such as their IRA, 401(k) or other retirement plans. Retirement accounts or annuities usually have a beneficiary named to receive the money in the event the holder of the account dies. Contacting the financial institution or the human resources department at your place of employment will get you the information needed to update the

Irrevocable Trust

Asset Protection FAQ (Frequently Asked Questions)

Rocco V. Beatrice / April 26, 2019

Asset Protection: Questions on Protecting Your Assets Estate Planning and Protecting Your Assets Asset protection is one of the most important things you can do. The planning is a method of preparing for any possible lawsuits in the future. It entails rearranging the ownership of your current assets so that they cannot be touched by creditors during a lawsuit. Asset protection can also act as a form of supplementary insurance. It can protect you from the various risks that can be associated with professions and businesses. Generally speaking, asset protection is used to safe-guard your assets that would be at risk. There are different degrees of asset protection. Typically, the more complex the planning is, the more effective it will be in the future. However, even though complex planning can offer you the best protection, it is also very expensive and there are more restrictions involved. Do You Need an Expert on Asset Protection Planning? If you have assets that require you to plan your estate if you die, then you probably have enough assets to strongly consider an asset protection plan. It is important to protect these assets from lawsuits that could occur before your death. The decision is entirely personal and is based on risk aversion, your asset level and the level of protection you need. There are very few levels of protection that as you may imagine, have a correlated cost to set up, but it is a very personalized product and a professional needs to assess all of these factors when making a recommendation. What Assets Can Be Protected? Asset protection involves exempt property that is considered unreachable by creditors. Each state has its own unique laws that define what exempt property is. Some properties can be entirely exempt, while others may be limited. Some common examples of exempt property include clothing and jewelry, tools of a trade or a business and household furnishings. In some cases, life insurance and social security may be classified as exempt property. But there is no reason to risk laws changing in your particular state; an asset protection plan should take these potential risks into consideration. If your property is not exempt, you should consider an asset protection plan attorney. This simple plan would transfer the property from you to an irrevocable trust. By transferring ownership of valuable assets to a trust, you will protect those assets from creditors. This transfer will protect your assets while you are living and will also protect them from a tax collector when you die. There are some disadvantages associated with these transfers which include the new owner’s exposure to creditors, your personal loss of control over the particular asset that was transferred and any gif tax consequences that result from the transfer. Are My Retirement Assets Protected from Creditors? If your assets are held in a retirement plan, the federal law will not allow creditors to reach those assets. Some examples of assets that are protected by a retirement plan include profit sharing, pensions and 401(k) plans. IRA’s may not be protected. You will need to check the laws in your state to see if your IRA is legally protected from creditors. How You Can Protect Your Assets When Starting a Business If your new business is not incorporated or held within an LLC with the shareholders being an irrevocable trust, you will place your personal and business assets at risk. Any claims that are made against the business could result in the loss of assets; personal or business-related. There are different tools that can help protect your assets when starting a business. Partnerships and Trusts Family limited partnerships have been deemed one of the available asset protection devices. While this is effective, it is not foolproof unless an irrevocable trust is the general partner. Many states allow limited liability companies to be formed, and they are also viewed as a great ownership form when considering asset protection. It is very difficult for any creditor to reach any assets that have been transferred using these devices if the membership shares are in the name of a trust. Fraudulent Transfers Asset protection is ethical and legal as long as the plan is put in place before a lawsuit is filed. It may be too late if there is already a claim or a lawsuit pending. Asset transfers during this time could be considered fraud. More specifically, fraudulent conveyance is where someone divests themselves of assets without fair consideration because they see a problem arising and would like to avoid paying a claim. However, a few highly sophisticated firms have ways of legally transferring assets in distressed times with a financial instrument to avoid problems with fraudulent conveyance.Please contact Estate Street Partners if you are seeking counseling to legally transfer your assets in distressed times and still avoid fraudulent conveyance. Each will be taken on a case by case basis. Estate Street Partners will never condone illegal practices and advocates transparent accounting and legal practices.

