Asset Protection

May 27, 2016

Remarriage Protection

Many lawyers proclaim to have remarriage protection in their estate planning documents, but few estate plans deal with these issues completely. A traditional trust that deals with remarriage will include language that permits or limits the surviving spouse rights to benefit in the event of future marriage. While this may seem like a good way of dealing with this potential conflict, it is often insufficient to protect the surviving spouse and kids from the numerous methods that can be used to gun a trust prior to the marriage. In the end, your kids are the ones that loose out.
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May 4, 2016

Prince – Estate planning

by David M. Goldman

Like many deaths, the death of the legendary pop star Prince came as a shock and surprise for the world. What shocked estate planning attorneys even more so is the possibility that Prince may have died without a will or an estate plan, which could have huge ramifications for his estate and heirs.

Estate planning has many benefits that include allowing a person the peace of mind of knowing how their assets will be divided among his or her heirs. Estate planning is also one of the best ways a person can preserve his or her wealth, avoid costly taxes, and ensure friends and loved ones are provided for. Many individuals also choose to protect their assets with certain types of trusts.

Prince died at the age of 57 and his estate is estimated to be worth around $300 million. What many people do not realize is that when a person’s estate goes through the probate process without any estate planning, the estate will be taxed by the federal and state government. It is likely that his estate will be hit by a federal estate tax rate of 40 and state tax rate of 16 percent. This means Prince’s estate may have to pay more than $120 million in taxes before it can be passed to his heirs.

April 19, 2016

Trust Funding

by David M. Goldman

Trust Funding

Trust funding is one of the most important aspects of an estate plan or asset protection plan. Attorneys, and clients, hear so much about trust funding, but rarely is it truly understood or implemented properly. Given how important trust funding is, it is a wonder why most estate planning lawyers leave the funding to the client. We regularly see clients who bring us copies of the parents fancy estate planning binders where the plan or many of the benefits to the plan fail because the trusts were never funded or even worse were funded improperly. That is why many of our estate plans and asset protection plans include trust funding. It is important to understand proper trust funding to ensure that the planning works the way it was intended.
The first key step in trust funding is to identify what type of estate plan the client is pursuing. Is the client looking for a traditional estate plan with revocable trusts, an asset protection plan that uses one or more irrevocable trusts, or a plan to protect assets from disability or long term care costs.
A traditional revocable living trust is an estate plan wherein the client identifies who gets to benefit from the client’s assets when the client is well, disabled, and after death. A critically important point to funding a revocable living trust is if all assets funded in the trust are still 100 percent available to creditors, predators, and long-term care costs of the grantor while alive. The assets can continue to be made available to the creditors and predators of the beneficiary after the death of the grantor without proper planning.

March 21, 2016

Can a grantor be a trustee?

by David M. Goldman

Can a grantor be a trustee?

The Irrevocable trust is one of the most valuable tools for estate planning and Florida asset protection that is available. These trusts are not only a great way to pass assets outside of probate, but also allow assets to be protected from creditors. For an irrevocable trust to be valid, a person or entity must serve as the trustee, or manager, of the trust. The Trustee is a person who is responsible for accounting and managing the trust’s assets for the beneficiaries of the trust. Naturally, a question our firm often receives is can I (the grantor/creator of the trust) serve as the trustee?

Can a grantor be a trustee of an Irrevocable Trust? The now outdated school of thought was that a grantor should never serve as the trustee because it could potentially make the trust’s assets available to the grantor’s creditors – thus defeating the asset protection benefits offered by an irrevocable trust. The belief came from section 2036 of the tax code, which states any trust where the grantor retains the right to possess or enjoy the property or designate who will possess and enjoy the trust property will make the principal of the trust includable in the grantor’s estate at death for estate tax purposes.

January 30, 2016

Protect Your IRA

by David M. Goldman

I just finished my new book Protect your IRA : Avoid the 5 Common Mistakes!

Here is the Table of Contents

The 3 Reasons Most People Experience Confusion with Their IRAs

January 4, 2016

Asset Protection: Can an Irrevocable Trust be Revoked?

by David M. Goldman

Florida Asset Protection Trusts: Can they be changed?

In Florida, both revocable and irrevocable trusts are valuable estate planning tools that permit individuals to organize and protect their assets from creditors. The Florida Asset Protection trust is not used by many estate planning lawyers. Asset Protection is an important part of estate planning in Florida. While the name irrevocable would seem to indicate that the trust cannot be revoked, there are many ways of accomplishing the same effect as revoking a trust.

