Latest news with #assetProtection
Forbes
3 days ago
- Business
- Forbes
When Is It Too Late For Asset Protection Planning?
The Judgment is the sword and Asset Protection is the shield. Asset protection planning is where a person takes steps to disassociate themselves from their current assets so that they are no longer available to creditors. Although asset protection planning as a discrete practice area for attorneys has only existed since the 1980s, folks with valuable assets have been trying to legally distance those assets from potential creditors since there were valuable assets. The Romans, for instance, promulgated laws that prohibited a debtor from transferring away assets so as to cheat creditors, and these Roman laws were the basis of the fraudulent transfers laws found in Anglo-American law. Some asset protection is proper and will be recognized as valid by the courts. Some asset protection is improper and the courts will set it aside, and may also issue certain penalties for the attempt. Questions of whether certain asset protection is proper or improper usually comes down to the timing of the transfers involved. If the asset protection planning is done too late, then it will likely be both ineffective and the debtor (and possibly the transferee) will be put into a potentially worse situation than before. Understanding The Dividing Line So, when does asset protection go from being proper to improper? To answer this question, one must first understand the concept of a claim. The word claim is a term-of-art in fraudulent transfer law which basically means a legal liability arising from some event. A creditor has a claim against the debtor. The claim can be contingent or unliquidated. A claim arises at the precise moment in time that the event giving rise to the liability occurs. To answer the main question: Asset protection goes from being proper to improper at the time that the claim arises, i.e., at the time that the event giving rise to the liability occurs. This is the relevant point in time. Asset protection planning done before a claim arises is proper; asset protection planning after a claim arises is improper. It is a clear delineation. In explaining this concept to folks who contact me, they'll often say the following things: Where this usually comes up is in the context of personal guarantees. The usual line that I hear will be something like this: "The loan is not in default yet, but I'm concerned that it might be and I've signed a personal guarantee." It's too late to do asset protection planning. For purposes of determining when a claim exists, the claim arose on the date that the guarantee was entered into. That is when the guarantee liability arose. Thus, if somebody has entered into a personal guarantee, it is probably too late to do any asset protection planning even if the project is still doing well and the underlying loan obligation is not in default. The next thing they'll say is, "Can I at least protect assets that were not on the financial statement that I gave to the bank?" No, that does not matter one iota. A personal guarantee is a pledge of all of one's non-exempt assets to back a debt, whether disclosed or not. A similar circumstance is one that we could call "the retiring doctor". This is the physician who retires, but is concerned that something in the past has occurred that the doctor is not yet aware of, but which might later turn into a problem for the patient and thus trigger a malpractice lawsuit. Unfortunately, if the doctor has done something negligently, then that event has already occurred and the claim already exists whether the patient or the doctor knows about it or not. Thus, the doctor cannot do asset protection planning (unless the doctor has tail coverage against such negligence claims, in which case the doctor doesn't have to worry about this in the first place and can still do asset protection against other unforeseen future events). Note that the same is true for all professionals, e.g., the architect who is concerned about a skyrise condo collapsing someday. Common situations where it is too late to do asset protection planning include: In all these situations, asset protection cannot properly be done and at rate it is unlikely to be effective. In fact, trying to do such planning in these situations can easily make the debtor's situation worse ― and possibly much worse ― as will next be discussed. Downsides Of Too Late Transfers Once a claim has arisen, then it is not possible to do proper asset protection going forward aside perhaps from some exemption planning in certain states. At the point in time that a claim arises, the planning is not proper asset protection planning at all but simply good old fashioned fraud on creditors. This can generate a variety of bad outcomes: In other words, by engaging in a fraudulent transfer a debtor can easily make their situation much worse than if they just let the creditor take the asset. One of the problems in this area is that there are "planners" (and I use that term quite loosely) who will advocate and assist with the making of fraudulent transfers. These folks will take their fees from the debtor and then basically try to disappear when things go badly. If the debtor complains, their defense will be something like, "well, you were going to lose that asset anyway." Thankfully, the rise of theories of liability for creditors suing these planners have been expanding and there are now much fewer of them still around. Also, case law has now established that it is possible for a creditor, receiver or bankruptcy trustee to take over the debtor's malpractice cause of action against the asset protection planner who advised a transfer that resulted in a fraudulent transfer. How To Avoid This Mess To have a chance of succeeding, asset protection planning must be done in advance of any claims. It is analogous to getting a flu shot: You get the shot when you are healthy, not when your throat starts to feel scratchy because then it is too late. Continuing this analogy, trying to do asset protection after a claim arises is like getting the flu shot after you already have the flu. In the best case, it will not do anything. The difference is that, as described above, post-claim transfers can make the debtor's situation much worse. For asset protection planning to be effective, it must be done at a time when there are no significant creditors, either known or unknown, and great care must be taken to ensure that enough assets remain outside of the asset protection plan such that there are no arguments of insolvency at the time of the planning. But therein lies the problem with asset protection planning, which is that most people don't think of it until it is too late. Most folks are optimists in that they think they will not have a problem until the moment they do. By that point, however, asset protection planning can no longer be properly done. So, don't wait until you get the creditor flu to get the asset protection shot.
