UltraTrust Irrevocable Trust Asset Protection

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Asset Protection, Irrevocable Trust, Trusts

Revocable vs. Irrevocable Trust Advantages

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 Watch the video on Like this video? Subscribe to our channel.Here we examine the differences of revocable vs. irrevocable trust advantages. If you reposition (transfer) your assets through the use of an IRREVOCABLE TRUST, you will no longer own them. If you don’t own assets, no one will want to sue you; no one will want to track your spending habits; no one will call you to interrupt your dinner. You don’t have to go offshore. US Laws, US courts will defend and support your asset protection system. These laws have been defined by thousands of court cases, over and over, right up to the Supreme Court. Hence, our analysis, based on court cases, revocable vs. irrevocable trust advantages. You must however, give-up control over your assets to a true independent trustee.            Learn the3 core secrets to uncompromising asset protection by clicking here Legitimate repositioning (transfer) of assets from you to an irrevocable trust is perfectly legal. The fact is, if your assets are owned by a subchapter S. Corporation or a Limited Liability Company and in turn the shares of the Sub S or membership units of the LLC are owned by an irrevocable trust, it’s the fortress of US Asset Protection. The ultimate asset protection device is the use of an offshore asset protection trust.The following financial grid explains the major differences between revocable vs. irrevocable trusts:  Features/Benefits REVOCABLE TRUST (REVOCABLE LIVING TRUST) IRREVOCABLE TRUST Asset Protection ABSOLUTELY NO Asset Protection. NONE. The Grantor, The Trustee, and the Beneficiary are generally the same person. The Grantor did not give-up control of the asset(s). YES. The Grantor no longer owns the assets. Assets have been transferred to the INDEPENDENT Trustee who has a fiduciary duty to manage the assets for the benefit of all beneficiaries, which may include the Grantor. Eliminate Probate YES YES Eliminate Estate Taxes NO YES. Assets are not subject to the Estate Tax. The deceased did not “own” the assets or have assets in his possession at the time of his death. Defer / Reduce Capital Gains Taxes NO YES. Assets transferred to the Trust can be structured without capital gains taxes. Defer / Reduce Income Taxes NO YES, if combined with international structure. Form 1040 income tax benefits YES. You have done nothing. You still “own” the assets. All Income and Expenses flow-through to the Grantor’s form 1040. YES. If this is a Grantor-Type Trust, for income tax purposes, all income and expenses flow-through to the Grantor’s form 1040. Comments: The Revocable Trust is designed to eliminate probate. DOES NOT eliminate estate taxes; ABSOLUTELY NO asset protection. The Revocable Trust is nothing more than an extension of your will. For asset protection purposes the trust is irrevocable. Under certain conditions, the trust can be designed to be a pass-trough trust for income taxes. The Revocable Trust (Revocable Living Trust): What’s wrong with a revocable trust (revocable living trust) is that the owner of the assets (the Grantor) retains too much power over the disposition of the trust assets. This direct control nullifies any defenses against potential frivolous lawsuits. His deemed control is equivalent to ownership, and if you still own the asset you are liable to lose them in a lawsuit. And if you own the asset you will incur an estate tax.The laws of most states permit the formation of a variety of revocable trust instruments (AB “Family” Trust, QTIP Trust, Crummey Trust, Retained Interest Trusts such as GRITS, GRATs, GRUTs, and QPRT), whereby the trust creator (Grantor) contributes assets for the benefit of others to be managed by a Trustee. While it is also possible for the creator to be either the Trustee or a Beneficiary of the trust he or she has created, such dual capacities will usually destroy the trust’s ability to shelter its assets from creditors of the Grantor. When a Grantor reserves an unqualified power of revocation, he or she is deemed the absolute owner of the trust property, as far as the rights of creditors are concerned. This is true even if a Grantor of a trust does not retain a beneficial interest in the trust, but simply reserves the power to revoke it. The Revocable vs. Irrevocable Trust Advantages: Unlike a revocable trust (revocable living trust), assets transferred to an “irrevocable” trust cannot be changed or dissolved by the Grantor once it has been created. The Grantor no longer owns the assets. An independent Trustee is your best defense. With an independent trustee, you generally can’t remove assets, change beneficiaries, or rewrite any of the terms of the trust. An irrevocable trust is a valuable estate-planning tool. First, you transfer assets into the trust-assets you don’t mind losing control over. You may have to pay gift taxes on the value in excess of $1million of the property transferred at the time of transfer or you may be able to set-up a mock sale by using a device known as a private annuity to avoid capital gains taxes.With an irrevocable trust, all of the property in the trust, plus all future appreciation on the property, is out of your taxable estate. That means your ultimate estate tax liability may be less, resulting in a more tax efficient way to transfer your accumulated wealth to your beneficiaries. Property transferred to your beneficiaries through an irrevocable trust will also avoid probate. As a bonus, property in an irrevocable trust may be protected from your creditors. Of late this irrevocable trust device is being utilized by many planners for avoiding the Medicare nursing home spend-down provisions whereby if the elderly has to enter a nursing home he must first spend all his money until he does not have any money left. Independent Trustee: A quick word about the independent trustee: most people don’t like to give up control over their assets because of their perceived notion that giving up control is equivalent to leaving the wolf in charge of the hen house. The law imposes strict