Generally when one discusses revoking a trust, they are referring to doing one of the following:

November 11, 2015

What your Financial Planner needs to know about an IPUG™ Trust

by David M. Goldman

Most financial planners are unfamiliar with some of the modern twists available with irrevocable trusts. They tend to be familiar with the older style of irrevocable trust that can pose several problems for those who use them. These problems include:

Loss of control over the management of the assets;
A separate EIN number for tax reporting purposes;
A larger tax bills because of the way traditional irrevocable trusts are taxed;
A loss of the step up in basis available to assets owned by an individual upon the death of the settlor; and
The inability to change provisions or beneficiaries in the future.

The irrevocable trust, you have chosen does not suffer from any of the traditional problems discussed above. It is an Irrevocable Pure Grantor trust (IPUG™). With the iPug™ many of the advantages that are traditionally only found with a revocable trust can be provided in an irrevocable trust. Some may ask, why should we use an irrevocable trust instead of a revocable trust. Here is a summary of the reasons that the iPug™ trust is superior to the revocable trust and does not pose the problems that a traditional irrevocable trust presents:

October 30, 2015

Does Florida law protect IRAs and SEP-IRAs from Creditors?

by David M. Goldman

NOTE: The US Supreme Court ruled that inherited IRAs are not protected from creditors. Florida has statutes that appear to offer protections for residents of Florida. It is best to plan for no creditor protection for inherited IRAs at this time.

At the Law Office of David M. Goldman, one of our biggest goals is to protect our client’s assets from creditors. One of the most important assets a person can have is a retirement account. These accounts are often targeted by creditors, but the good news is many retirement accounts are protected from creditors through federal and state laws.

So what type of retirement accounts are protected from creditors? The most common form of protected retirement accounts are known as “qualified retirement plans,” and are protected under Federal ERISA law. ERISA protected accounts include traditional pension plans such as 401(k) and 403(b) plans, and these plans are usually exempt from civil court judgments and from bankruptcy. Other protected accounts include Rollover IRA accounts, which are assets, formerly in a 401(k) account, from a previous employer that are “rolled over” into an IRA. This means that these retirement accounts are usually protected no matter what state they were established in.

October 16, 2015

The law of charitable pledges

by David M. Goldman

One issue that occurs in estate planning is whether or not a charitable pledge can be enforced on a person’s estate after death. Wealthy individuals often make pledges to their favorite charitable organizations during their lifetime, only to die before fulfilling the pledge. Executors are then placed in the difficult situation of balancing its duty to ensure the estates assets for the decedents heirs and to pay the money owed by the estate to the charitable organization. If a court rules the pledge is enforceable, the pledge must be paid out of the estate before the rest of the estate’s assets are distributed to the beneficiaries.

Courts will often find a charitable pledge enforceable when these situations occur:

The pledge is an offer to contract that becomes binding when work obligated by the pledge has begun, or the charity relying on the pledge has otherwise incurred liability.

Donor’s pledge has induced other pledges

The charity’s acceptance of the pledge imparts a promise to apply the funds according to the donor’s wishes, and his pledge is supported by that promise.
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October 15, 2015

How to add a second member to a LLC in Florida

by David M. Goldman

Limiting the ability for creditors to charging lien to the owner of a Florida LLC is a big concern for many residents. At least two members are required to limit a creditor’s ability to a lien, and adding another member to an LLC can be a tricky process.

In Olmstead vs. Federal Trade Commission, the Supreme Court decided the issue of whether a court could order a judgment-debtor to surrender all “right, title, and interest in the debtor’s single-member limited liability company to satisfy a judgment. The Court ruled courts were allowed to do this and reasoned, “that there is no reasonable basis for inferring that the provision authorizing the use of charging orders under section 608.433(4) establishes the sole remedy for a judgment creditor against a judgment debtor’s interest in single member LLC. This case, and other recent bankruptcy cases, have made it clear that a single member LLC is not as safe from creditors as once believed. The best solution to this issue of potential liability is to form a multiple member LLC.

Generally, there are two ways to add another member to an LLC. The LLC owner can allow a third party to invest money in the LLC in exchange for a minority interest. There is no limitation regarding who can serve as the third party, which means a family member or even a spouse can be a third party. What is important is that the share of the LLC given in consideration for the investment reflects a fair value for what is given. The purchase price must be at or above fair market value.