Asset Protection, Irrevocable Trust, Lawsuit

How to Protect Assets from Lawsuits, Divorce, Accidents

Rocco V. Beatrice / February 2, 2019

The keys is to learn how to protect assets from lawsuits. According the National Center for State Courts, there were 103M lawsuits in 2019; One lawsuit for every three citizens in the United States. Decades of a person’s hard-work to accumulate wealth; working their entire life to build, are at risk of being attacked because of one “frivolous” lawsuit. How to protect wealth from litigation like these? Did your lawyer tell you that there is nothing you can do now because the tragedy already happened? Do want to know how to properly protect property? Learn the 3 keys to protect wealth from litigation step by step (click here) If We Can’t Help Teach You How to Protect Your Wealth from Litigation, Then You Don’t Pay One Penny… Dramatically increase your armor against all types of litigation Save on your capital gains by deferring your taxes Know that your wealth is properly and safely assigned to your loved ones Complete control over all your wealth and reallocation of property even after death Design your own personal financial plan according to your wishes and desires and be flexible as your situation changes (addition of new baby, divorce, death of family member) Total, surefire privacy and complete anonymity with client/attorney privileges Exceptional successful and clear roadmap designed specifically for you and your family’s needs Substantial savings of tens of thousands of dollars from probate fees Option for Foreign Wealth Protection and offshore financial planning if you have $10million or more, 10% should be in a foreign jurisdiction. Completely legal. You rely on the laws created for wealth protection, not secrecy. Filling all necessary IRS requirements, strengthens the actions taken. Finally, learn how to protect your wealth from litigation, divorce, and even from the Medicaid Nursing Home spend-down program. Watch the video on How to Protect Assets from Lawsuits, Divorce, Accidents Like this video? Subscribe to our channel. I’ll get straight to the point and tell you the ONE Ultimate Secret to how to protect your hard-earned wealth from litigation or “hiding your money” is to REPOSITION it. What do I mean by that? The answer is simple: you actually don’t hide your money to protect property from litigation. You use laws created for “asset protection” to protect your wealth. You use the laws to your advantage. You use legal entities created under the different laws – trust laws, corporate laws, partnership laws, bankruptcy laws, and tax loopholes to your complete advantage. The average individual wants to “own” things. The truly successful individuals have learned WHAT the absolute secret is regarding how to protect hard-earned wealth from litigation: that “control” is more significant than “ownership.” By not owning the property, they control frivolous litigation, they avoid probate, they avoid estate taxes, negotiate with creditors on their own terms, and they are able to significantly reduce their taxes. In essence, they can “hide their money” completely transparently and legally. Ownership is the absolute right to possess and use property to the exclusion of others. Control is the control of others or skillfully influencing others to your advantage. Ownership is absolute; control is not. If property is in the absolute control of others, there’s no control on how it can be transferred, thus avoiding frivolous litigation and allowing you to dictate terms to your creditor in any negotiation. 96% of litigation never goes to court because they are settled in a negotiation. We put you in a position of leverage when negotiating with your creditor. The successful have also learned to diversify their wealth worldwide. The theory “don’t put your eggs in one basket” applies to everyone, not just the rich and successful. Everyone has the same opportunity to diversify, the number may be smaller for the average individual, but there is nothing that the successful are doing that is not available to everyone. How to Protect Wealth From litigation by “Hiding Your Money and Property in Plain Site“ “Most advisors are mainstream with mainstream ideas. You are definitely out of the box. Your ability to take apart complex issues and provide alternative solutions is simply remarkable. Your vast array of tax planning strategies are extraordinary. You are absolutely in my little black book of people to call.” — Rick S., Massachusetts You can “hide” your wealth with various options. Remember, you still keep your total privacy of your property re-allocation but it’s still completely legal to the IRS because you still file all necessary forms that strengthen your protection! Irrevocable Trusts Foreign Trusts (FAPT) Limited Liability Companies (LLC) Foreign Limited Liability Companies International Business Companies (IBC) Limited Partnerships Corporations under Chapter C Corporation under Subchapter S The 9 Basic Things The Successful Have Learned About How to Protect Wealth From Litigation… No system will make you “judgment proof.” Anybody can still sue you for any reason they can dream-up. You cannot avoid a lawsuit directly, but you can make it so painful to file one that they move-on to a better/easier target. Preventive maintenance, you don’t run your car 100,000 miles before replacing the oil. Planning ahead is most effective and least expensive before you have legal problems. If you’re in a current lawsuit then don’t worry because there is something you can still do about protecting property from litigation. Read on! It is never too late to improve protection. Anything is better than doing nothing. Don’t handout road maps to your bank account. Don’t UNDER-ESTIMATE the abilities of these shrewd, ruthless, invasive, money hungry predators and their very CLEVER CLIENTS. For the mere filing fee of $275 they will shake your tree to see what falls. They have learned that if they shake enough trees, they will get rich. Everything you own in your name is subject to creditor attacks. The common stock you own in your corporation; the LLC membership units, general partnership interests are subject to creditor attacks. If they

