UltraTrust Irrevocable Trust Asset Protection

Estate Planning

Asset Protection, Estate Planning, Lawsuit

Fraudulent Transfers, Civil Conspiracy, Uniform Fraudulent Transfer Act

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What are Fraudulent Transfers? What is Civil Conspiracy? What is the Uniform Fraudulent Act state regarding LLC and creditor claims? Discuss the Single Member LLC within the context of owning public shares in a stock and its role in asset protection.   Under the Uniform 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…”     Watch the video on   Like this video? Subscribe to our channel.   Learn how to avoid incorrect transfers in this article (click here)   What are Fraudulent Transfers?   Fraudulent conveyance has to do with transferring assets at less than the “fair cash value” thereby defrauding a potential creditor or the intentional divesting of assets which become unavailable for satisfaction of the creditor’s claims. Fair cash value means cash or near cash value at the time of transfer, not the price you paid for the asset.   For example, you transfer your portion of your equity in your home to your wife for $200.00 and the fair cash value of your portion of the equity was $250,000 (total value of the home was $500,000) or you transfer title to your Mercedes to your brother for $100.00. Additionally the IRS would claim that such a transfer is a gift subject to a gift tax return and assess a penalty for the non-filing of Form 709 (PDF) United States Gift (and Generation-Skipping Transfer) Tax Return.   What is 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. To be convincing, the creditor must allege not only the conspirators committed the act but also the act was tortious in nature. The conspiracy alone is not enough to trigger a claim for civil conspiracy without the underlying tort. Lately, however, advisors have been dragged into the creditor claims as co-conspirators for suggesting and implementing everyday common asset protection strategies. This has made me more cautious, making sure that I don’t get dragged in to my own legal nightmare.   Example of Single Member LLC Membership Units and Shares in a Public Stock   SINGLE MEMBER LLCs should be avoided. The example I can use is this: If you own 1,000 shares of General Motors it’s considered a personal asset subject to a creditor claim. If the claim is perfected by litigation in favor of the creditor the owner of the 1,000 shares of General Motors will have to transfer those shares to the creditor in satisfaction of his claim. Owning single member units of an LLC is not any different. The Owner of the LLC membership units is equivalent to owning the 1,000 shares of General Motors and therefore subject to a perfected creditor claim.   Asset Protection: Placing Title of Assets in Another Legal Entity   THE CONCEPT OF ASSET PROTECTION includes the possibility of placing title in certain assets in the name of a less vulnerable spouse or other family members, or a legal entity. One should be very attentive in transferring title without an open invitation to a “incorrect transfer” claim against the asset transferred or the possibility of death by the spouse or family member, or possible dissolution of the marriage, or a court judgment.   The most common methods of holding assets by INDIVIDUALS:   Joint Tenancy Joint Tenancy with right of survivorship Tenants in Common Tenancy by the Entirety Community Property   LEGAL ENTITIES (Artificial person created by application of law):   General Partnership Limited Partnership Limited Liability Company Corporation under Chapter “C” Corporation under Sub Chapter “S” Revocable Trust (There are many Revocable Trust variations, since a Trust is nothing more than a Contract) Irrevocable Trust (There are many Irrevocable Trust variations, since a Trust is nothing more than a Contract)   To learn more about avoiding conveyance rules and how to avoid civil conspiracy theories when repositioning assets and implementation of precise asset protection systems speak with an experienced and knowledgeable financial planner and advisor in these matters such as Estate Street Partners offering free initial consultations.   I always caution against simply speaking with only an attorney and only an accountant in complex financial planning with regards to single member LLC scenarios, partnerships in Limited Liability Company formations, regulations surrounding conveyance and civil conspiracy and asset protection. It’s best to develop or consult with a group or team consisting of an attorney, accountant and financial planner or advisor to offer you the best, well-rounded protection. You will gain a more thorough understanding of the nature of asset protection from LLC formations to avoid incorrect conveyance and civil conspiracy judgments.   Read the first part of this article “Fraudulent Conveyance, Civil Conspiracy, Uniform Fraudulent Transfer Act” by clicking here Single Member LLC: Charging Order, Creditor Claims, Pass-through

Asset Protection, Estate Planning

What is Asset Protection

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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

Divorce, Estate Planning

5 Estate Planning Horrors to Avoid In Your Divorce

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  “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

Estate Planning, Irrevocable Trust

Should You Consider Moving to Avoid State Estate Taxes?

