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Asset Protection & the LLC: 8 Case Studies

Posted on: April 5, 2017 at 3:18 am, in

Many business owners believe that they can simply incorporate their businesses into an Limited Liability Company (aka LLC) and protect their personal assets. However, that is an extreme oversimplification of the law and at the core of misleading consumers by the “LLC farms” out there. Lawyers should know that if a corporation or LLC owes a client money, they are allowed to sue the owners, asking the judge to pierce the corporate veil. Studies have shown that American courts disregard the corporate entity to hold shareholders liable for corporate debts in nearly 50% of cases. As one Illinois Court noted, piercing the corporate veil is both the number one issue that arises in business litigation lawsuits and one frequently misunderstood. If business owners are not meticulous in following corporate formalities, they could find himself forfeiting corporate protection.
Piercing the corporate veil means that a judge may reach beyond the protection provided by the corporate form to hold a business owner personally liable for the company’s debts. There are two common reasons that this happens: undercapitalization and commingling of corporate assets.
If a person starts a business that is likely to incur a significant debts, such as a real estate company, but does not secure adequate insurance or provide funding to pay possible claims against the company, a judge may find that the corporate shareholders are personally liable on the debt. Undercapitalization will most likely lead to veil piercing when it is combined with the failure to observe corporate formalities. To receive protection, a company must hold shareholder meetings and keep minutes. It must have business bank accounts used for business purposes only. Shareholders must not use personal accounts to make business purchases or vice versa.
One of the reasons that piercing the corporate veil is so dangerous for owners is that it does not attach percentages of liability based on a person’s individual wrongdoing. If corporate formalities are not observed and the veil is pierced, the law treats the corporation or LLC like a partnership. That means all shareholders will be jointly and severally liable on the total debt, even a person who owns merely a single share. The plaintiff can choose to sue whichever shareholder has assets.
A cause of action to pierce the corporate veil is not a new lawsuit. The defendants do not have the ability to attack the underlying allegations in the case against the business, even if the business would have had a viable defense. Piercing the corporate veil is a way of imposing liability for an existing judgment against the business on the owners. Thus, an owner who chooses not to defend a case brought against the company because it is incorporated may come to regret that decision later.
The best way for an individual to ensure that his or her assets are protected is to maintain control rather than ownership. Assets that are owned may be seized by creditors, even a person believes they are protected through the formation of an LLC or corporation. Even funds in a revocable trust do not have protection: If the trust may be revoked by the individual who created it, the assets within may be taken by creditors. Only a properly drafted, executed, and funded irrevocable trust provides 100% asset protection.
When a Grantor establishes an irrevocable trust, he transfers ownership of the assets into the trust. A trustee will invest and distribute the assets in accordance with instructions provided by the trust documents. Income generated by irrevocable trusts may provide income to the Grantor, but the Grantor doesn’t own the assets. Subject to Medicare’s five year “look back” period, property held in an irrevocable trust may not be used to satisfy a judgment against the grantor or against the trust beneficiaries.
Below are actual court cases from all over the country highlighting these facts:

1) Peetoom v. Swanson, 630 N.E.2d 1054 (Ill. Ct. App. 2000):

The Illinois Court of Appeals applied the concept of piercing the corporate veil to a personal injury case where the plaintiff, Peetom, fell and injured himself while walking on The Swanson Group’s parking lot. She filed a lawsuit for her hospital bills and pain and suffering, and her husband filed a loss of consortium claim arising out of the accident. The trial court judge entered a default judgment against The Swanson Group in 1997. Approximately one year later, the company was dissolved by the Secretary of State for failure to comply with taxation and annual report requirements. The plaintiffs later filed an action against The Swanson Group’s owners as individuals.
The defendants argued that the two year statute of limitations for bringing a personal injury action had expired and therefore, they could not be liable. The original injury occurred on January 20, 1993. The lawsuit against The Swanson Group was filed on January 11, 1995, shortly before the statute of limitations expired. However, the suit against the owners was not filed until September 2000. The trial court granted the defendants’ motion to dismiss, but the plaintiffs appealed.
The Court of Appeals explained that piercing the corporate veil is not a cause of action like negligence, and therefore is not subject to the same statute of limitations. Piercing the corporate veil is an equitable remedy, a way of imposing liability on corporate shareholders for fraud or injustice that the corporation allowed or caused. As such, the action could be brought within five years after the corporation was dissolved, as provided by Illinois law on shareholder liability for defunct corporations. Neither the corporate form nor the fact that the defendants were not named in the original lawsuit protected them.

2) Las Palmas Assocs. v. Las Palmas Ctr. Assocs.

Las Palmas Assocs. v. Las Palmas Ctr. Assocs., 1 Cal. Rptr. 2d 301(1991): A California Court of Appeals extended the concept of piercing the corporate veil to sister corporations owned by the same parent company. The case arose out of the sale of a large commercial shopping complex.
The contract stated that 84 percent of the complex would belong to Villa Pacific Business Company and the remaining 16 percent belonged to Gribble, president of Hahn Devcorp. Devcorp was a wholly owned subsidiary of Earnest W. Hahn, Inc. Several years later, both companies merged into subsidiaries of the same parent company. The same two individuals sat on the board of directors of both Hahn and Devcorp. By 1983, Hahn’s staff conducted business for Devcorp, leaving Devcorp a shell of a corporation. All of Devcorp’s assets had been liquidated, and all employees and directors fired. At trial, Hahn’s value was more than one hundred times that of Devcorp. The jury found that Devcorp was an alterego of Hahn and, as a result, Hahn should be liable for Devcorp’s debts.
The public policy behind allowing courts to pierce the corporate veil is that, in a situation where there is so much unity in ownership and interest between the company and the owner that the two are not really separate legal entities, it is not fair for the owner to avoid liability. These same principles apply when the owner of a corporation is another corporation. The court noted that there are many situations where a corporate entity is disregarded, and a corporation is treated as merely part of the parent corporation. In these cases, it is only equitable that veil piercing be allowed. The same line of thinking applies to two subsidiaries controlled by the same parent, if that parent company does not observe corporate formalities.

3) Agai v Diontech Consulting

Agai v Diontech Consulting, Inc., 2013 NY Slip Op 51345(U): In this NY Supreme Court case, the defendants were not shareholders of the company in question, Diontech Consulting, Inc. However, they ran the company for their own gain, so it would not be fair to allow them to benefit from hiding behind the corporate form. The judge pierced the corporate veil and imposed liability.
The undisputed evidence showed that the defendants did not observe any corporate formalities in running Diontech. Two of the three, the Antoniou brothers, admitted being unaware of any records or books showing corporate operations. They could not produce any board meeting minutes, pay stubs, bank account statements, or other documentation showing the company’s existence as a separate entity. The brothers commingled business assets with personal funds and used the corporate bank accounts for personal expenses. Both brothers were paid for assisting in settling corporate affairs when Diontech was dissolved, yet both claimed no knowledge of what happened to the corporate assets, including vehicles, furniture, and computers. An accountant for the firm testified that all three defendants routinely took money from the corporate bank account and did not pay it back. No tax return was filed for Diontech because the defendants never provided the required documentation. The evidence suggested that Diontech was a sham corporation, created for the sole purpose of avoiding legal liability.
The standard in New York for piercing the corporate veil whether an individual hid behind a corporation to perpetuate an unjust or wrongful act against the plaintiff. The judge found that the defendants used Diontech to avoid paying creditors. The principals here used the plaintiff’s payments to Diontech and materials purchased for the plaintiff’s job to work on other projects. As a result, it would be unjust not to hold them liable.