Estate Planning, Irrevocable Trust

Selecting a Trustee: 7 Truthful Tips When Choosing a Trustee.

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When Selecting a TrusteeThe most important qualities are honesty, stability, dependability, organization, financial experience, and the ability to devote time and energy on an impartial basis for the benefit of all Beneficiaries. The Trustee is the most pivotal and critical part of any Trust Agreement.   Selecting a trustee is very important. So choose wisely. Read on to learn the aspects that constitute a trust and how selecting a trustee should be decided upon by you.   The Concept of a Trust Agreement   A Trust is a written contract between the Grantor and the Trustee for the benefit of all Beneficiaries, which can include the Grantor and anyone else he chooses, including spouse, children, grandchildren, friends, or charities.   A Trust can be created during one’s life or by will upon death. A trust that is created at death by virtue of a will is referred to as a Testamentary Trust by the “Testator” (the deceased individual). A trust created during the life of an individual is referred to as the “Settlor,” the “Grantor,” or “Trustor.” The Trust instrument is referred to as “inter vivos,” formed during the life of its creator.   A Trust is an integral part of any estate plan for the purpose of avoiding the Probate Process, minimizing the impact of taxation on the transfer of wealth from one generation to another or from one individual to another, or protecting against unwanted and unpleasant potential events like a lawsuit. A Trust can financially provide for a spouse, a minor child or children, yet unborn children, an incapacitated or disabled person, or persons incapable of managing their financial affairs. A Trust must have enough provisions to adapt itself beyond the life of the grantor(s), and the Trustee is at the center of the goals of the Trust creators.   Once a Trust is created, it becomes the new legal titleholder of assets either transferred to the Trust as a gift or as a sale. In order to avoid fraudulent conveyance, the individual giving up their legal right to possession or title must receive equal fair cash value at the time of the transfer.   Otherwise, it is considered a “fraudulent transfer” to the detriment of all potential creditors or a gift subject to a gift tax.   The Gift Tax on Taxable Gifts   The gift tax applies to the fair cash value given up at the time of the transfer (not the amount originally paid). Taxable gifts are reported on IRS form 709 and are taxable to the person giving up the right of possession by gifting their assets.   The person receiving the gift (in this case, the Trust) always receives the gift tax-free. The person giving the gift is taxed on it unless it is less than $12,000 per person (as per 2006 tax laws).   Trustee’s Power Derived from Grantor   A Trust can be revocable or irrevocable, grantor or non-grantor.   Revocable Trust – The “Grantor” retains the power to “void” the Trust Contract. Irrevocable Trust – The Grantor severs all power of possession, and the legal title to own the Trust is vested exclusively with the Trustee.   The Trustee’s power is derived from the Grantor(s) by a written agreement (Trust Agreement). The most important person, therefore, is the Trustee.   Consequences When Grantor Names Himself Trustee   If there is a provision in the Trust Agreement allowing the Grantor to name himself as the Trustee for his list of Beneficiaries, including himself, he runs the risk of frivolous liability and harsh tax consequences. This is because he has essentially appointed himself to judge his own decisions.   Factors to Consider When Choosing a Trustee   A true Trustee is an independent person, not related to the Grantor(s) by blood or marriage, or an independent trust company, bank, or corporate body. Selecting a Trustee is the most significant part of any Trust Agreement.   Consider these factors when choosing a Trustee:   Location of the assets (e.g., real estate requires knowledge of financial and tax implications). The physical location of the Trustee in relation to the Beneficiaries. The types of assets (tangible, intangible, cash, or near cash). Relationship of the Trustee to the Grantor’s family. Understanding of family dynamics among Beneficiaries. Familiarity with financial management and decision-making. Financial ability and experience with asset management. Business knowledge, especially for family businesses. Willingness and ability to serve as an impartial fiduciary. Legal capacity to interpret and administer the agreement fairly. Willingness to accept potential legal liability from Beneficiaries. Succession planning for a successor Trustee. Some Bad Trustees   When choosing a Trustee intended to last longer than the life of the original Grantors, certain types of Trustees may not be well-suited for the role.   Less Suitable Trustees:   Corporate Trustees or Trust Companies – These are often slow, bureaucratic, and impersonal. They focus on numbers rather than Beneficiaries’ needs. Banks as Trustees – Ultra-conservative, slow decision-making, and risk-averse. Lawyers – While legally knowledgeable, they generally lack financial management expertise. Accountants – Good at keeping financial records but lack long-term investment foresight. Family Members as Trustees – Risk of mistrust, potential conflicts, and family disputes over money. Selecting a Trustee is Complicated   Selecting a Trustee can be complex. Many individuals are reluctant to assume fiduciary responsibilities, even when compensation is offered.   Some Grantors opt for co-Trustees or Trust Protectors to ease the responsibility. This ensures that the Trustee has someone for consultation, particularly someone close to the Grantor’s family.