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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.    

Estate Planning, Prenuptial

Five Estate Planning Things You Need to Know After Getting Married

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1. You both own everything.   You and your spouse are now the joint owners of all of the marital assets with a few exceptions and a few state specific variables. This means that if one spouse’s income has a lot more than the other, it doesn’t matter. Those savings accounts and even retirement accounts may be split evenly upon divorce.   2. Children of prior marriages are forgotten.   Of course the children aren’t forgotten, but they are forgotten in the estate planning world. Most state intestate (without a will) laws state that your assets go to your spouse in the event of an untimely death. That leaves your children from a prior marriage directly out of the line of descendants that will receive your assets. Unless your spouse gives them assets in their will, as a beneficiary of a trust, or outright, your children of a prior marriage will never see any of it without proper estate planning.   3. Children of the current marriage may be forgotten.   If you die and your spouse takes all of the estate, your spouse can do whatever they please with all of that money. They can take trips around the world, spend it on their new love interest or even give it to their family. In most states, there is no law saying it has to go to your children. That’s right, your children with your current spouse may never get any of your estate without the right planning.   4. There is twice the chance of long term care eating up your assets.   People don’t generally think of long term care when they are under retirement age, but the sooner one acts, the sooner the time clock starts running on Medicaid’s 5 year look-back clock. To qualify for Medicaid to pay for you or your spouse’s nursing home care, you have to own very little; like less than $2000. Now you have two people to worry about. To get to the point where Medicaid thinks you own very little, the nursing home will bill you either to death or until you own very little and ultimately qualify for medicaid. If you give your money away and not enough time has passed, you won’t qualify for Medicaid and have to pay out of pocket. This can really be a problem if the person who you gave it to won’t give it back or cannot because they already spent it!   5. Your spouse could end up with half of your business, with the right to make decisions.   What could be worse than a spouse to whom you are divorced from telling you what to do with your business? Well, how about a spouse who decides you are not being cooperative, so they get a court to order you to sell the business.   What can you do to protect your assets after you get married:   In addition to the run-of-the-mill estate planning documents, a will, power of attorney, health care proxy and living will, one document can help with all of these estate planning items: An Irrevocable Trust. When you are married, you and your spouse can choose to put money into an irrevocable trust. The assets will be safe in the trust from you or your spouse and the trustee who is in charge of the assets will have to distribute them in the manner prescribed by you – not the manner the State tells you. Thus, those particular assets are divided when, presumably, the couple is still in love and thinking rationally, rather than when you are at each others’ throats. With less to fight over at divorce, the process could be simpler, but the Irrevocable Trust can also help with the other matters listed above.   The instructions in the Irrevocable Trust can say whatever you and your spouse want them to say. When forming the trust, you can include your kids from a past marriage. You can also tell the trustee to hold the funds and only give them out for certain expenditures or landmarks, like college funding or on their wedding day. All the of kids can be provided for, but not just by giving them a bucket of money and letting them run free. The assets are protected by the trust and thoughtfully given out by the trustee.   Putting assets in an Irrevocable Trust may also help you qualify for Medicaid. When you put assets in an Irrevocable trust, you are effectively getting them out of your name and into the name of the trust. You don’t own them anymore, although you can benefit from them – think about it like leasing a car. When you apply for Medicaid, if the lookback period has gone by, those assets will not be counted towards your net worth. For example, if you were to put $1.3M in an Irrevocable Trust, 10 years ago and applied for Medicaid with $20 in your personal bank account, Medicaid would pick up the tab for long term care. If you kept the $1.3M in your name, then you, or your spouse would not qualify for Medicaid and the long term care facility would upwards of $12,000 or more a month for your care until nearly all the assets are gone.   If you have your own business or are starting one you should learn about LLCs and Irrevocable Trusts. You can put your new or existing LLC in a trust and specify how you want the profits distributed. In the event of a divorce, the business would continue to run exactly how it has run, the profits are distributed exactly how they have been and that pesky ex-spouse is written out of a controlling interest. After all, while a marriage is doing well, the spouse will say, “Oh honey, that’s your business. I never want to interfere,” but if the marriage goes sour, “I want to own your business, and if I can’t own it,

Estate Planning, UltraTrust

Limited Liability Company LLC-What is it?