4) Ted Harrison Oil Company v. Dokka

Ted Harrison Oil Company v. Dokka, 617 N.E.2d 898 (1993): An Illinois Court of Appeals found that incorporation did not protect the assets of a company owner who followed no corporate formalities and treated the company as an extension of himself. Ted Harrison Oil Company (“Harrison”) filed a lawsuit asking the judge to hold Dokka personally liable for a debt owed to him by Dokka’s company, Hess Tire. Dokka purchased all shares of Hess Tire in 1972. He later sold shares to two investors, but never created or printed stock certificates. The company was initially profitable but lost a significant amount of money between 1972 and 1981.
A review of the corporate books showed no shareholder meeting minutes, although Dokka claimed the shareholders met and were involved in the business. Hess Tire operated in a building personally owned by Dokka and paid no rent. A corporate account paid property taxes for the building. Dokka even admitted that he did not follow corporate formalities. The company’s bookkeeper testified that another shareholder, Walden, had her write checks to herself on the business accounts, which Walden cashed, keeping the money. Dokka testified that there was no business purpose for these checks or other loans and bonuses paid to Walden. Walden moved tires from Hess Tire’s inventory into storage to avoid paying creditors. Although Dokka claimed no knowledge of Walden’s activities, the Appeals Court pointed out that the deception would have been uncovered sooner if corporate formalities had been followed. Since Dokka did not treat Hess Tire as a separate business entity, he was not entitled to the protection of incorporation laws. The court held Dokka responsible for Hess Tire’s debt to the plaintiff.

5) Buckley v. Abuzir

Buckley v. Abuzir, 2014 IL App (1st) 130469: Plaintiffs John Buckley and Mama Gramm’s Bakery, Inc. won a case against Silver Fox Pastries, Inc. for violation of The Illinois Trade Secrets Act. After they realized that they were not able to collect the judgment from Silver Fox, which had no assets, the plaintiffs asked a judge to pierce the corporate veil and enter a judgment against the owner, Haitham Abuzir. Although the trial court dismissed the Complaint, on appeal, the Illinois Court of Appeals reversed, finding that the plaintiffs had alleged sufficient facts to allow the trial court to pierce the corporate veil.
After incorporated, Silver Fox never filed an annual report with the Secretary of State. It had no directors, no officers, no corporate records, and no corporate books. The company never held a shareholder or director meeting. No stock was issued, and no dividends paid. Silver Fox never made any payments on loans granted to it, and at no time had assets exceeding its debts. No corporate formalities were ever observed. On the other hand, Abuzir ran Silver Fox, maintaining 100% control over the company. Abuzir did not dispute the plaintiffs’ allegation that he and Silver Fox were, in effect, the same entity. Instead, he claimed that the corporate veil could not be pierced because he was not an officer, director, employee, or shareholder of the corporation.
After reviewing the law in other states, the Court concluded that stock ownership was not required to pierce the corporate veil. A person who exercises considerable authority over a company may be legally considered the equitable owner and, therefore, a judge can pierce the corporate veil to hold that person liable for corporate debts. Abuzir could not avoid liability by refusing to appoint himself as director or officer and failing to issue himself stock.

6) Associated Vendors, Inc. v. Oakland Meat Co.

Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal.App.2d 825 (1962): A California appellate court found that a person could be held personally liable for corporate debts when the corporation was merely the “alter ego” of the individual. The case arose out of a commercial lease between Associated Vendors, Inc. (“Associated”) and Oakland Meat Company (“Meat”). and Oakland Packing Company (“Packing”). After Meat leased the premises in question from Associated, the company turned around and leased it to Packing for only a portion of the rent they had agreed to pay Associated. Associated asked the judge to hold the owner of the companies responsible for the debt owed, based on the fact that the corporations were alter egos of the owner and not treated as separate legal entities.
The company’s owner, Zaharis, loaned personal funds to Packing without a first holding a corporate meeting or requesting a shareholder vote. When it was time for the loan to be repaid, Meat issued a loan to Packing, and the funds were transferred to Zaharis. Meat applied for and received business permits used by Packing. Zaharis and Meat’s two other officers worked for Packing without receiving compensation; however, Meat continued to pay their salaries. The lawyer who negotiated the commercial lease testified that he was unaware that Meat and Packing were separate companies. A butcher who delivered products to Packing was told to bill Meat instead. Invoices sent to Meat were paid by Packing and vice versa. Several other vendors that did business with both corporations testified they were unaware that Meat and Packing were two separate legal entities. Because the directors commingled assets, did not observe corporate formalities such as holding meetings and keeping minutes, and they treated the companies as one, the court held that the owners were personally liable for the corporations’ debts.

7) Kinney Shoe Corp. v. Polan

Kinney Shoe Corp. v. Polan, 939 F.2d 209 (4th Cir. 1991): The United States Fourth Circuit Court of Appeals found that the business owner, Polan, was responsible for paying a corporate lease entered into on behalf of his company.
In November 1984, Polan filed paperwork with the Secretary of State to create Polan Industries, Inc. He incorporated Industrial one month later. Neither corporation elected any officers, held organizational meetings, or issued a single share of stock. Both corporations were created for the same purpose.
Shortly after the first business was established, Polan began negotiations with Kinney Shoe Corp. to sublease a building owned by a third party. Although the parties signed the sublease in April 1985, their actual agreement started in December 1984. Ten days after the sublease with Kinney was signed, Industrial subleased half of the property to Polan Industries. Polan signed the sublease on behalf of both corporations.
Industrial owned no assets other than the sublease, not even a bank account. The corporation had no income, other than the payments Polan Industries owed under the sublease. When the first lease payment to Kinney became due, Polan issued a check on his personal bank account. This first payment was the only one Kinney received from either company. In 1987, after receiving no further payments, Kinney sued Industrial and obtained a judgment of more than $166,000. Kinney then sued Polan personally to collect its judgment. Despite the long-established rule that the stockholders are not responsible for corporate debts, the Court held that it was appropriate to reach beyond the corporate veil and hold Polan personally liable for the judgment against Industrial because Polan did not follow corporate formalities. Thus, the corporate veil did not protect Polan’s personal assets and the Court upheld the judgment against Polan.

8) Minnesota Mining & Manufacturing Co. v. Superior Court

Minnesota Mining & Manufacturing Co. v. Superior Court, 206 Cal. App. 3d 1027 (1988): The California Court of Appeals held a shareholder responsible for paying a corporate debt after they pierced the corporate veil, even though the company had other shareholders. The case also clarified that, when the corporate veil is pierced, a shareholder may be held liable for one hundred percent of the debt, not a percentage equal to his proportionate share in the company, even if he owns only one share of stock.
Maximum Technology (“MaxiTech”) sued several defendants, including Minnesota Mining and Robert Schwartz for more than $2 million. Schwartz and MaxiTech settled their claims for only $20,000, and Minnesota Mining filed a suit after the judge appealed the settlement. The settlement was based on the erroneous conclusion that Schwartz, as a 40 percent owner of one of the companies being sued, was only responsible for paying 40 percent of that company’s liability if the corporate veil was pierced. However, that is not how the law works. If a company forfeits the protection of the corporate veil by not observing corporate formalities, all owners become jointly and severally liable for corporate debts, as if the business had never incorporated. It is not relevant whether a shareholder owns one share of a company in that scenario or all but one. In this particular scenario where only two of the company’s three shareholders were sued, the two of them would have to bear the burden of the entire corporate debt. As a result, the settlement agreement was based on a faulty assumption of law and could not have been found to have been negotiated in good faith, and Schwartz not only lost the benefit of the corporate veil, but also the advantageous settlement he negotiated.
Protect your assets for yourself and your children and beneficiaries and avoid tax dollars. Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with our Premium UltraTrust Irrevocable Trust. Call today at (888) 938-5872 for a no-cost, no obligation consultation and to learn more.
Rocco Beatrice, CPA, MST, MBA, CWPP, CAPP, MMB – Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an “AA” asset protection, Trust, and estate planning expert.

Pros and Cons of an Offshore Asset Protection Trust: Is it the Best?

Posted on: April 5, 2017 at 3:18 am, in

Offshore Caribbean palm trees and beach.