Asset Protection, Irrevocable Trust

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

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 Watch the video on Compare chart Irrevocable Trust, Revocable Living Trust, Non-Grantor Trust, LLC Like this video? Subscribe to our channel. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicaid nursing home provisions. Under the new provisions, before seniors qualify for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5-year look-back. The look-back used to be 3 years. By a vote of 216-214, the U.S. House of Representatives passed budget legislation that will impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. Act of 2005, click on PDF: Deficit Reduction Act 2005. Search for “transfer of assets provision” in the pdf document. What’s Medicaid? What’s Medicaid? Medicaid is a government assistance program for people over the age of 65 or who are disabled. Medicaid assistance was designed for those who could not afford medical expenses (for the poor) but Medicaid has become the default for the middle class. The middle class has become the new poor. Medicaid estate planning and Medicaid rules are complicated. The government is mandating a 5-year look-back on any transfers you may have made to disqualify you from entering the nursing home. Before the 2005 Tax Reduction Act it was 3 years. The transfer of any assets by the elderly has taken a notation of a “fraudulent conveyance” or in government parlance “deprivation of resources.” These new rules are spousal impoverishment programs designed to punish the healthy spouse. If one of the spouses gets sick, all resources have to be spent before you can qualify for government assistance. These new restrictive rules punish the healthy spouse leaving the healthy spouse at the mercy of welfare or her children. It’s very humiliating when seniors have planned their retirement based on their ability to keep their home. Assets That You Must Spend Down Before You Can Qualify for Nursing Home Assistance: ANYTHING YOU OWN IN YOUR NAME OR TOGETHER WITH YOUR SPOUSE. Cash, savings, checking, certificate of deposits, U.S. Savings bonds, credit union shares, Individual Retirement Accounts (IRA), nursing home trust funds, annuities, living revocable trust assets, any revocable Medicaid estate planning trust, real property occupied as a home, other real estate you hold as investment property or income producing property, cash surrender value of your life insurance policy, face value of your life insurance policy, household goods and effects, artwork, burial spaces, burial funds, prepaid burial if they can be canceled, motor vehicles, land contracts, life estate in real property, trailer, mobile home, business and business property, ANYTHING IN YOUR NAME OR YOUR POSESSION. What is “Fraudulent Conveyance” in Medicaid Estate Planning? What do you mean by “fraudulent conveyance” or “deprivation of resources”? If you give away your assets and you do not receive an equal amount (value) in return, the transfer is a deprivation of resources and you have committed a fraudulent transfer, (you give your house to your children for $100.00 when the fair cash value of your home is i.e. $150,000). If you gave your house to your children for $100 sixty months (5 years) before you entered the nursing home, you “deprived your resources” from the nursing home expenses. Unwittingly, you also incurred a gift tax on the difference between the $100.00 and the $150,000 and in addition you may have cheated the government out of Estate Taxes. Federal Gift Tax Rules in Medicaid Asset Protection & Estate Planning: The federal gift tax rules apply to the transfer by gift of any property. You make a gift if you give property (including money), or give the use of property, or give the income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift. The general gift tax rules are that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts: Gifts that are not more than the annual $12,000 $13,000 exclusion for the calendar year beginning in 2006 (This is called the Annual gift tax exclusion for any 12 month period, see below). Tuition or medical expenses you pay directly to a medical or educational institution for someone, Gifts to your spouse, Gifts to a political organization for its use, and Gifts to charities. Annual gift tax exclusion. A separate annual gift tax exclusion applies to each person to whom you make a gift. For 2007 2010, the annual gift tax exclusion is $12,000 $13,000. Therefore, you generally can give up to $12,000 $13,000 each to any number of people in 2007 2010 and none of the gifts will be taxable. However, gifts of future interests cannot be excluded under the annual exclusion provisions. A gift of a future interest is a gift that is limited so that its use, possession, or enjoyment will begin at some point in the future. A federal Gift Tax return is filed on form 709 for taxable gifts in excess of the annual exclusion.   Filing a Gift Tax Return: Generally, you must file a gift tax return on Form 709 if any of the following apply: You gave gifts to at least one person (other than your spouse) that have a fair “cash” value of more than the annual exclusion of $12,000 $13,000 for the tax year 2007 2010. You and your spouse are splitting a gift. You gave your spouse an interest in property that will be ended by some future event. Your entire interest in property, if no other interest has been transferred for less than adequate consideration (less than its fair “cash” value) or for other than a charitable use; or A qualified conservation contribution that is a restriction (granted forever) on the use of real property.   Estate Tax & Senior Medicaid Estate Planning: Estate tax may apply to your taxable estate at your