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How the Limited Liability Company (LLC) avoids double taxation, provides asset protection and financial and tax benefits. Creditors and contingent-fee lawyers, when structured correctly, are deterred to launch frivolous lawsuits.        Watch the video on   Like this video? Subscribe to our channel.   The limited liability company (LLC) is the strongest asset protection devise for your business replacing the sub chapter “S” corporation. The LLC offers limited liability to the owners of a business and, additionally, the limited liability company is approved in all 50 states.   The LLC is similar to a corporation and sometimes has been mistakenly referred as the limited liability corporation. In the LLC, the individuals are called members and the LLC is most advantageous to smaller companies with a smaller number of members. In cases where the LLC has only one member the LLC may be regarded as a disregarded entity whereby the sole member is viewed as the entity performing the operations of the LLC. This contrasts a corporation owned by a single individual whereby the corporation is viewed as the entity performing the operations.   The limited liability company with multiple members avoids double taxation because the members are partners for taxation purposes. The IRS Form 1065 and Schedule SE (i.e. Self-Employment Tax) are used with the LLC entity. For tax purposes, the LLC in a partnership formation reports its income and deductions via each members’ income tax return.     Why Choose the LLC for Asset Protection?   Courts and clever predators with their contingent-fee lawyers have significantly eroded the benefits and protection of corporate entities, allowing for little or no asset protection against employees, shareholders, officers, or directors. The limited liability company has become the “entity of choice” for all new business structures. The sub chapter “S” corporation has now become the white elephant.     protect assets  with a 99.9% success rate     Limited Liability Company’s Financial Benefit   There is a significant financial benefit to establishing a limited liability company for your business. Your predatory creditor’s sole remedy is the “charging order.” Similar to partnerships, the charging order can only be against LLC member(s) and not the LLC. The charging order is obtained subsequent to your creditor obtaining a judgment against you for monetary damages and other frivolous charges. Your creditor cannot, and is precluded by law, to step into your shoes as an LLC member and take over the financial affairs of your LLC. This is, in and by itself, the limited liability company’s most significant financial benefit.   In all cases, after you plead with your creditor, “Please, please, please, do NOT place a charging order against me because it’ll have the most detrimental affect on how I deal with my existing clients, banks and other businesses,” your creditor will turn around and slap you with a charging order. What you creditor does not realize is that he just gave you a major gift. Thanks in largely due to the drafters of the Uniform Limited Partnership Act.   The charging order means that your creditor has a right to “all your capital distributions.” So when will you have a capital distribution to pay your creditor? The answer is never. You are allowed to take a salary, to joint venture, to borrow money from the limited liability company but you will never take a capital distribution wherein you will pay your creditor. You have just become your creditor’s and their contingent-fee, gold-digging lawyer’s worst nightmare.   Limited Liability Company Tax Advantage   The LLC has a significant tax advantage. Someone must pay the taxes so the IRS declares. According to the IRS, in revenue ruling (77-137) it states that someone must pay the taxes. Since the person holding the charging order will receive the “K-1”, he must pay the taxes on the income generated by the LLC even though your creditor never receives any actual cash from the business.   The creditor saddled by the charging order is treated as a substituted limited partner for tax purposes, thanks to the IRS, and will suffer the tax consequences without capacity to force payment, dissolution or distribution. Do you think that your creditor will want to settle? Please note the “K-1” is the yearly income tax statement to be included in recipient’s taxable income for the year similar to your mutual fund’s form 1099.   The shocking news is that your creditor will be obligated to pay the taxes for you. Every 6 months, send your creditor a letter on how well your business is doing and that you want to make sure that he prepares himself to pay the taxes. At the end of the taxable year, you send your creditor a copy of an additional letter along with the K-1, addressed to the IRS, requesting an audit of your creditor because you want to be tax compliant and that you want to make sure that all taxes have been timely paid and are up-to-date. Do you still have doubts that your creditor will want to settle?   Is the LLC for you?   When you combine the limited liability company’s tax benefit and the protection of the charging order with a surefire asset protection system of an irrevocable trust such as the Ultra Trust® you will receive a financial asset protection fortress against your creditors and other contingent-fee based lawyers. So the next time there are any pending frivolous lawsuits you can relax and sleep soundly at night knowing your business assets are well protected.   Read these dangers and disadvantages of the more traditional limited partnerships:   Family Limited Partnership Read more articles on asset protection, limited liability company here: LLC Advantages Frivolous Lawsuits Foreign LLC Offshore Tax Havens Offshore Asset Protection Why is Offshore Asset Protection Good? International Business Company Estate Trust and Planning Services   Become judgment proof, preserve your wealth by calling Estate Street Partners toll-free at 508-429-0011 for an Absolutely Free Consultation with No Strings Attached, No

Estate Planning, Trusts

What is a Trust Protector?