Bloomberg
17-06-2025
- Business
- Bloomberg
France's Elite Are Moving to Protect Wealth Before 2027 Election
Wealthy French are intensifying asset-protection efforts after the resurgence of tax-the-rich policies during last year's election raised fears they'll be a target as the country seeks to bolster its finances. Well-off residents are taking or considering bigger dividends from their companies, diversifying stock portfolios and weighing the sale of high-end real estate in case of more drastic tax changes once President Emmanuel Macron departs in 2027, according to wealth and property advisers. They've been put on alert by policies touted by both left and right-wing candidates during the 2024 election.
Associated Press
16-06-2025
- Business
- Associated Press
Jonathane Ricci Recognized by Lawyers of Distinction, Featured in The Washington Post
Jonathane Ricci recognized by Lawyers of Distinction in The Washington Post for his expertise in international tax and asset protection. TORONTO , ONTARIO, CANADA, June 16, 2025 / / -- As prominently featured in The Washington Post, Lawyers of Distinction has recognized Jonathane Ricci, CEO and Founder of JR Wealth Management, in its prestigious 'Most Influential Lawyers' list for 2025. This acknowledgment highlights his significant impact in international tax and wealth management, specifically noting his managed expertise in International Tax and Asset Protection in New York, NY. This notable inclusion underscores Ricci's pioneering achievements and substantial influence within the legal field, as determined by industry leaders and peers. 'This recognition affirms our commitment to setting new industry benchmarks,' said Jonathane Ricci. 'By blending innovative legal and financial strategies, we continue to deliver exceptional value to our clients, especially in complex international tax and asset protection scenarios.' This feature in The Washington Post amplifies JR Wealth Management's standing at the forefront of international legal and financial innovation. About JR Wealth Management JR Wealth Management combines elite managed legal know-how and know-when with sophisticated wealth management strategies, delivering institutional-grade solutions through a boutique approach. Our proprietary methodologies integrate advanced tax optimization, strategic asset protection, and innovative wealth building frameworks, ensuring intergenerational prosperity for high-net-worth individuals and family offices. Jonathane Ricci JR Wealth Management +1 855-571-3669 email us here Visit us on social media: LinkedIn Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
Forbes
14-05-2025
- Business
- Forbes
Self-Settled Asset Protection Trust Upheld By Delaware Court
Consider a self-settled asset protection trust to protect your wealth from claims. Case May Provide A Roadmap to Better Planning A Delaware court (by the Magistrate in Chancery) recently upheld the validity of a domestic asset protection trust (DAPT). In the Matter of the CES 2007 Trust, C.A. No. 2023-0925-SEM. The claimant sought to pierce the trust to reach assets held in limited liability companies (LLCs) and the Court refused. The Court found that the trust met the requirements of Delaware law to qualify as an asset protection trust and should be respected. This is a big deal! This case provides you with a roadmap of many dos and 'don'ts' in pursuing this type of planning. What is a Self-Settled Domestic Asset Protection Trust (DAPT)? An asset protection trust is an irrevocable trust you create that you can be a beneficiary of. That is the estate planning and asset protection nirvana – you may protect assets from your creditors while you may still benefit from those assets. The ruling in this case gives anyone (perhaps you?) considering this type of planning more confidence that it may work. And this type of planning, especially after this case, may be beneficial for lots of people. For people who are not uber wealthy, being able to give assets to a trust that you can also be a beneficiary of, is a key that may make you comfortable pursuing asset protection (or estate tax) planning. The biggest impediment for most people is that they may need to access or benefit from the money they want to protect. Risks Remain to this Planning The reason for the use of the word 'may' is that this case, while favorable to asset protection and the use of asset protection trusts, doesn't resolve every issue with this type of planning. The one big issue that many commentators have questioned about using the self-settled trust technique that was the subject of this case is if you live in a state that does not permit such trusts, e.g., New York or California, but you create this type of trust in a state that does, e.g., Delaware in this case (but there are about 20 states that permit this type of planning), will your home state have to respect the trust created in Delaware? That critical issue was not addressed in this case. But it should be noted that in the many years since Alaska created the first domestic asset protection law in 1997 no case has taken this adverse position. Finally, this case, like all cases, is fact sensitive. In a different situation with different circumstances any court might reach a different conclusion. But in the Court's discussion of these matters, it provides valuable insights on things that you might do, and stuff you should probably avoid, if you are doing this type of planning. That is really valuable to learn and those points will be discussed below. Being methodical and deliberate in your planning, and in particular, doing the planning years before a claim arises, may put you in a favorable position like the person in this case (we'll call him the 'settlor') to protect your wealth. Why Asset Protection and Estate Planning Often Go Hand-in-Hand If you give away or sell assets, e.g., to an irrevocable trust (see below), and those assets are not reachable by your creditors (that is asset protection planning), those assets will generally also be outside of your taxable estate for estate tax purposes. This is why if you