Offshore and domestic asset protection trusts (“APT”) have been around for a while. Currently, there are seventeen states that allow a person to contribute assets to trust for their own benefit (i.e. a self-settled trust) and exempt those assets from claims of their own creditors subject to certain statutes of limitations and exception creditors. Other than…
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In the recent case of In Re Jones, 123 AFTR 2d 2019-_________ (Bktcy. Ct. IL), an individual taxpayer and petitioner for bankruptcy relief under chapter 7 was able to withdraw $50,000 from his individual retirement account (“IRA”), deposit the funds into his personal account, spend $30,000 of the funds on personal items (primarily lottery tickets),…
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Are assets transferred by your parents into a trust for your benefit subject to your tax liabilities? In general, no, provided the trust has the proper spendthrift language. Longstanding common law has recognized spendthrift clauses in trusts which restrain voluntary alienation of trust assets, thereby preventing a beneficiary’s creditors from reaching trust assets to satisfy…
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In the recent Tax Court opinion, Campbell v. Commissioner, T.C. Memo 2019-4, the Court held that assets in a self-settled offshore asset protection trust were not includable in assets collectible by the IRS to satisfy the taxpayer’s assessed income tax liabilities. The case involved John Campbell’s request for an Offer in Compromise, offering $12,603 to…
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Whenever I attend a large conference, I try to take some time afterwards to consider the most important takeaways. Having just returned from the 53rd Annual Heckerling Institute of Estate Planning which was held from January 14-19, 2019, I spent the last week reviewing the conference materials and my notes. From this, I have compiled…
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Background Surprising to many, qualified retirement accounts received by a spouse in divorce may lose creditor protection, a significant beneficial feature of retirement accounts. In the case of In re Lerbakken, filed on October 16, 2018, the Bankruptcy Appellate Panel of the Eighth Circuit held that qualified accounts received by the non-participant spouse pursuant to…
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Background In the recent case of Golfwood Square, LLC v. O’Malley, 2018 WL 4370875 (Ill.App., Unpublished, Sept. 11, 2018), the Appellate Court of Illinois held that a creditor could reach assets of a subsidiary LLC to satisfy debts of its parent company’s owner. This is an important case to review in evaluating how to operate…
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The Alaska Supreme Court ruled that Alaska does not have exclusive jurisdiction to hear claims of whether conveyances to an Alaska domestic asset protection trust (“DAPT”) were fraudulent transfers. In Toni 1 Trust v. Wacker, 2018 WL 1125033 (Alaska, Mar. 2, 2018), as judgments were being entered against them, Bertran and Barbara Tangwall transferred Montana…
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