Estate Planning, Trusts

What’s a Trust? Grantor, Trustee, Beneficiary

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ULTRA TRUST™ – What’s a Trust? A “TRUST” is nothing more than a “CONTRACT.” The purpose of a TRUST is to create an “Artificial Legal Person” to protect, hold, and manage your private wealth for the benefit of your heirs. As in any contract, someone must initiate the contract (Grantor or Trustee). The contract (trust agreement) must specify the who, what, where, when, why, and other conditions. Finally, the contract is for the benefit of someone or something (beneficiaries: wife, children, grandchildren, church, other charitable organizations, etc.) Trust concept       Like this video?What’s a Trust? Grantor, Trustee, Beneficiary   Subscribe to our channel.   The concept of a trust was first used in Anglo Saxon times and is contractual arrangement whereby property is transferred from one person (The Grantor) to another person or corporate body (The Trustee) to hold the property for the benefit of a specified list or class of persons (The Beneficiaries).   Although a trust can be created solely by verbal agreement it is normal for a written document to be prepared which evidences the creation of the trust (the Trust Deed), sets out the terms and conditions upon which the trust assets are held by the Trustees and outlines the rights of the Beneficiaries. In essence, a trust is not dissimilar to a will except that assets are transferred to trustees during lifetime rather than those assets being transferred to executors on death. The trust deed is analogous to the deed of will.   There are three elements to the “trust” document:   Grantor Trustee Beneficiaries 1. The “Grantor”   The person with the money or assets. The owner of the asset(s). The grantor’s motivation is to get asset(s) out of his name for either some or all of the following: Asset protection/wealth preservation Reduce potential frivolous lawsuits Elimination of the “probate jail process” (see definition, below) Elimination of estate taxes To gain some tax benefit or some other tax deferral benefit If the “Grantor” initiates the trust (contract), it’s called a “Grantor Trust,” otherwise it’s called a “Non-Grantor Trust.”   If the “Grantor” wants to retain certain control over his asset(s), it’s called a “Revocable Trust” otherwise, it’s an “Irrevocable Trust.”   Revocable / Irrevocable has significant asset protection and tax differences.   “Revocable,” is like the kid next door that brings the ball to play basketball with the other kids. Everything is fine, as long as he makes the rules, and he makes the rules as he goes along. If you don’t agree, he takes the ball and goes home. Ball game over.   #Living Trusts are outright dangerous.   The Living Trust can destroy your estate in the event of a lawsuit, serious illness, or elderly care. One name given to a “revocable” trust is the “Living Trust.” The sole purpose of the Revocable Living Trust is to “eliminate the probate process.” Assets in a trust, avoids probate Assets NOT in a trust goes to probate with or without a will The living Trust is outright dangerous for asset protection, wealth preservation, and estate tax elimination. It’s obsolete for assets greater than $675,000. With the Living Trust the owner of the assets retains significant power over his wealth and will NOT insulate assets from the lawsuit explosion. There’s absolutely no tax benefit, no asset protection and no wealth preservation benefits with the “Living Trust.” I DO NOT RECOMMEND THE “LIVING TRUST.” if you have one, reconsider your financial goals. (See my final word about trusts, below)   Personally, I think the “Living Trust” is a sham perpetrated on you by shameless professionals out to extract more than just one fee. Don’t just walk, run!! Various tax proposals are being bandied about, including House Ways and Means Chairman Bill Archer who says that he’s “pushing” to “g r a d u a l l y phaseout” the death tax within the next 10 years. “Death by itself should not trigger a tax” says Chairman Archer. Currently, estate taxes vary from 37% to 55%. Only Japan has a higher rate of 70%. Germany takes a maximum of 40%, while Australia and Canada, take nothing.   When you add-up your federal, state, probate, legal fees, accounting fees, appraisal fees, administrative and executor fees, and etc. fees, ……. it could easily cost you 70 to 80% of your estate. You can avoid these unwanted results with the Ultra Trust™ or the Medallion Trust™.   NOTE: The new 2001 tax PHASE-IN for estate taxes, changes absolutely nothing. The estate tax is the only voluntary tax. The new laws have added confusion. You can avoid the voluntary estate tax by simply engineering an irrevocable trust.   2. The “Trustee”   The trustee is the guy who manages your trust assets. Great care should be taken in your selection of your trustee. The trustee is bound by the trust document (contract) and he has a duty to protect trust assets for the beneficiaries. The independent trustee manages, holds legal title to trust assets, and exercises independent control.   The trustee can be your lawyer (worst person you would ever want to trust), your accountant, best friend, or any-one you trust who is not a relative by blood or marriage. You may have more than one trustee. I usually recommend two trustees in all cases of $500,000 or more.   #Accountability of trustee   The law imposes strict obligations and rules on trustees including a duty to account for any benefits the trustee may have gained directly or indirectly from a trust. This goes beyond fraudulent abuse of position by a trustee.   There is a basic rule that a trustee may not derive any advantage directly or indirectly from a trust unless expressly permitted by the trust, for example, where he is a professional trustee and the trust provides specifically for a right to make reasonable charges for services. However, full disclosure of the basis and amount of charges is required.   The trustee of an “Irrevocable