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What is a Trust Protector and Do I Really Need One? Can it protect me and my money? How does a Trust Protector act as a check and balance? What does a trust protector do exactly?   In our gratification-obsessed society, everything is subject to change – even our most intimate relationships.   Today, you’re in a very different place than 10 or 15 years ago. You’ve probably lost touch with many of your old friends. You might live in a different household, a different job, and practice different hobbies. The past is gone forever.   15 years from today, chances are good that things will look different still. While a typical irrevocable trust provides the strongest framework for preserving your hard-earned assets, it lacks the flexibility that your ever-changing circumstances demand.   Simply put, you need a trust protector to back you up. That’s why it’s so important to upgrade to a Trust package with the special power of appointment and trust protector. This added protection gives you the flexibility to respond to unforeseen changes and dilemmas.   Why a Trust Protector?   In many countries, trust protectors are a requirement in an estate plan. While this isn’t true of the United States, legal experts are virtually unanimous in their agreement that trust protectors are a crucial component of any irrevocable trust and estate planning.   A trust protector is a third-party individual – separate from the trustee – who understands the dynamics of your family. He acts as a check on the actions of the trustee and maintains a fiduciary responsibility to the trust. By protecting the assets of the trust from the inevitable squabbles that occur whenever there’s money to be had, he lives up to his name.     The validity of the trust protector has been upheld time and again. The court’s decision in McLean Irrevocable Trust v. Patrick Davis, P.C. (Mo. Ct. App. 2009) clearly establishes the legal basis for the office’s existence and provides a framework for the definition of its roles.   A subsequent case brought by the same plaintiff, McLean Irrevocable Trust v. Ponder, is even more pointed. Here, the court ruled that a trust protector has a fiduciary obligation to take action against unresponsive, incompetent or malevolent trustees.   The trust protector doesn’t have the luxury of looking the other way. He’s like an insurance policy that automatically comes to the rescue whenever a trust’s integrity is threatened – just like the crucial insurance policies that we carry on our homes, cars, and businesses. The trust protector provides the same backup planning.   As we outline in this comprehensive article on “The Trust Protector: Power & Responsibilities”, a trust protector can legally do the following:   Replace your trustee at will Serve as a mediator for squabbling trustees and beneficiaries Veto large disbursements in accordance with existing agreements Change the trust’s state of incorporation if you relocate or to avoid taxes Veto questionable investment decisions and beneficiary distributions Address legal challenges to the trust Terminate a dwindling or unnecessary trust   The true beauty of the role, though, lies in its versatility. A trust protector can do as much or as little as you need. He’s the perfect ally in any trust-related jam. Let’s see 2 real-life examples of what a trust protector can do.   Best Friends, Just Not for Life   Meet Sal.   After graduating from college, Sal started painting houses to make ends meet. Two summers in, he had saved up enough to buy a truck and some tools. Before long, he was working as a foreman for a contracting company that replaced roofs, wiring systems, and insulation in aging suburban homes.   Soon enough, he got sick of repairing other peoples’ homes and decided to buy and fix up his own. His first buy was a sad-looking foreclosure in a working-class neighborhood just outside of Philly, but he worked on it until it was the pride of the block. He booked a cool $100,000 profit from its sale.   Soon, Sal was a mini-real estate mogul who managed a portfolio of eight properties in the area. He had a great system: He’d fix up each house, sell it for well above market price, book the profits and plow the principal back into a new property.   To protect his years of hard work and preserve a legacy for his growing family, Sal set up an irrevocable trust and named his young son as its sole beneficiary. He chose Dave, his former college roommate, to be its trustee. Dave came from a well-off family, so he understood how to manage money and he refused the offer of being paid to serve as trustee.   The experience wasn’t always conflict-free. Sal had a knack for identifying market peaks, but Dave didn’t always listen to his advice. Sal’s properties were always the trust’s most valuable assets, and the proceeds from their sales provided much-needed liquidity.   Fifteen years later, matters have come to a head. Sal’s son has been helping his dad fix up houses for years and finally wants what – he thinks – is due to him. He approaches Dave and proposes using $100,000 of the trust’s funds to buy a late-model Porsche for his personal use. As a wealthy man who is used to having a nice ride, Dave happily agrees to the plan.   Sal is disgusted. Dave has refused to sell any houses for several years, so the trust is low on cash. A frivolous car purchase would further risk the solvency of the trust and, should an unforeseen event occur, potentially jeopardize everything Sal has achieved.   If Sal had a trust protector, he could put a stop to this nonsense by firing Dave or at least vetoing his questionable purchasing decision. Sal’s son certainly deserves a decent vehicle, but perhaps the trust protector could have forced the trustee to purchase a Camry over a Carrera.   As it stands, Sal