Pros & Cons Offshore Asset Protection Trust: When to use an Offshore Trust

Today many estate planning firms tout the benefits of Offshore Asset Protection Trusts as instant asset protection solution for every individual looking for the end-all, be-all. It feels to them like finding a the last raft on a ship that has a pin-sized hole in it. Their first instinct is to throw out the raft and jump off the boat immediately. Unfortunately, things since 9/11 and the global financial crisis of 2008 have changed in this country. Prior to 9/11 we recommended Offshore trusts for a much larger percentage of clients, but that is no longer the case.
The problem is that 99% of the time, jumping off the boat is not the best solution because the nearest land is thousands of miles away and the hole is not that large. What they actually need is for the captain to help them analyze all of their options, the safest and easiest of which is to simply plug the hole. Of course if someone is selling rafts, then it’s even more difficult to expect them to recommend a thoughtful and unbiased solution.

And this is the real challenge if you are considering an Offshore Asset Protection Trust. I am a big advocate of the Offshore Asset Protection Trust (just like I am an advocate of rafts) – but in both cases only when they are absolutely necessary and appropriate. In fact, offshore asset protection trusts are only recommended to a very small percentage of clients these days; those with at least $7-10M liquid assets.

Why an Offshore Asset Protection Trust is a Bad Idea for Most People

Because of the new regulations from the Patriot Act and subsequent banking acts, offshore asset protection trusts are very expensive to maintain.
Going offshore to establish asset protection trusts means going out-of-pocket for between $5,000 to $10,000 per year in maintenance fees. Because of these expenses, many of these offshore trusts will only last about three to four years for the average individual, particularly if they were created in a rush to thwart a perceived upcoming risk; for this reason, grantors often question whether their hasty decision was indeed the right one at the time.

Offshore Trust Maintenance Fees Explained

There are quite a few mandatory and compliance forms to file when going offshore. At a minimum, there’s Treasury Department form 90-22.1, Report of Foreign Bank and Financial Accounts to consider. There may also be a requirement to file a Foreign Bank Account Report (FBAR), which falls under the authority of the Financial Crimes Enforcement Network (FinCEN) form 114.
Aside from filing TD and FinCEN forms, offshore trust grantors may also have to respond to the Internal Revenue Service (IRS) by filing forms 3250 and 3250A. These forms, which require disclosure of trust assets, are handled by a foreign trustee and a CPA based in the United States. As of December 31st, 2012, the U.S. Foreign Account Tax Compliance Act (FATCA) is creating an additional burden on offshore trust grantors and trustees by requiring financial institutions abroad to report on the financial holdings and income of their clients.
With the new filing and compliance requirements also comes uncertainty as to how offshore trusts are managed. It calls for retaining the services of an attorney to work in conjunction with the foreign trustee. If you take into consideration all of the aforementioned factors, it is easy to see the $10,000 annual maintenance cost of an offshore trust.

Why $10,000 Offshore Trusts Are Not Always Sustainable

The mid and long-term costs of maintaining offshore trusts for asset protection simply do not add up for most individuals. With regard to offshore trusts being sustainable solutions, consider the following scenario:
An offshore trust with a $10,000 set-up fee and $5,000-$10,000 in annual maintenance costs will end up adding up to:
  • Between $25,000 and $50,000 after five years and five IRS Form 3250 filings.
  • Between $50,000 and $100,000 after 10 years and 10 IRS Form 3250 filings.
  • Between $100,000 and $200,000 after 20 years and 20 IRS Form 3250 filings, assuming no inflation.
It’s not just the sizable amount of money required to keep offshore trusts active year after year that prompts most individuals to dissolve them after just three to four years; there’s also the experience and expertise of the firm to think about. Many financial planners rushing their clients through a $10,000 Offshore Trust lack the real-world experience of a firm that actually files and executes documents, disclosures and compliance forms.
As an alternative, some of our competitors propose a better plan that avoids much of the heavy compliance of the foreign trust because they use a foreign trust in combination with a domestic limited partnership structure for a $25,000 inception cost and “only” $1,500 per year maintenance cost (who knows how much these costs will rise each year once you are locked in). They justify the fee because they insert themselves into your trust as a trust protector. Essentially giving themselves the ultimate control over your assets. Their costs will work out to:
  • $25,000 in the first year
  • $32,500 by the 5th year
  • $40,000 by the 10th year
  • $55,000 by the 20th year
Prospective grantors looking for asset protection strategies should not throw caution into the wind. If anything, shielding assets in advance of a knowingly potential adverse situation should be approached with circumspection. Offshore trust structures are actually very good for grantors who fund their nest eggs with about $7M to $10M, and they can offer a enormous amount of asset protection if executed correctly; however, some plaintiffs have found cracks in the armor and some judges are beginning to formulate a dim view of these instruments.

A Better and More Affordable Long-Term Asset Protection Strategy

A much more optimal alternative to offshore asset protection is the Ultra Trustâ„¢. It is designed to last 21 years beyond the death of the youngest heir and is easy and inexpensive to maintain. This domestic trust is supported by a firm that has 30 years of experience and a spotless record of asset protection in civil cases. A properly drafted, implemented, and funded domestic irrevocable trust has 150 years of success including challenges from the IRS and other sophisticated creditors. Click here for laws and actual cases.
Comparing the cost savings of the Ultra Trustâ„¢ versus offshore trusts is easy. The inception cost is $14,500 and there are no annual fees; also, there are no IRS Form 3520 filing requirements since this is a domestic instrument. To this effect, the long-term costs of an Ultra Trustâ„¢ are as follows:
  • First year: $14,500 set up cost.
  • After 5 years, the grantor has only paid $14,500 and avoided the IRS Form 3520 filings.
  • After 10 years, the grantor has only paid $14,500 and avoided the IRS Form 3520 filings.
  • After 20 years, the grantor has only paid $14,500 and avoided the IRS Form 3520 filings.
Ultra Trust® clients can reach the firm by telephone and in person without having to worry about billing hours. All client services are included in the setup cost. The Ultra Trustâ„¢ is supported by one of the top 3 experienced and respected asset protection firms in North America that takes pride in shielding the holdings of clients; this is the most important factor for prospective clients to consider since there they do not have to worry about what may happen to their assets in an offshore jurisdiction they are not familiar with.
The Ultra Trust® asset protection plan is perpetually effective and does not need to be created in a rush. As a matter of fact, the best time to create this domestic trust is when things are tranquil and before problems arise. With the Ultra Trustâ„¢, clients can rest easy in knowing that their assets enjoy true legal protection all the time.
It is your money. Spend it wisely.

Legal nightmares: Asset protection strategies

Posted on: April 5, 2017 at 3:17 am, in

Everyone has either experienced or know of someone who went through a financial nightmare:

The frivolous lawsuit

Fueling these frivolous lawsuits are contingent fee lawyers. Quite simply, a contingent fee lawyer is your financial nightmare. Your assets can evaporate before your very eyes. His objective is to squeeze all he can out of you. Right, wrong – it does not matter. When he goes in front of a judge he will do and say anything to intimidate you to settle. Most likely, you will be intimidated and you will settle, because either way it’s going to cost you.

An Irresponsible or Problematic Business Partner

You are in business. Your partner has become problematic. You fear the obvious.
Partners are jointly and severally liable for all legal and financial obligations of the partnership and for all wrongful acts of any partner acting in the ordinary course of partnership business.

The Slip and Fall

You are a young doctor with a young family, you just started your own practice. What if? Employees, patients, slip and fall,…but you carry liability insurance, you say.
Liability insurers have two (or three, in some jurisdictions) major duties:
1) the duty to defend,
2) the duty to indemnify, and (in some jurisdictions),
3) the duty to settle a reasonably clear claim.

After the initial defense, the insurer has three options, to:
(1) seek a declaratory judgment of no coverage;
(2) defend; or
(3) refuse either to defend or to seek a declaratory judgment.