Asset Protection, Irrevocable Trust

Compare chart Irrevocable Trust, Revocable Living Trust, Non-Grantor Trust, LLC

Rocco V. Beatrice / January 21, 2019

Watch the video on Compare chart Irrevocable Trust, Revocable Living Trust, Non-Grantor Trust, LLC Like this video? Subscribe to our channel. Medicaid and the 2005 Tax Reduction Act: What You Need to Know If you’re unfamiliar with the 2005 Deficit Reduction Act, you must understand exactly the way that it reshaped Medicaid eligibility—especially at that point when seniors seek nursing home care. Under this law, rules in regard to Medicaid “spend-down” became a good deal more punitive. An elder must deplete private wealth initially. They must complete this before Medicaid can cover long-term care. The new law extended the asset look-back period from 3 years to 5 years; any asset transfers made within five years of applying could disqualify you from benefits. The U.S. House passed legislation in a narrow 216–214 vote that now labels certain asset transfers as “fraudulent conveyances”—or “deprivation of resources” in bureaucratic terms along with applying penalties accordingly, as the government assumes toward gaining eligibility such transfers were made. What Is Medicaid? Medicaid is a government assistance program designed for the elderly (65+) and disabled who lack the means to pay for care. Originally intended for the poor, it has become the de facto safety net for the middle class—who now face the harsh realities of long-term care planning under these stricter rules. The Harsh Reality of the Look-Back Today, even carefully planned gifts now may trigger a transfer penalty. Impoverishment of spouses is fueled by the law also, forcing the couples to drain all of the resources for available help. One spouse’s illness has the potential to leave the healthy spouse in financially vulnerable or destitute circumstances. For survival, that healthy spouse may rely on public aid or children. It’s a humiliating blow for many especially when dignity along with a home were retirement plans. Since Medicaid planning is necessary it’s no longer optional. Assets You Must Spend Down Before Qualifying for Nursing Home Assistance If it’s in your name—or jointly held with your spouse—Medicaid eligibility probably demands using it as an asset initially. Cash includes checking, savings, CDs, U.S. Savings Bonds, and also IRA accounts. Additional items include also nursing home trust funds and annuities and also revocable living trust assets. Assets you own or control will include real estate (even your primary residence), investment properties, life insurance policies (cash surrender and face value), art, antiques, vehicles, prepaid burials (if refundable), burial funds, household contents, land contracts, trailers, business property, mobile homes, as well as any other assets—even if you’re unaware they could be counted. What Is “Fraudulent Conveyance” in Medicaid Planning? In Medicaid planning, “fraudulent conveyance” or “deprivation of resources” signifies assets given away without receiving equivalent value instead. Selling your $150,000 home to your children for $100 before five years in a nursing home might create concern. This particular transaction would be noted. Why? It reduced your resources until you could not pay for care. The state was in effect deprived of all of those funds. This would likely disqualify you from being eligible for Medicaid and you may also owe gift tax on what is the $149,900 difference. You could have violated estate tax laws by inadvertently creating financial hardship and legal exposure. Federal Gift Tax Rules in Medicaid Asset Protection & Estate Planning The federal gift tax does apply to any transfer of money or property where return of its full value is just not received. Outright transfers of money or of assets, use of free property, or loans without interest can be a gift. The exchange may be viewed as a taxable gift. That is probable when the trade is unequal. However, several important exceptions apply. The following do not count as taxable gifts: Gifts within the annual gift tax exclusion limit (e.g., $12,000 or $13,000, depending on the year), Tuition or medical payments made directly to an institution on someone’s behalf, Gifts to your spouse, Charitable donations, and Gifts to political organizations. Annual Gift Tax Exclusion The annual exclusion lets you give each person as much as $12,000 or $13,000 (depending on the tax year) without triggering gift tax. This does apply to each one recipient. You can gift annually to multiple individuals within that limit because this applies. The exclusion is unavailable regarding Future Interest Gifts. These are gifts in which the recipient uses them or enjoys these gifts at a later date. Gift Tax Reporting If your gift exceeds the annual exclusion, you must file a federal Gift Tax Return (Form 709). Though not all gifts result in tax owed, they must be disclosed for tracking lifetime exemption amounts, which affect estate tax thresholds. Filing a Gift Tax Return (Form 709) You are generally required to file IRS Form 709—the United States Gift (and Generation-Skipping Transfer) Tax Return—if any of the following apply: You gave gifts to someone other than your spouse with a fair market (cash) value that exceeds the annual gift tax exclusion ($12,000–$13,000 for tax years 2007–2010). You and your spouse split a gift (i.e., each claims half of a single gift’s value). You transferred an interest in property to your spouse that may end due to a future event (e.g., a conditional clause). You transferred your full ownership interest in a property, without any prior transfers for adequate value or for charitable purposes. You made a qualified conservation contribution, meaning you placed a permanent restriction on the use of real property—such as conservation easements. Filing Form 709 is essential to maintain compliance, track cumulative gifts over the exclusion limit, and manage future estate tax exposure. Estate Tax & Senior Medicaid Estate Planning Estate tax may be imposed at the time of death on the total of your taxable estate. Gross estate minus allowable deductions equals your taxable estate. Everything under your name is

Estate Planning, Irrevocable Trust

Should You Consider Moving to Avoid State Estate Taxes?