Estate Planning

Top 5 Revocable Living Trust Pros and Cons

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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.   Last wills and testament with a revocable living trust   A common question considered by individuals who are preparing their estate planning is whether a will or a living trust would be a better option to serve their estate planning needs. Everyone has slightly different goals and nobody has the exact same needs. There are many benefits to choosing a Revocable Living trust instead of a will, but there are also some drawbacks. Which is better is a very personal decision. Many people use both a will and a trust to ensure that their assets are distributed according to their wishes, but they are very different. Still other people use an irrevocable trust instead of a living revocable trust. Here are the highlights of the top 5 pros and cons of the living revocable trust:   1. Revocable Living trusts do not go through probate – Pro   One of the primary reasons a person might choose a living revocable trust to distribute his or her estate is that trusts allow the heirs to avoid going through probate. Probate is the legal process of distributing assets under a will, and it requires going to court. The administrative costs associated with probate can be as high as six to ten percent of the estate’s value, which could get expensive when an estate has substantial assets. If there are challenges or issues it is likely going to be closer to ten percent than six.   Revocable Living trusts do not avoid all costs associated with probate – Con   The estate must still pay state or federal estate taxes or other taxes, which means that the administrator may have to hire an accountant or tax attorney to assist. An estate attorney may still be needed to assist with transferring assets from the revocable living trust to the beneficiaries. The successor trustee may also be entitled to a fee for the time spent administering the trust.   2. Faster distribution of assets – Pro   The law requires that probate be completed in each state where a person owns property at the time of his or her death. Thus, the more states where a person has assets, the more expensive probate will be. Probate can also be time-consuming, especially if the process must be completed in several states. Therefore, having a revocable trust instead of a will may reduce the amount of time that passes before assets are transferred to the Settlor’s heirs.   Revocable Living trusts carry upfront costs – Con   There are still some costs associated with establishing a trust. It may be necessary to pay an attorney to create the trust, write necessary documents, and transfer ownership of personal assets into the trust. The process could cost anywhere from $1,000 to $2,500. There may also be costs associated with settling the estate if the heirs or beneficiaries to the trust dispute the asset distribution or validity of the trust documents. The estate may have to pay to value assets in the trust or settle creditor claims against trust assets. Therefore, establishing a trust doesn’t avoid one hundred percent of the costs of probate, but many individuals could likely still save money.   3. Revocable Living trusts’ distribution is private – Pro   Another big advantage to avoiding probate is that probate proceedings are public. A person who wishes to keep his or her finances private and protect the heirs from public scrutiny may prefer to create a revocable trust instead. The contents of trust documents are not public record. If it becomes necessary to probate assets not included in the trust, the probate records would note the existence of a trust, but not the contents or the value of the assets. Many people choose to create a revocable trust for this reason.   4. The Settlor retains control of assets during life – Pro   A revocable trust allows the Settlor to maintain control of assets during his or her lifespan. Assets that are acquired after the trust is formed may be added, and the Settlor may also remove and sell assets, change beneficiaries, or choose to dissolve the trust entirely. Nothing is final during the Settlor’s lifetime.   The Settlor needs to retitle the assets but for asset protection she still owns them – Con   The Settlor must retitle all assets in the trust’s name. Transferred property belongs to the trust, but because any part of the trust can be revoked at any time, including dissolving the trust, that means a creditor can force you to do the same and can get access. The Settlor does not receive tax benefits from the trust during life and will be required to keep impeccable bookkeeping records to help avoid issues down the road.   5. A trustee or power of attorney may help manage assets – Pro   The Settlor is often a trustee, but it is possible appoint a successor trustee, which gives someone else the authority to make decisions if the Settlor becomes mentally or physically incapacitated. A durable power of attorney may have some of the same powers as a successor Trustee, but in neither case does the trustee or a person with power of attorney own the assets he or she manages. In addition, assets managed by a power of attorney rather than a trustee must still go through probate when the Settlor passes away.   Revocable Living trust does not receive the same tax benefits as an estate – Con   An estate is a separate legal entity like an irrevocable trust may enjoy significant tax benefits after the Settlor passes away. A revocable trust does not receive these same benefits. However, depending