Irresponsible or Unruly Children

Your under-age children are irresponsible, uncontrollable, in and out of trouble with the law.
A person who is responsible for the death of another may be liable under civil law, criminal law, or both. In the civil liability context, the basis of which is tort law, parental liability for the acts of minor children takes two forms: vicarious tort liability and, parental responsibility statutes hold parents criminally liable when their children commit acts of juvenile delinquency.
What if you go away for a weekend? You tell your under age kids that you and Mom will take the weekend to some not too distant site, you’re leaving Friday afternoon and returning late Sunday night. You instruct your kids: no friends at the house, no drinking, no partying. You will call to check-in, here’s the number where we will be, and of course we will have our cell phone.
Parental civil liability is imposed by most states, by statute when children are not, or cannot be, financially responsible.
See ARIz. REv. STAT. § 12-661 (1999) (“any act of malicious or willful misconduct of a minor…shall be imputed to the parents or legal guardian having custody or control…”); CAL. CIV. CODE § 1714.1 (Deering 1999) (“Any act of willful misconduct of a minor…shall be imputed to the parent or guardian having custody or control .. . “); ILL. CaMP. STAT. ANN. 740 115/1 (West 1999) (“The legislative purpose of this Act is…to compensate innocent victims of juvenile misconduct that is willful or mali-cious; and…to place upon the parents the obligation to control a minor child…”); N.Y. GEN. OBLIG. LAw § :3-112 (McKinney 1999) (”The parent or legal guardian, other than the state, a local sodal services department or a foster parent, of an infant over ten and less than eighteen years of age, shall be liable…where such infant has willfully, maliciously, or unlawfully damaged…”); TEx. FAM. CODE ANN. § 41.001 (West 1999) (“A parent or other person who has the duty to control…the negligent conduct of the child if the conduct is reasonably attributable to the negligent failure of the parent…or…the willful and malicious conduct of a child who is at least 12 years of age but under 18 years of age. “)

The First Children and the Second Divorce

You’re in a rocky second marriage. You are constantly putting out fires. You are waiting for her to take half and wondering if your child from your first marriage will get anything.

What is the best asset protection solution?

Do any of these, sound familiar?
Protecting your assets from a frivolous lawsuit or any other contingent fee professional can only be accomplished through a timely implementation of an “irrevocable Trust, with an independent Trustee” Period. For added protection you elect to have an “independent Trust Protector.”
Most people, like you, procrastinate. They know the risk but fall short on implementation. Sound familiar? You will not act until it’s too late.
Fraudulent conveyance” is the primary risk when you try to move assets in a crisis situation. It’s too late, says your lawyer. A judge will undo any of your planning, and your lawyers will unlikely help you because he will become a civil conspirator and possibly lose his license to practice.
Is your lawyer, right? Can he lose his license? It depends on the circumstances.
The critical part not taught in school, is avoidance of the fraudulent conveyance claims by potential past, present, and future (not yet born) creditors.
What they overlooked was that the movement/repositioning of any assets…relies on the theory of a “fair” “exchange.” You give me $100 I give you back $100, that’s the “exchange.”
I perfected the “method of exchange” to AVOID fraudulent conveyance, civil conspiracy, avoiding the trigger of income taxes, resulting in the elimination of probate, elimination of estate taxes, elimination of Medicaid and state recovery of Medicaid, avoidance of the Generation Skipping Tax, Tax deferral and tax-free wealth accumulation, reduction of frivolous lawsuits, eliminate ex-spouses, your business partners, greedy and clever lawyers with their contingent-fee clients, and put monkey wrenches into the legal system to make them spend money. Finally: dictate from your grave the distribution of your assets. …. Oh, YES. It’s been tested.
When our Ultra Trust® is combined with the method of exchange, it’s the best you can do without having to go offshore.

Asset Protection in Pennsylvania: Is a Single Member LLC Enough?

Posted on: April 5, 2017 at 3:17 am, in

Many Pennsylvanians look to the almighty LLC to protect their business from personal debts and their personal assets from business debts, but they may be in for a surprise. Others, may not even be looking towards an LLC and could be making an even bigger mistake of holding their business as a sole proprietorship. Either way, Pennsylvanians can do a better job of protecting their assets.

The Sole Proprietorship

A sole proprietorship is just what it seems to be: a business owned by one person in totality. A sole proprietorship may be the worst way to hold a business, because running a business in this manner is like waving a $100 dollar bill at the Louvre in Paris; just not safe. Similar to owning a car, if you owe money to someone, they can take the car to pay the debt. If one has an accident with the car, the people who were injured can acquire other assets, for example assets in a savings account, to pay off the judgment in the lawsuit. In the same way, with a business owned solely, if one owes debt the creditor can go after the business assets. Additionally, if the business is sued, the plaintiff can attach personal assets. An LLC is by far a better choice, although not the best choice.

The Pennsylvania LLC

A Pennsylvania LLC offers better asset protection than a sole proprietorship for several reasons. First the LLC is protected from personal debts of the LLC’s owners. This means that if one of the owner’s are sued personally, the LLC is not required to pay the owner’s debt. The creditor may, however, attach any profits that the LLC is paying to the debtor. This is called a “charging order” [Zokaites v. Pittsburgh Irish Pubs, LLC, 962 A.2d 1220 (PA Super. 2008)] and is the only remedy available to creditors. So although the indebted owner will not lose his business, he won’t profit from it either. The reasoning behind this Pennsylvania law is that it protects the other owners of the LLC from having a creditor as owner with voting rights.

Pennsylvania and the Single Member LLC

But what if there is only a single member of an LLC. A lot of people don’t want to give up part of their business, even to protect it. Well, in a single member LLC, all bets are off [In re Albright, No. 01-11367 (Colo. Bkrpt. April 4, 2003)]. There aren’t any other owners to protect, so a creditor may well be able to take over the ownership of an LLC to satisfy the debt or judgment. This type of LLC probably doesn’t protect much better than a sole proprietorship.

The Better Asset Protection Choice in PA

So what is the better asset protection choice? Don’t own the business directly at all. Keep working for yourself, but don’t own the business. It’s not as confusing as it sounds. Change the sole proprietorship to an LLC owned by a proven and properly drafted, executed and funded irrevocable trust such as the Ultra Trust. Many believe that an irrevocable trust is for estate planning and has nothing to do with a business. Well, an irrevocable trust, drafted in the correct way, can be an excellent vehicle to hold an LLC to add another layer of protection. An irrevocable trust is like a safe at the bank. The LLC goes into the trust and is owned by the trust. Whenever the ex-owner wishes to access funds, they get paid from their job as the manager of the business or they drive up to the teller (trustee) and ask for assets. The teller (trustee) then gives out the assets. When a creditor drives up to the teller window and asks for assets, the teller (trustee) says, “No way. Get out of here.” The creditor has no recourse because the debtor (the ex-owner) doesn’t legally own the business anymore. The trustee is under instructions to stop paying if there is a lawsuit, a divorce or in the case of severe debts. The LLC is safely tucked inside the trust and the ex-owner is safely outside the trust. Similarly, if the LLC falls on hard times, the creditors can try to “pierce the corporate veil” but will only make it to the trust, not the ex-owners personal assets.

Bonus Benefits of Irrevocable Trusts

As an added bonus, there are estate planning benefits. If the LLC is an asset that is growing, then placing the LLC in an irrevocable trust could save thousands of dollars of estate tax for your heirs. This is how it works. The owner owns a business that is worth $100,000 when placed in the trust. Because it is already owned by the trust, and $100,000 is well below the gift tax exemption, no gift tax will be paid. Now, the business grows to an $8 million business. The ex-owner dies and the trust passes the $8 million business to the beneficiaries that he chose in the trust instrument. Because the trust owns the LLC and the trust is the entity passing the LLC to the heirs (whom already had and interest when it was worth $100,000), the LLC is outside of the estate and not subject to estate tax.
Keeping with the added bonus theme, the trust doesn’t have to end at the ex-owner’s death. Unlike a will, a trust is its own entity and can carry on many years past the death of the ex-owner. In a will, the assets are “given” to whomever a person chooses or the will creates a trust. With a pre-existing irrevocable trust, assets are held with instructions to “give” the asset at any given time or under any given circumstances that the ex-owner can imagine. A trust could hold the business and give out the proceeds to the ex-owner’s children a little at a time or hold back payment should a child develop a substance abuse problem or get a divorce. The trust could continue on until the statutory end or it could end when a child reaches a certain age. All the while, the assets are safe from the creditors of the children.
In Pennsylvania, as in all states, A sole proprietorship is not the way to go. An LLC alone can help with asset protection somewhat, but one of the best asset protection strategies to hold a business in Pennsylvania is to combine an LLC with an irrevocable trust. Not only will the protection increase 10 fold, but one gets the added bonus of skipping estate tax when passing the asset to heirs. If one wants to keep their business firmly rooted in the keystone state, an irrevocable trust with and independent trustee is a great choice for any sized business.
Not all trusts are created equal – find out what makes the Ultra Trust Better

Advantages of Using a Nevada Asset Protection Trust for your Asset Protection Trust

Posted on: March 8, 2017 at 1:06 am, in

The Ultra Trust® irrevocable trust asset protection plan is the best way to protect your assets without going offshore and without risking trouble with the IRS and government.

