Following up on my posts of January 26, 2011 and July 21, 2010 — I want to emphasize again that not all trusts provide asset protection.
A so-called revocable "living trust" (often designed for probate avoidance) can protect beneficiaries of that trust from claims of creditors. For example, you can protect assets that you place
Does a Roth IRA provide better creditor protection than a traditional IRA? The answer is yes. This is because with a traditional IRA, you have to begin taking mandatory required distributions (MRD’s) starting in the year you reach age 70 1/2. These distributions can become a potential target for creditors. You are not required to
In the United States, a creditor usually has to
obtain a court judgment against you before attempting to seize any of your assets. But there are some exceptions to this general rule.
In some cases, a court can issue a temporary restraining order (TRO) or an injunction against a debtor that effectively freezes the debtor’s assets. This
“Avoiding probate” has become almost an obsession with many Americans. In some states, this can be a good idea, to the extent reasonably possible. But “probate avoidance” is usually not my biggest concern for a client.
It is very important to remember that a trust designed to avoid probate may provide absolutely no asset protection. A so-called revocable grantor
Believe it or not — banks, hedge funds and private investors are now funding lawsuits. They are pumping staggering amounts of money into medical malpractice claims, class actions against companies, and even divorce fights! According to a front page New York Times article by Binyamin Appelbaum, total investments in lawsuits at any given time now
In the United States, forming an LLC in a particular state (such as Delaware) can provide significantly better asset protection advantages than forming that LLC in certain other states. The same holds true for offshore LLCs. Nevis is currently one of the best offshore jurisdictions for a limited liability company.
Forming a limited liability company
I have discussed the Florida Supreme Court’s decision in Olmstead in other posts on December 20, 2010, September 22, 2010 and August 2, 2010. In addition to severely weakening the asset protection advantage of a single member LLC in Florida, the decision unfortunately calls into question the effectiveness of multi-member LLCs in that
On June 24, 2010, the Florida Supreme Court ruled in Olmstead v. Federal Trade Commission that a charging order is not the exclusive remedy for a judgment creditor against a debtor’s single member LLC interest. This means that in Florida, a judgment creditor can essentially seize a debtor’s single member LLC interest and gain full
A fascinating article by Daniel J. Wakin in the November 29, 2010 New York Times reveals that even Mozart should have done some asset protection planning.
An aristocratic friend of Mozart’s sued him and won a judgment for an amount of more than two times Mozart’s annual income. The judgment called for garnishing half of
If you own a business through a corporation or limited liability company, you should not be personally liable for the company debts. That is one of the reasons you set up a corporation or a limited liability company in the first place. It is a different story if you sign a personal guaranty for a bank loan or