Medicaid, Nursing Home

Eldercare with Medicaid: Senior Transfers Assets before Nursing Home Care

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ULTRA TRUST® – Medicaid Benefits     “The Deficit Reduction Act of 2005 (S.1932) [DRA]” signed by the President on Feb. 8, 2006. The Act established a June 30, 2006 deadline for the Secretary of Health and Human Services (HHS) to release regulations for states to come in compliance with the new law.   Among other provisions, … the new law places severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.   The law extends Medicaid’s “lookback” period for all asset transfers from (3) three to (5) five years, and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage.   In other words, these new Medicaid rules are specifically designed to “impoverish the healthy spouse.”   This is an extreme. If you’re approaching the Medicaid Nursing Home Spend-down Provisions…you have to pay attention to these new very restrictive regulations. …The healthy spouse can find him/herself out in the street. If you have parents in this predicament, YOU better take note because you will end-up supporting your parents, specifically when they now have substantial assets.

Irrevocable Trust, Trusts

Living Revocable Trust

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   Watch the video on Living Revocable Trust   Like this video? Subscribe to our channel.   A Living Trust or Revocable Trust, or a Revocable Living Trust, are the same Trust. The word “revocable” says it all. The “Grantor” the guy with the assets, transfers his assets to a “Trust” where he is the “Trustee” for the benefit of all “Beneficiaries”, which includes himself and others. In other words he has kissed his hand and declares himself to be the “Pope.”   The revocable trust is not worth the paper it’s written on. The revocable trust does not protect the assets from potential frivolous lawsuits. The revocable trust does not eliminate the estate tax. The revocable trust was designed to avoid the probate process but nothing else.   SO, WHAT’S A “TRUST”?   A “Trust” is nothing more than a contract. The concept of a trust was first used in Anglo Saxon times and is contractual arrangement whereby property is transferred from one person (The Grantor) to another person or corporate body (The Trustee) to hold the property for the benefit of a specified list or class of persons (The Beneficiaries).   Although a trust can be created solely by verbal agreement it is normal for a written document to be prepared which evidences the creation of the trust (the Trust Deed), sets out the terms and conditions upon which the trust assets are held by the Trustees and outlines the rights of the Beneficiaries. In essence, a trust is not dissimilar to a will except that assets are transferred to trustees during lifetime rather than those assets being transferred to executors on death. The trust deed is analogous to the deed of will.   WHAT’S A “GRANTOR”?   He’s the guy with the buck; the owner of the asset(s). The grantor’s motivation is to get asset(s) out of his name for either some or all of the following:   Asset protection / wealth preservation Reduce potential frivolous lawsuits Elimination of the “probate process” Elimination of estate taxes To gain some tax benefit or some other tax deferral benefit. If the “Grantor” initiates the trust (contract), it’s called a “Grantor Trust,” otherwise it’s called a “Non-Grantor Trust.” To me, it’s just legal garbage so lawyers can charge you more.   If the “Grantor” wants to retain certain control over his asset(s), it’s called a “Revocable Trust”; otherwise, it’s an “Irrevocable Trust.”   Revocable / Irrevocable has significant asset protection and tax differences.   “Revocable,” is like the kid next door that brings the ball to play basketball with the other kids. Everything is fine, as long as he makes the rules, and he makes the rules as he goes along. If you don’t agree with the rules as he makes them up as you play, he takes the ball and goes home. The ball game is over.   LIVING TRUSTS ARE OUTRIGHT DANGEROUS   The Living Trust can destroy your estate in the event of a lawsuit, serious illness, or elderly care. One name given to a “revocable” trust is the “Living Trust” The sole purpose of the Revocable Living Trust is to “eliminate the probate process.” Assets in a trust, avoids probate. Assets that are NOT in a trust goes to probate, with or without a will. The living Trust is outright dangerous for asset protection, wealth preservation, and estate tax elimination. It’s obsolete for assets greater than $1,000,000. With the Living Trust the owner of the assets retains significant power over his wealth and will NOT insulate assets from the lawsuit explosion. There’s absolutely no tax benefit, no asset protection and no wealth preservation benefits with the “Living Revocable Trust.”   