Rocco V. Beatrice / January 5, 2019

Wealthy individuals or couples who have reached maturity do not need to worry about raising their children or paying bills. Money gives them the financial freedom, economic stability and peace of mind to do what they want. As estate (death) taxes rise, wealthy individuals wonder if it is financially beneficial to move to a more asset-friendly state to protect their assets. Many “snowbirds” have vacationed in the warm weather states of Florida or Texas, so it is not a dramatic “leap of faith” for them to consider moving to these low-tax states permanently to protect their assets. But are the financial benefits in a more tax-friendly state attractive enough to justify the costs, expenses and hassles of moving? Here is an answer to this very important question. Disadvantages of Moving to Low-Tax State When you have lived your entire life in one state, you build up emotional, spiritual and social ties. Your core family may be concentrated in one area, but most Americans are very mobile. You might have good friends in your home state or you might have grown comfortable with the convenience of your home area. You also wonder about the costs of moving. Many low-tax states have vibrant communities of people who have moved from high-tax states. So if people are socially-friendly and charismatic, they can make new friends. The Internet has made it easier to communicate over long distances, so your family will be electronically close. If you compare the money that can be saved by avoiding a high estate tax to moving costs, it might make sense to move financially. Governments with High Debts Must Increase Taxes With government debts rising, the primary way they can balance their budgets is to increase tax rates. The estate (death) and inheritance taxes are popular ways to generate revenue by transferring a portion of the wealth from private families to the public coffers. The government has been modifying the level at which the tax is “triggered” and experimenting with different rate levels. According to W. Rod Stern, attorney-at-law, Entrepreneur Magazine’s Legal Guide Estate Planning, Wills and Trusts affect an estimated 1 to 2% of American household estates are large enough to incur the estate tax. Most states have what is called an “exemption” for the primary family home. The first step is to compare the value of your estate to that minimum threshold. Some states realize that if they raise the estate tax exemption, they can attract wealthy individuals. These figures are always changing, but here is a sample of state estate tax exemption levels for 2012: 2013 State Estate Tax and Inheritance Tax Chart State Type of Death Tax 2013 Exemption 2013 Top Tax Rate Connecticut Estate Tax $2,000,000 12% Delaware Estate Tax $5,250,000 16% District of Columbia Estate Tax $1,000,000 16% Hawaii Estate Tax $5,250,000 16% Illinois Estate Tax $4,000,000 16% Iowa Inheritance Tax $25,000 15% Kentucky Inheritance Tax Up to $1,000 16% Maine Estate Tax $2,000,000 12% Maryland Estate Tax, Inheritance Tax $1,000,000, $0 16%, 10% Massachusetts Estate Tax $1,000,000 16% Minnesota Estate Tax $1,000,000 16% Nebraska Inheritance Tax Up to $40,000 18% New Jersey Estate Tax, Inheritance Tax $675,000, Up to $25,000 16%, 16% New York Estate Tax $1,000,000 16% Oregan Estate Tax $1,000,000 16% Pennsylvania Inheritance Tax $3,500 15% Rhode Island Estate Tax $910,725 16% Tennessee Estate Tax $1,250,000 9.5% Vermont Estate Tax $2,750,000 16% Washington Estate Tax $2,000,000 19% If your estate is valued above one of these limits, it makes sense to move to a state that puts you below their estate tax exemption rate. If you time the housing market properly, the sale of your old home could pay for the moving costs to the low-tax state. States know the value of wealthy residents and are offering plenty of financial incentives to encourage you to move. How do Estate Taxes Vary by State? Once the estate is valued above the exemption limit, then each state has a different rate that they charge for the death tax. Also in the chart above are figures for estate tax rates in 2013 (these changing very frequently). You should also take into account the rates because they can make a huge difference. For example, if you calculate the difference between 9.5% and 19% estate tax rates, the amounts are quite dramatic. When you consider probate, estate (death) and inheritance taxes, it makes sense to move to a more asset-friendly state. If you explain to your children (future heirs) that they will inherit more money in a low-tax state, then they may support the move, especially with the ability to communicate. While the primary reason for moving to a state with lower estate taxes is financial, there is also a philosophical difference in low-tax states. While colder high-tax states try to siphon off the wealth built up by hard-working citizens, the warmer low-tax states emphasize increasing the “productivity” of the state. This can create a better environment in the long run. You should consider moving to avoid state estate taxes if it is financially advantageous to do so. Another Option: Another option exists to avoid estate taxes in your own state. UltraTrust.com has many articles on the advantages of the irrevocable trust and how it can save you and your children from having to pay any estate taxes or even having to go through probate.