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Author: Rocco Beatrice
Over the last decade, asset protection has become a topic of interest among many individuals and families across the United States. Asset protection strategies have been around for centuries, and one of the most commonly discussed today, since the Nevada self-settled trusts statutes changed in 1999 and subsequent changes to their statute of limitations for gifting into these trusts in 2010, is the Nevada asset protection trust type of family trust.

Nevada asset protection: map of United States with Nevada state highlighted.
Nevada asset protection: map of United States with Nevada state highlighted.

Of all asset protection strategies, the Nevada asset protection trust, on the surface, stands out as being one of the most secure methods of securing personal and family fortunes since the change in statutes.
Many asset protection attorneys have recommended the Nevada asset protection trust to their clients for these very reasons. A Nevada domestic asset protection trust (DAPT) is essentially an irrevocable trust instrument that has special features enabled by the statutes of the Silver State. To understand why asset protection attorneys are turning their attention to Nevada DAPTs, it helps to learn about the history of trusts and recent trends in how society perceives wealth.

The Need for an Asset Protection Trust

The 21st century has become one of the most paradoxical times in terms of how global economies are shaping the way demographic societies develop. The vanishing middle class and the change in the mechanisms that rule the redistribution of assets have become major issues of contention.
The concept of asset protection dates back to the 12th century, when the legal instruments we know as trusts today were created in England. The original purpose of trust was to protect the assets of English knights who served the Crown during the Crusades.
History shows that trusts were created for the purpose of asset protection, and the family trust was perfected over the centuries for this purpose as well as for estate planning, gifting to charities, and keeping family fortunes away from the reach of outsiders and third parties; after all, what is a family trust but an effective way of preserving wealth? A modern real estate family trust, for example, is essentially an updated version of the early trusts used by knights.
United States is the most litigious nations in the world. Map of the United States displaying state ranking of number of torts in each state.
United States is the most litigious nations in the world. Map of the United States displaying state ranking of number of torts in each state. (Click on image to see larger map)

Now that we know that about the historic need for asset protection, understanding the current need becomes easier. The United States has become one of the most litigious societies in the world, and this is something that has been exacerbated with the redistribution of wealth in the 21st century.
To a certain extent, the expression “the rich get richer while the poor get poorer” has become axiomatic in modern times. The so-called “one percent” who make up the wealthiest and most powerful individuals and families in the world have indeed become wealthier over the last few decades. The United States middle class is becoming smaller every day. These changes are caused by ineffective redistribution of wealth schemes.

Individuals and families who make up the American upper middle class and above are in serious need of strong asset protection strategies for business owners such as the Nevada version of the asset protection trust. Basically, families who enjoy unencumbered assets worth $100,000, or whose annual incomes are greater than $100,000 per year, face problems that have been created by the uneven redistribution of wealth in the 21st century.
Whereas early family trusts offered protection from feudal lords, usurious creditors and zealous Crown revenue collectors, family fortunes these days are in danger of being decimated by excessive taxation, irresponsible heirs, zealous creditors, frivolous plaintiffs, gold diggers, and other unpleasant characters.
It is generally accepted that the “one percent” have become so powerful as to be considered untouchable, and thus not many people bother with trying to tap their fortunes. The truth is that those within the “one percent” make extensive use of strategies similar to the Nevada asset protection trust, which happens to enjoy many irrevocable trust advantages.
With a diminished American middle class, revenue collectors and creditors are focusing their money-grabbing efforts on the upper middle class and above because they know that they cannot penetrate the asset protection fortresses of the “one percent.” A similar philosophy is practiced by frivolous plaintiffs and gold diggers who want to make an easy score from those who are not protected by a Nevada asset protection trust.
There is no question that there is a strong need for asset protection these days, and the pesky trend of uneven wealth redistribution will continue to make the Nevada DAPT an important financial strategy.

Understanding the Nevada Asset Protection Trust

Financial planners and asset protection attorneys have been closely following the legislative action in Nevada since 1999, which is when Chapter 166 of the Revised Statutes was amended to pave the way for the creation of an irrevocable grantor trust that would become the strongest form of asset protection in the United States.
Chapter 166 of the Nevada Revised Statutes is known as the Spendthrift Trust Act, and was originally created to place restraints on voluntary and involuntary transfers from trusts to benefits. Asset protection lawyers saw that their clients could certainly benefit from an irrevocable grantor trust created under Nevada state law.
A Nevada DAPT has numerous advantages and can serve many purposes, but its most efficient use is for wealth preservation. As mentioned earlier, a Nevada asset protection trust is also known as a domestic asset protection trust (DAPT), a term that helps to differentiate these instruments from offshore trusts.
To understand the basics of a Nevada DAPT, it helps to learn how an irrevocable grantor trust works. When an asset protection attorney recommends an irrevocable grantor trust to his or her clients, it is because of the way irrevocable trust advantages can help in relation to wealth management and preservation.
An irrevocable grantor trust can be a family trust, a small business trust, or even a real estate family trust. It can also be a DAPT in the sense that it assures the protection of assets for the discretionary benefit of the grantor. As its name suggests, an irrevocable grantor trust does not normally allow for revocation or amendments once it is settled, which is why many asset protection attorneys recommend them to their clients.
As opposed to revocable trusts, which have been used as family trusts as well as real estate family trusts, irrevocable grantor trusts offer real asset protection features relative to an irrevocable grantor trust from a different state by virtue of the Nevada statutes and favorable case law. Although revocable trusts allow grantors to serve as their own trustees and beneficiaries, the revocable nature of these instruments make it too easy for creditors, plaintiffs and others seeking to tap into trust assets to convince a court to issue an order to enact revocation in their favor. Such is not the case with Nevada asset protection trusts since they enjoy the irrevocable trust advantages that create legal barriers against those who wish to claw at the trust assets.
There are two special advantages related to the creation of an irrevocable grantor trust in Nevada: First of all, this is an instrument that is designed to be completely self-settled, which means that the grantor can serve as one of the trustees for the purpose of retaining control of the assets.
The distributions and disbursements from a Nevada asset protection trust can be set up in a discretionary manner instead of being mandatory. Another powerful feature of an irrevocable grantor trust is the trust protector. This is advantage similar to the offshore trusts offered in certain Caribbean jurisdictions. When the grantor of a Nevada asset protection trust appoints a trust protector, he or she is essentially assigning a guardian angel with broad powers such as the legal right to remove trustees and to settle conflicts between beneficiaries.
If an irrevocable grantor trust is to be used as a family trust, an asset protection attorney may recommend that the grantor’s spouse and children be the initial beneficiaries so that they can share distributions. In this fashion, the trust assets enjoy greater protection.

What is a Family Trust?

One of the many irrevocable trust advantages of a Nevada asset protection trust is that it can be used to keep wealth in the family. If we pose the question “what is a family trust” to a seasoned asset protection lawyer, the answer will likely be: a legal instrument that provides an ideal ownership situation for all beneficiaries. In a family trust, relatives are usually designated as the beneficiaries of the assets, which means that they get to enjoy them without actually owning them.
Asset protection attorneys often mention the legal and financial burden of ownership when they discus family trusts. Ownership is the basis of legal claims by creditors, frivolous plaintiffs, gold diggers, freeloaders, and others who may want to claw at the family fortune. One of these claimants, for example, may want to file a lawsuit to place a lien on the apartment occupied by a grantor’s daughter who is attending college. Let’s say the claimant performed maintenance work on the apartment and thinks that he was underpaid. If this prospective plaintiff consults an attorney about this matter, chances are that he will be informed that the young lady does not really own the apartment, and that he is basically barking up the wrong tree.
Eliminating the burden of ownership is one of the greatest benefits of irrevocable trusts, but the traditional reasons for establishing a family trust can certainly be satisfied with a Nevada asset protection trust. An asset protection attorney explaining family trusts may mention that they are one of the best estate planning tools for all families, particularly for those whose members will potentially not get along in probate court.
Legendary musician Prince George Nelson's legal estate of the Prince of Paisley Park engaged in probate court.
Legendary musician Prince George Nelson’s legal estate of the Prince of Paisley Park engaged in probate court.