THE “TRUSTEE”   The Trustee is the guy who manages your trust assets. Great care should be taken in your selection of your trustee. The trustee is bound by the trust document (contract) and he has a duty to protect trust assets for the beneficiaries. The independent Trustee manages, holds legal title to trust assets, and exercises independent control.   The trustee can be your lawyer (worst person you would ever want to trust), your accountant, best friend, or anyone you TRUST who’s not a relative by blood or marriage. You should not have more than one trustee, however, I usually recommend one trustee and one trust protector in all cases of $750,000 or more.   ACCOUNTABILITY OF TRUSTEE   The law imposes strict obligations and rules on trustees including a duty to account for any benefits the trustee may have gained directly or indirectly from a trust. This goes beyond fraudulent abuse of position by a trustee.   There is a basic rule that a trustee may “not” derive any advantage directly or indirectly from a trust unless expressly permitted by the trust; for example, where he is a professional trustee and the trust provides specifically for a right to make reasonable charges for services. However, full disclosure of the basis and amount of charges is required.   The trustee of an “Irrevocable Trust” has sole discretion over trust assets. Your selection of your trustee must be a carefully planned decision.   The significant item to remember is that an “Irrevocable Trust” gets the assets completely out of your (Grantor’s) name and in return you get complete asset protection, elimination of probate, elimination of estate or inheritance taxes, in certain cases a tax deduction for the assets contributed to the trust, and finally, under certain conditions other uncommon tax benefits not otherwise available. Did I mention it’s the most tax efficient way to transfer your wealth to your next generation?   Duty of trustee is to obey the trust document for the benefit of beneficiaries.   The most important rule relating to the duties of a trustee is that requiring them to obey the directions in the trust deed both with regard to the interests of the beneficiaries (i.e. who is entitled to what) and with regard to the administration of the trust

Asset Protection, Irrevocable Trust

Getting Sued Hiding Assets

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   Watch the video on Getting Sued Hiding Assets   Like this video? Subscribe to our channel.   You just had a car accident causing a fatality or a disability. You are handed a ticket and released with a warning not to leave the state. You call your lawyer, you’re getting sued, you ask about hiding assets.   Your lawyer is going to tell you, there’s nothing you can do.   In my book, it’s better to do something than nothing. Exposing your open wallet for every potential creditor is not in my vocabulary. Your insurance company is your first line of defense. They will send a team of lawyers limited to your insurance coverage. But the Insurance Company is not going to cover your negligence.   Taking stack of what you own and how it’s going to evaporate between legal fees and court decisions, completely out of control. Your lawyer is partially incorrect. A judge is going to decide how much guilt you are going to bear. Your police are going to determine the amount of negligence and possible criminal prosecution. You will have to defend yourself on both fronts. Most people will hire one attorney to handle the civil and criminal. In my opinion, that’s wrong. Criminal attorney are trained differently. The criminal side of life is to put up defenses to keep you out of jail. The civil attorney is to keep your assets. They are different defenses with different objectives.   4 THINGS YOU CAN DO IMMEDIATELY TO PROTECT YOUR ASSETS:   Reposition your asset(s) with an independent trustee through an irrevocable trust, before the lawsuit is filed. Have your documents notarized and filed with the registry of deeds. Avoid fraudulent conveyance by transferring asset at less than it’s fair market value. Hire an expert defense lawyer. Will it work? It depends. But it’s better to give them the run around to your assets than a straight line to your bank account.