Asset Protection, Estate Planning

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

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Estate Street Partners offers advanced financial advice to ensure maximum asset protection from lawsuits, divorce and Medicaid spend down   [set_up_personalized_medicaid_trust]   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®?   Part 2 – What is the Ultra Trust®? Part 3 – What is a Trust? Part 4 – Asset Protection Plan Part 5 – Asset Protection Eligible Assets Part 6 – Irrevocable Trust Tax Benefits Part 7 – What is Probate? Part 8 – What is Estate Tax? Part 9 – Medicaid Spend Down Rules Part 10 – What is the Ultra Trust®? Part 11 – Irrevocable Trust Benefits 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: Medicare: elder care Asset Protection from Medicaid Hide My Assets Medicare Protect Assets Nursing Home Costs Nursing Home Spend-down Program Medicaid Estate Planning < UltraTrust home

Estate Planning

What is a Will and Last Testament?

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What is a last will and testament?   First and foremost a last will and testament (“will”) is a legal document. A will describes a person’s final wishes, their desired distribution (wish list) of their property and assets, and the guardianship of minors. As a legal document, a will, to be valid, must follow strict rules that vary by state. If any of these rules are not followed, beneficiaries and potential beneficiaries may challenge the will in probate court. A will does not avoid the probate court process. When one dies with a will, or without one for that matter, the probate court oversees the distribution of property and guardianship of minors. Probate court may be a lengthy process and difficult to manage even when not grieving a loss of a loved one.   What can a “will” accomplish?   Wills accomplish certain goals well and others not so well. Wills do a very good job in two areas.   First, a will appoints an executor or personal representative to follow the instructions of the will. This is the person that appears in probate court, presents the will to the court and accounts to the court for any distributions or debt payments under the will or by the estate. A will also is a vehicle to describe one’s “final arrangements” in terms of burial wishes, funeral wishes and any other ceremonies one may wish their executor to arrange. A Will also establishes who will be the new guardians of any minors or dependents.   What are the disadvantages of a stand-alone will?   Although a will describes the intended distribution of assets and property, there are several drawbacks to using only a will to fulfill your last wishes:   First, as described above, a will has to go through probate court which can be confusing, long (6 months to 3 years on average), and expensive (typically costs are 4-8% of the estate, depending on unforeseen issues or challenges that arise). Better methods exist to avoid probate court which are described later. A will is only a wish list of where one would like their assets to go. A probate judge uses it as a guideline, but the judge is the ultimate determinant where the assets go. He makes a decision based on his opinion of the validity of the will. A will is only part of the probate process. The probate process is public court hearing allowing all of your private wishes to be shared with the world. Everyone and anyone interested in your private business can attain information that you may not wish them to get including: all the assets you own, where they are going, the debts you have. As described previously, a will is only a piece of the entire probate process, and cannot help defend legitimate or illegitimate claims of your assets by creditors. If creditors claim the assets that you wanted to give to members of your family, the court will require the creditor be paid in full before any of your heirs will get ownership of those assets. A will also does not distribute property in such a way that avoids or reduces estate or “death” taxes. The federal government as well as many states have a low threshold of “free” inheritance and the federal government also may take from the estate. Another problem with having only a will is that the distributions are essentially gifts. These gifts go directly to the beneficiary and become their property. One can see how this would be an issue if the assets are going to an immature or young adult, a person with legal problems and/or drug dependence, or someone irresponsible in financial matters. The entire estate could be lost or squandered away. Hence, a will does not offer financial protection to the giver or the receiver. Also, as stated earlier, a will may, and often is, challenged by beneficiaries or potential beneficiaries. Even if the will stands, the process may keep assets and property away from loved ones for years.