There is a famous someone who may have needed an asset protection attorney to review how irrevocable trust advantages could have benefited him in life. The estate of Prince George Nelson, one of the most brilliant musicians to hail from Minneapolis, is a legal mess.

The Ultimate Safeguard of a Nevada Asset Protection Trust?

As previously mentioned, Nevada’s version of the Domestic Asset Protection Trust fully came to be one of the strongest financial safeguards with a 1999 amendment to the Nevada Revised Statutes.
We have already explained that an irrevocable trust allows the grantor to create a legal instrument that he or she can retain control of as co-trustee, and with the help of a trust protector, the grantor can be also be a discretionary beneficiary. Asset protection means keeping third parties away from property, investments, valuable artwork, and generally anything else that may be of value.
Asset protection attorneys will always recommend creating a Nevada irrevocable trust when the skies are clear, which means before issues such as a divorce, lawsuits or a crash of the financial markets may come about. The reason for this recommendation can be found in the 1999 amendment to Chapter 166, the Spendthrift Trust Act of Nevada.
One section of Chapter 166 states that once a Nevada DAPT has been active for two years, the trust veil cannot be pierced. In a way, this is similar to what the state of Delaware offers to partners of limited liability companies, and it is also similar to the way some offshore trusts operate. After assets have been transferred into a Nevada asset protection trust, creditors have virtually no chance of establishing a legal claim against the assets after two years have passed.
It is important to note that the Nevada provision that locks down assets after two years applies to future creditors, which is why a Nevada DAPT can greatly help individuals or families who come into sudden wealth due to inheritances or sales of assets.
Creditors and plaintiffs who believe they are entitled to file claims against the assets in trust can only challenge the transfer of assets into the irrevocable trust, and they have two limitations in this regard. First, they must file their legal challenges within two years from the date of the trust being funded; second, they have six months to file after they discover or suspect a dubious transfer being made.
After the two aforementioned limitations, creditors and prospective plaintiffs also have the burden of presenting discovery in a timely manner. The Nevada Revised Statutes consider discovery to be on the date it appears on public records; so, if a creditor and claimant fails to perform due diligence, he or she may be late to the party with regard to filing legal claims.
Ever since the statute of limitations on fraudulent transfers for Nevada trusts was enacted, case law does not reflect a single instance of the trust veil being pierced or trust assets being clawed by creditors or claimants as long as they are within these time limitations, but there is even a better way to avoid the claims of fraudulent conveyance. This is what makes the Nevada asset protection trusts so advantageous, but prospective grantors should be thoroughly advised on how to enact the transfers in a way that makes this provision more effective – The Ultra Trust combined with the Derivative Financial Instrument™.
State From Asset Transfer Date From Date of Reasonable Discovery
Alaska 4 years 1 year
Delaware 4 years 1 year
Nevada 2 years 6 months
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Finally, the recent “Panama Papers” scandal that revealed how the offshore trust industry is used by the rich and powerful is making many Americans think twice about placing their assets in the Caribbean or other jurisdictions abroad.
Although offshore trusts are highly recommended for asset protection purposes, the Panama Papers case brings up valid concerns about activists and journalists working with insiders at these offshore law firms, waiting for the right moment to leak confidential information to the press.
The last thing a grantor wants is to see his or her name listed alongside those of corrupt politicians, drug cartel financiers and disgraced athletes. The Nevada asset protection trust industry has not fallen victim to a Panama Papers-style attack, and this has a lot to do with the fact that it enjoys the support of U.S.-based law firms. Moreover, a Nevada asset protection trust is less expensive to create and maintain than its offshore counterpart.

The Nevada Asset Protection Trust and Daily Life

Asset protection trusts should not be used as checking or savings accounts; however, they can be structured in a way that allows grantors and beneficiaries to access assets in a discretionary manner.
In general, the grantor cannot be the recipient of mandatory distributions; this is a resolution that allows for maximum asset protection. Still, the grantor can be a beneficiary along with his or her spouse, children and relatives, who can enjoy discretionary distributions.
When a Nevada asset protection trust is being managed by a fiduciary trustee, the grantor and beneficiaries can agree on a discretionary distribution and make a formal request. Let’s the family agrees on a $250,000 distribution; the trustee will ensure that the request complies with the law and with the trust agreement. It may take a few days to complete the distribution in a manner that does not pierce the trust veil; for this reason, a Nevada DAPT cannot be considered to have the same flexibility as a money market account with a Visa debit card.
With regard to the minimum assets level at which asset protection trusts can be recommended, the situations will vary. In general, families with net worth of at least $1 million are good candidates for irrevocable trusts based in Nevada. Nonetheless, asset protection attorneys also see young families with annual incomes of $100,000 interested in asset protection; these are usually families who are holding on to investments projected to drastically increase in value. In other words, they may not be the target of money grabbers yet, but they see their situation changing in the near future.
As previously mentioned, asset protection lawyers set up irrevocable trusts in ways that will not arise suspicion among third parties and officials. To this effect, a law firm or trust protector may not recommend depositing every single asset item in trust if doing so may seem as a fraudulent action. This type of advice may extend to distributions, which should not be made in a manner that makes an irrevocable trust look like an ATM.
While it is true that Nevada created some great statutes making the Nevada Asset Protection Trust extremely good, making a Nevada Ultra Trust and combining it with the Derivative Financial InstrumentTM is even better.
The Ultra Trust® has been around for thirty years; being challenged by some of the most powerful groups in the country: the Attorney General of New York, the Attorney General of California, the IRS, and the US Attorney in Washington D.C., among others, without a single detrimental client outcome. Why not put the odds in your corner?
Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.
Mr. Beatrice is an asset protection award winning trust and estate planning expert.

Asset Protection Strategy Consideration

Posted on: March 8, 2017 at 12:56 am, in

Asset Protection Strategy Consideration

bolt nut Asset Protection of UltraTrust
Our Asset Protection System

Asset Protection: Part 2 of 4, by Rocco Beatrice, Sr.

You see the writing on the wall.
You’re not certain if this litigation is going to begin in a month, six months, or year; but you definitely feel the stress related to it. The thought is consuming and dominating your daily life. If you have never gone through this nightmare, I can tell you: … IT’S EXHAUSTING.
Our Asset Protection System is financially engineered to protect your wealth against unscrupulous lawyers, internet prying eyes about you, your family, your finances, scam artists, identity thieves, and other con-artists, and “I’m from the Government and I’m here to help you.”
90% of the time asset protection gets dismantled due to fraudulent conveyance
Regardless of what structure that you use, whether it be a limited partnership (LP), a family limited partnership (FLP), a domestic Limited Liability Company (LLC), a domestic corporation, a domestic Sub S corporation, a domestic trust, or even an offshore trust, if the judge sees that your transfers were without fair market consideration (i.e. you never got paid a fair price for them when you gave them away), they can be clawed back by the court.
Man with head in sand because he won't deal with the problem of protecting his assets.
Something this stressful gets some people so overwhelmed with fear and anxiety that it causes them an inability to take action. They think that if they keep pushing it aside, and bury their head in the sand, that the problem is somehow going to go away on its own.