Asset Protection, Offshore

Offshore Asset Protection

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  Watch the video on Offshore Asset Protection   Like this video? Subscribe to our channel.   The litigation explosion are forcing professionals and small business owners to focus on ways/strategies to protect their savings, investments and other accumulated assets that may become attractive to potential contingent fee trial lawyers.   Presently, well over half the world’s wealth moves around internationally, taking advantage of business opportunities. National political boundaries, from a financial point of view, are becoming virtually transparent. Many Americans have come to the realization that the only way for them to protect their assets is to hold international assets. This offshore asset protection strategy has nothing to do with tax evasion and everything to do with the creation and protection of wealth.   In the United States, the legal system is often stacked in favor of the plaintiff and against the defendant. The corporate veil is routinely ignored. This encourages the filing of spurious lawsuits.   For a mere filing fee, a contingent fee lawyer and his client risk very little to see how things turn out.   The possibility of being on the receiving end of a ruinous judgment can instantly result in the loss of a lifetime’s accumulation of hard work. Lawyers for plaintiffs only prosecute cases they believe will pay off. The largest growing business in America is contingent fee lawyers, just look in the yellow pages of your phone book.   The Internet has facilitated an exponential rate of detailed information about your personal and/or your business accounts, property ownership, investment holdings, income, savings, and many other facts about you, your business, your associates, your buying/spending habits, and so forth.   Most trial lawyers will tell you, that forming U.S. based corporations for asset/wealth protection is not worth the certificate it’s written on. Judges will inform you that if any asset is within their jurisdiction anywhere in the U.S. they have the power to redistribute your wealth.   SO WHY USE OFFSHORE ASSET PROTECTION?   Many international jurisdictions impose less governmental regulatory restrictions and reporting, less taxes on their assets and income, greater flexibility and disclosure requirements. Individuals, professionals, entrepreneurs, and their companies adopt an aggressive policy to safeguard and preserve their wealth/assets from predators and their very clever lawyers, while significantly reducing their costs of doing business.   An offshore asset protection Corporation or other offshore Foreign Limited Liability Company (FLLC’s), or International Business Company (IBC’s) or other legal entities can conduct any type of business in the United States. You sacrifice nothing by having a corporate veil with real teeth. An International Business Company (IBC) is an offshore corporate legal entity that does not have to comply with a U.S. based judgment.   Judgments are not enforceable in non-United States jurisdictions. U.S. contingent fee lawyers and their clients have a significant jurisdictional problem: only citizens of the tax haven jurisdiction can practice law. U.S. lawyers or their clients will have to hire a local law firm and pay up-front legal fees, post bonds, pay court costs, and pre-pay other expenses to pursue their claims. Generally speaking, the local authorities frown upon foreign-generated claims/judgments. “You are in your home-country.”   The need for international diversification arises because of perceived shortcomings in the U.S. judicial, legislative, and political processes. Once the plaintiff see the uphill battle involved, plus the enormous costs out of his/her own pocket, he/she may either re-evaluate the merits of filing a lawsuit or settle for a fraction of the settlement he/she may have received in a U.S. Court. This fact alone can become your catalyst for good financial offshore asset protection planning and save thousands off your liability insurance premiums.   Foreign asset protection is the Rolls Royce of asset protection planning. For most Americans it would be overkill. For an asset protection fortress within the United States, the Cadillac of asset protection is the Irrevocable Trust combined with a Limited Liability Company.    