This is exactly what happened to someone that called us a last year, but it happens at least once every year. Mike originally reached out to us at a time that there was a high risk of a court battle coming, but nothing was set in stone yet. Because he hadn’t actually been served papers indicating that he’s been sued, he thought there might be a chance that there may never be a lawsuit, so he decided to hold off taking action to avoid the cost.
A few months later from our phone call he found out through a series of checks that bounced that his bank accounts were frozen. The creditor got a preliminary judgment and brought it to his bank, freezing the accounts without even his knowledge.
At that point, not only was there nothing that anyone could do, but he couldn’t even access funds to retain a defense attorney because all of his money was frozen.
You don’t have to go through what Mike went through.
BUT… I’m sure you’re thinking, “well, by using an offshore trust, the judge doesn’t have any jurisdiction, so a ‘judgment’ is not executable and It’ll be fine” and you’d be partially right… except for one small detail:
1. Offshore trusts typically cost $5-10,000 a year to maintain
2. If you have committed a fraudulent conveyance, most judges now put you in jail until you comply with a court order to bring the money back into the United States.
Offshore trusts for real estate work even less well:
Real estate that is physically located in a state that the court does have jurisdiction (even if the property is owned by an offshore trust), can be unwound if it is found that you gave up the asset without getting anything for it.
And while setting up a structure and transferring assets into it well before a problem arises is the best advice, the issue of “fraudulent conveyance” still will come up because there is a 4-5-year statute of limitations for any transfer if you do not get paid for it.
This means that, even if you take action before a lawsuit happens, but less than four – five years from the transfer of the assets, you could still be at risk of a fraudulent conveyance claim. So, if you take the wrong advice, you could lose more than “just money, you could be held civilly and criminally liable” taking advice from every 3rd lawyer who claims to be “the Asset Protection Expert.” Most lawyers use the “gifting method” to transfer assets. “GIFTING” is a Fraudulent Conveyance.
Under the Uniform Fraudulent Transfer Act you would be committing a crime, see Section 19.40.041
… (a) a transfer made or obligation incurred by a debtor is fraudulent as to a creditor whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with actual intent to hinder, delay, or defraud any creditor of the debtor.”…
Your lawyer could also be held liable, and possibly lose his license under the theory for civil conspiracy:
The “civil conspiracy theory” has been defined by the courts as (1) an agreement (2) by two or more persons (3) to perform overt act(s) (4) in furtherance of the agreement or conspiracy (5) to accomplish an unlawful purpose or a lawful purpose by unlawful means (6) causing injury to another.
Read part 1 of 4: Asset Protection Strategy
Read part 3 of 4: Irrevocable Trust Structure

Asset Protection Strategy

Posted on: March 8, 2017 at 12:55 am, in

Asset Protection Strategies

It happened!

Asset Protection: Part 1 of 4, by Rocco Beatrice, Sr.

And now, someone may be planning / plotting / threatening / bullying to sue you. “For everything you’ve got.”
A LAWSUIT IS ON THE HORIZON. You knew that you should have done something before a “lawsuit” was more than just an “idle warning” … You gave it some serious thought. You intended to do it, later… but, … it just never got done.
“Later” became a week, then a year, and now it has been at least three years. And, it just never got done. Sounds familiar?
OUR DYSFUNCTIONAL LEGAL SYSTEM. Contingent fee lawyers, and there’s more graduating from law school. It’s nothing new to you, you heard someone-else’s horror stories, divorce stories, victim stories. You just did not expect it – to become your story.
The internet is full of information. Every 3rd lawyer claims to be the “Asset Protection / Estate Planning” expert. Hundreds of books, thousands of articles. Who can you trust?
My 45 years of personal experience dealing with lawyers and lawsuits in business, right down to the “nuts and bolts.

ASSET PROTECTION is about giving your creditor two (2) options:
1. You dictate the terms of settlement to your creditor.
2. You file for bankruptcy, and your creditor gets NOTHING.
Which is better, diarrhea or throwing-up?
Our Ultra Trust® locked to our Derivative Financial Instrument

bolt nut Asset Protection of UltraTrust
Our Asset Protection System

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Our Ultra Trust®

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Our Derivative Financial Instrument™

Read part 3 of 4: Irrevocable Trust Structure

Estate Street Partners Protect Assets from Lawsuits, Divorce, Medicaid Spend Down

Posted on: February 26, 2017 at 5:43 am, in

Estate Street Partners offers advanced financial advice to ensure maximum asset protection from lawsuits, divorce and Medicaid spend down

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours
Protect your assets from lawsuits, divorce, Medicaid.
Hello, my name is Rocco Beatrice. I am the Managing Director for Estate Street Partners. We provide financial solutions to your problems of wealth and help protect your assets. We coordinate with your financial goals. We bring to the table the different disciplines, the accountants, the lawyers, the appraisers, the tax guys all for the purpose of protecting your assets and wealth against potential frivolous lawsuits, divorce, the Medicaid spend down, and to minimize your taxes on your income streams, to defer your capital gains taxes, to eliminate the probate process, and to eliminate the Estate tax. And finally, to facilitate tax efficient transfers of your assets and wealth to whomever you’d like to your heirs, children or beneficiaries (in the second generation) and to enable a top, reliable asset protection plan.
Continue to read part 2 of 11 the Ultra Trust® benefits as one of the best irrevocable trust plans for protecting your assets here: What is the Ultra Trust®?

Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.


Mr. Beatrice is an asset protection award winning trust and estate planning expert.
To learn more about irrevocable trusts and senior elder care visit:

Asset Protection Strategies

Posted on: February 21, 2017 at 5:28 am, in

Asset protection trusts such as irrevocable trusts require an independent trustee

Asset Protection Strategies

There are many strategies to take the necessary steps in order to protect your hard earned assets. Unfortunately, there is not a simple solution for every situation. Each person will choose a different method. It is important that the method chosen will be the most beneficial in protecting all of your assets.

Asset Protection Trusts

Asset protection trusts are great tools to protect assets. There are many states that allow these trusts. Before, it was required for wealthy people to have offshore trusts. While this did protect their assets, it became very expensive and time consuming due to additional reporting requirements. Some states that now support asset protection trusts include Rhode Island, Alaska, Delaware and Nevada. The great thing about these trusts is that you do not need to be a resident of the state to buy into one. These trusts work to protect your assets by placing a portion of your assets in the hands of a trustee. The assets that are placed in the irrevocable trust will not be able to be touched by creditors.

Protect Assets from Your Children

In addition, the trusts can allow you to shield assets from your children. In order to set up this type of trust, there are some requirements that must be met. The trust must be irrevocable, it must have an independent trustee, distributions can only be made at the discretion of the trustee, the trust must have a spendthrift clause, some of the assets must be located in the state in which the trust is in and the documents pertaining to the trust must be located in the same state as the trust.

Accounts-Receivable Financing to Protect Assets

If you are a business owner, you may benefit from accounts-receivable financing. This is when you are allowed to borrow money against the receivables of the business and then place the money into a separate account that is non-business. This tool deters creditors and protects assets that would typically be attacked.

Remove Equity for Asset Protection

Another way to protect your assets is to remove all equity from them. When this is done, you can place the money into assets that are protected by your state. For example, if you are the owner of an apartment complex, you could take a loan against the equity of the building and place the money into an annuity, Roth IRA on Roids, or another protected asset.

Family Limited Partnership in Asset Protection

Family limited partnerships are also good asset protection tools. This is when assets are transferred into the partnership. The assets are then exchanged for shares in that partnership. Since the family limited partnership owns the assets, they are completely protected from creditors under the Uniform Limited Partnership Act. The general partner is still at risk, making the irrevocable trust a little stronger, however.

Simpler Ways to Protect Assets

Many of the mentioned strategies may be complex and confusing. There is no need to panic. There are easier ways to protect your assets from creditors. These strategies are inexpensive and effective. One of the most common strategies used by married couples is to transfer all assets into the spouse’s name. This will protect your assets, but if there is a divorce, the end result could cost you those assets. Make use of any employer-sponsored retirement plan. Most times, these plans are protected and offer a great way to save and protect your assets. Always take advantage of state laws regarding asset protection. The laws pertaining to homesteads, life insurance and annuities can be great tools when planning to protect your assets. For example, if you pay down your mortgage, you may be protecting the cash that would otherwise be vulnerable. Be sure to contact your state to find out what protection is offered before making any decisions. One thing to remember when planning to protect your assets is to never combine business assets with your personal assets. If the business fails, your personal assets could be in jeopardy if the assets have been combined.