Asset Protection, Medicaid

Asset Protection from Medicaid

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What’s an asset protection trust? What’s a Trust?    Watch the video on Asset Protection from Medicaid   Like this video? Subscribe to our channel.   The Deficit Reduction Act of 2005 established a June 30, 2006 deadline for the Secretary of Health and Human Services (HHS) to release regulations for states to come in compliance with the new severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.   The law extends Medicaid’s “lookback” period for all asset transfers to 5 years, it was originally 3 years and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters the nursing home.   Qualification to enter the nursing home is achieved when the individual is out of funds, meaning he/she cannot afford to pay the nursing home. The new federal law applies to all transfers made on or after the date of enactment, February 8, 2006. Any transfer made before February 8 falls under the old transfer rules. Exact enactment provisions are state by state, but it’s clear that non-compliance by 50 state legislatures puts their federal funding at risk.   You can protect yourself from the Medicaid nursing home care by taking action now while you still have your health.   You can reposition (transfer) your assets from you to an irrevocable trust with a truly independent trustee. The key is the “Independence of your Trustee.” The trustee cannot be any-one related to you by blood or marriage. And, you must be willing to give-up complete control over your assets. This lack of perceived control is the most difficult to achieve. Seniors have a deep sense of independence by their ability to control and manage their assets.   Revocable or irrevocable trust, what’s that mean? Revocable is when the original person with the assets transfers (repositions) the assets to a trust with strings attached. The tax lingo is “grantor-type trust. The “strings” when the original grantor (person with the assets) elects himself as the trustee, and the beneficiary of the trust. The grantor, the trustee, and the beneficiary are the same person. Effectively you have kissed yourself on the hand and blessed yourself as the pope. This simply will not work. Period.   An irrevocable trust is when the grantor (the person with the assets) gives-up complete control to an independent trustee who in turn will use his judgment as trustee to manage the assets for the beneficiaries of the trust. The fiduciary relationship of the trustee is to the protection of the assets at any cost. The trustee must protect and must diligently invest under the prudent man rules, he cannot ever deal for himself. The courts do not look favorably on dereliction of duties while serving as trustee. An irrevocable trust is the only significant asset protection device for avoiding the Medicaid spend-down provisions.   Asset protection from Medicaid requires foresight and a strong conviction to walk away from perceived control. Inaction is devastating. Seniors must use all their funds first, then qualify for the nursing home. It’s clear, that these new rules are designed to impoverish the healthy spouse.        

Asset Protection, Medicaid

Senior Medicaid Asset Protection

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What’s an asset protection trust? What’s a Trust?    Watch the video on Senior Medicaid Asset Protection   Like this video? Subscribe to our channel.   As tax preparation time begins, many seniors are asking to include Medicaid asset protection as part of their tax planning strategies. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicare nursing home provisions. Under the new provisions, before a senior qualifies for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5 year look-back, used to be 3 years. And used to be that each spouse had a one-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not seen specific regulations but it appears that the healthy spouse will be left without any assets if one of them gets sick.   Suggestions by seniors have been to transfer their assets to their children. Although this option is available, I’m not sure that it’s a good option. What if the child decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wife’s decree, what if the child get’s sued?   There are also tax implications. If the assets are transferred to the child for less than fair market value, then it’s a taxable gift. Even worse, if this type of transfer to the child is completed before the 5 years-look back, is it a “fraudulent conveyance?”   Medicaid asset protection has to be done very carefully. Planning in this area is evolving. There are a lot of eldercare law firms popping up all over the place. I have been approached by such a firm to send them clients. They claim that they can structure a new deal whereby the nursing home won’t be able to attach assets even after they enter the nursing home.   I know this much, any method used to deflect assets from the original owner has to be done at it’s fair market value. For example you just can’t transfer your house from you to your child. There are tax consequences. Did you just sell your house? Or did you just gift your house? Who will determine the fair market value? Did you get a genuine appraisal? If therefore, it’s at less than fair market value (willing buyer and willing seller, neither under compulsion to buy or sell, each acting in their best interest) did you just create a more challenging problem?   Any method whereby there’s an element of strings attached, it’s revocable and therefore you have done nothing to disassociate yourself from your asset. One can challenge your intent, to divert assets for the purpose of defrauding a potential creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?   I am aware of only one method of disassociating yourself from your asset (personal residence, your CD’s, your investments, vacation spot) is to give it away. Period. You can gift it to your children, pay the tax and that’s it. The problem is that you no longer have any control and you are at the mercy of your child’s good intentions and a blessed spouse. Risky? You bet!   An irrevocable trust with an independent trustee (not related to you by blood or marriage) will fit the bill. An irrevocable trust, is an irrevocable contract between you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can become beneficiaries along with your children and grand children.   Timing is extremely important. If the transfer (repositioning) of your valuable assets is done before the 5 years, chances are good that it will stand-up in court. What if it’s before the 5 years are up? Is your Medicaid asset protection plan still good? In my book it’s better to have done something than nothing.        

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