Protect Your Assets Before There is a Problem

No matter what method you think will be best, always consult with a professional such as Estate Street Partners. Make sure you do some research and get references before hiring a consultant. If you have found an expert to help you plan, take the time needed to discuss every option. You want to make sure you are taking the right steps to protect all of your assets in the event of a lawsuit. Finally, don’t wait. Protect those assets before there is a problem.

Reviews on the ‘Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST®’ eBook

Posted on: February 21, 2017 at 3:51 am, in

Payment made via Paypal for the eBook: “Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST®

5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Treasure Trove of Learning, September 14, 2010

Scott N.

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
This book offers some wonderful insight and education – not just about protection strategies, but about what motivates those who sue, how the legal process works, and how lawyers think. Anyone with assets should learn this material and read this book. The strategies outlined are intuitive and logical once you understand the premise that we’re all very exposed. My lawyer should be reading Mr. Beatrice’s book!

Buy the Asset Protection eBook by Ultra Trust, the irrevocable trust plan.
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection straight forward, in my opinion, September 13, 2010

Review (testimony) by C. H. Fisher “fluke skywrecker”

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
I had no idea what a trust is, a little idea of what an LLC is, nothing about asset protection. All I knew was that the rich smart guys can get away with so much while us peons have so little. I knew I needed help. I ‘read’ the diagrams and was profitted greatly since I am mostly a visual learner. I also enjoyed Rocco’s straight talk, and his phone calls always made sense. IMHO, not much beating around the bush. I appreciate straight talk. That’s what works for me. I don’t like those authors who bury their gems of knowledge in pounds of English filler.
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Excellent Asset Protection Book!, September 10, 2010
This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
Mr. Beatrice and his team’s expertise in the field of irrevocable trust asset protection proved invaluable to me in setting up a trust for my upcoming problems. The book provided a great example of how asset protection works (including some methods that don’t work) providing examples throughout, as well as why one needs to do things in a certain way to avoid fraudulent conveyance. He goes on to explain how and why the Ultra Trust offers the ultimate in protection and safety for your major assets against lawsuits (of any kind), as well as elimination of probate and estate taxes in the US. The book takes up the popular types of asset protection methodologies being marketed here in the US (including the offshore assets protection trusts and LLC’S), explains each with an expert’s touch,but in easy to understand language for a layman, and compares them with the Ultra Trust. Setting up a trust, particularly one such as the ‘Ultra Trust’, is a serious business, fraught with traps for creditors when established correctly, and ought to be done with professional help each step of the way-one of which not done correctly, could completely undo the purpose of the asset protection planning. Mr. Beatrice expertise in this field proved invaluable to me in setting up a trust for my needs, and I’m a lot happier now, knowing my assets are so well protected. I’d recommend reading the book first for anyone contemplating an irrevocable trust for asset protection, and I thank him countlessly for his patient guidance assisting me with my problem that cound have bankrupted me. William B. (Townsend. GA, USA)
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Intense Topic – easy to read, September 8, 2010
This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
Pretty simple, I wouldn’t want to be sued knowing that there are options like the UltraTrust out there.
I usually have a lot of trouble following very technical books but in this case, the topics are nicely explained and you always feel like you can email or call the author directly if you wanted additional clarification.
I am early on in my career so knowing these trusts exist will help me hopefully structure things correctly so my family can benefit long term.
I would recommend reading this, talking to a few lawyers and bankers and then making an educated decision about which direction you want to go. It can never hurt to spend a few extra bucks to future proof your estate.
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection A must have for your home and office, August 30, 2010

Review (testimony) by dannie11

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
This book did an outstanding job of delivering information to me that I could comprehend and understand with ease.
Being a financial planner, I read this book so I could be more knowledgeable and make more confident decisions to protect myself, my clients, and my family. I now have a more thorough understanding about asset protection and I will be keeping this book in close reach for me to refer back to!
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection More Than You Expect!, August 12, 2010

Review (testimony) by StawCran23

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
I know quite a bit about business entities since I own a business, but I was concerned that this book could be a bit over my head, or too basic. I found that it did a fantastic job of covering the basics without being condescending and even addressed some much more complicated strategies at a level I understood as well. I also got some great ideas and strategies to really increase my protection and dramatically cut my taxes. Rocco Beatrice manages to make complex strategies digestible for those not versed in legal jargon, yet doesn’t talk down to the reader with familiarity in the areas he covers. Since studying the strategies within the book, I find I can understand and speak with my CPA and attorney with more confidence and comprehension. I have also found that I can make better tax and legal decisions with my new knowledge and my tax and legal advisors were impressed with my understanding of the topics of asset protection, estate planning and tax reduction. Thanks, Mr. Beatrice!
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Excellent practical Guide for Asset protection!!!, August 11, 2010

Review (testimony) by jingw954

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
This book is absolutely a very Practical Guide that you can apply immediately to your issues and REALLY helps you out! The author clarifies the solutions for asset protection issues in a clear and very easy-to-follow way. There are also very useful summaries for the key points and useful forms to help you finding out the answer in a most straight-forward way (like the form that helps you to evaluate your financial risk and determine your need for asset protection).
The second-half of this book is mainly about “Questions and Answers”; it answers the most commonly encountered problems in this kind of issues. Just feel like consulting face-to-face with the expert, this section displays the solutions with precision and clarity which makes this book to be the handiest guidebook! Highly recommended for anyone who is willing to protect your personal or business wealth, Excellent Work!
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Mine or Theirs, August 3, 2010

Review (testimony) by Regis Sauger

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
I am also an author and speaker. I have over 48,000 readers of my articles. I am also a licensed mortgage broker in Florida and talk to many folks with financial issues.
Un-fortunately in today’s litigious mindset, we all have the fear of Attorneys, Judges, Court Rooms and law-suits. It seems you cannot “sneeze” without someone wanting to sue. As you go through life and accumulate assets, the predominant fear is losing those assets and sometimes for actions that you were not responsible for. A wayward off-spring caught up in the “jungle” of society can come back to haunt the parents.
If, you read this book a couple of times over and contact the author you will be in awe of the knowledge and expertise that Rocco Beatrice presents that can save you hundreds of thousands of dollars.
My step-son is an attorney. He is a very competent attorney. But, just like the medical profession, he doesn’t know everything. He only knows what he chooses to practice. In dealing with financial sharks and lawsuits it behooves one to have enough knowledge of how to retain that which is yours rather than lose it to some blood-thirsty creditor or attorney.
5-star rating on the book by Ultra Trust®, the irrevocable trust asset protection Helpful solutions. Great insight. A++, July 31, 2010

Review (testimony) by genius527

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
This book helped me so much. I was sued by an out-of-state entity in their state and I survived with barely a few scratches. After reading this book I had the authors make a trust for me that protected me and my assets. The case was settled in a small amount of time once the plaintiff learned that I was well protected and judgment proof. I am thankful to the authors for their expertise and guidance. Had it not been for the easy to understand solutions, tips and strategies outlined in this book I would have likely had to deal with more legal headaches. This is a must read for anyone in a situation even remotely similar to mine.
4-star rating on the book by Ultra Trust®, the irrevocable trust asset protection A Must Read if you have a problem on the horizon, July 2, 2010

Review (testimony) by Kristin1118

This review is from: Being Sued? The Insider Secrets of Asset Protection: The ULTRA TRUST® (Paperback)
This book runs through many of the strategies most lawyers advocate and the pros and cons of each. It also goes through the different ways to hold assets and the best way to hold assets to protect yourself. Most importantly, it shows you how to get the assets into the Trust even if you are about to be sued, like in my case. Most lawyers told me I could not do anything because my upcoming lawsuit would restrict my ability to move my house and assets, but I found out that it is possible.
While this is a great book because it outlines the key strategies, like most legal books, it is not a do-it-yourself book for novices like me, but your attorney can implement the ideas outlined. I was shocked that the lawyers I spoke with did not know most of this stuff in the book.