pursue estate tax planning you are also obtaining asset protection planning benefits too. The flip side is also true, and is why so many more people that should take steps to protect their assets also get estate tax benefits. If you move assets outside your estate, e.g., by a gift to an irrevocable trust, those assets should also be difficult to reach by future claimants or creditors. This is a misunderstanding many people have: 'My estate is not big enough to worry about estate taxes.' That may be, but that doesn't mean you shouldn't be taking similar steps to protect your assets. So, even if your estate is well under the exemption amount it doesn't mean that setting up planning similar to what wealthier taxpayers might do will be beneficial for you, for another reason, protecting what you own. Defendant's Asset Protection Plan Explained The following is an oversimplified overview of the asset protection plan the person in the case put in place that the court upheld. Big picture the donor (the person transferring assets to a trust) created an irrevocable trust. Irrevocable simplistically means that the trust cannot be changed. A cornerstone of most estate and asset protection planning is one or more irrevocable trusts. Although an irrevocable trust might be modified by various techniques after it is created (decanting, non-judicial modification, etc.), not everything can be changed, there are limits. The settlor in this case took a further step in his planning beyond just an irrevocable trust. This was smart, and something you should consider (and we'll give you some tips on how to do it better below). Instead of gifting assets directly to the trust he gave interests in limited liability companies (LLCs). That is a smart move. If a creditor pierces through the trust they then may face a challenge having to reach assets inside an entity owned by the trust, like an LLC. Now in this case he probably had to have the assets owned by an LLC since they were real estate assets outside of Delaware which was where the trust was based. You should not have a trust in a trust-friendly state like Delaware own real estate or tangible personal property (e.g., artwork) located in a different state. Instead, if an entity, like an LLC owns those assets, the trust can own the entity. If this is not done the trust could be subject to the jurisdiction of that other state where the property is located and that could undermine the trust. But using entities like LLCs is not an assured protection. The plaintiff in this case argued that the settlor had maintained too much control over the entities in the trust and that on that basis those entities should be pierced (reached through to get at the LLC real estate). The court declined to do that, but important lessons are to be learned. What's The Big Deal of Being A Beneficiary of Your Own Trust? As mentioned briefly above, being a beneficiary of your own trust is a big deal! If you are really wealthy (wealth relative to your income/cash flow and net worth) you might be able to set up a trust that you won't need to benefit from. But for most people it may be uncomfortable if not scary to give away money that you may not be able to get to. For example, many married couples create a special type of irrevocable trust called a spousal lifetime access trust (SLAT). That type of trust, if done properly, can provide valuable asset protection. But if you are the settlor creating such a trust you can only benefit indirectly from that trust through your spouse. It is not really clear how permissible indirect benefits are defined so there is risk associated with that. But more worrisome, what if your spouse divorces you or dies prematurely? That would cut off your indirect access to the trust. That could be financially devastating. So, when you weigh the potential asset protection benefits of using a trust plan, versus the worries of running out of money, you may reasonably determine that the creditor and other liability risks are less worrisome then losing control over your money. But that is precisely why a self-settled trust or DAPT is so powerful. You arguably can give your money away to a trust, protect it from claimants (and perhaps future estate taxes) yet you can remain a beneficiary! That's the asset protection version of having your cake and eating it too! And, this is why this recent case is so important, it found that this type of trust worked. For those who are not zillionaires, this type of planning (still not without risk) could be the mechanism that gets you comfortable taking steps to protect your assets. The Trust/LLC Plan in This Case Is Common The overall structure or plan that the settlor used in this case is very common in estate and asset protection planning. Setting up irrevocable trusts to hold entity interests that hold valuable assets is pretty classic estate and asset protection planning. There really is no data on how many of Each variation of trust is created, and there are a myriad of variations, but it's likely that most trusts are not self-settled trust (he was a beneficiary of his own trust in this case). Planning is more often done without the person doing the planning (the 'settlor' who created the trust) being a beneficiary. That is in part due to the fact that, while about 20 states permit this planning, about 30 states do not. Also, many lawyers are not familiar with this type of planning and of those that are familiar some are hesitant to do this planning because of the perceived risks that a self-settled trust, especially if you live in a state that does not have that type of law, could be overturned. The fact that the Court upheld the plan with the settlor as a beneficiary is a valuable development for anyone doing similar planning and may encourage more people and more lawyers to consider this approach. With the above background we can now review the case. Facts The settlor created the Trust on April 30, 2007, for the benefit of its beneficiaries, namely the settlor's wife (if any), parents, and issue. The trust predates the claimant's loan and the follow-on Michigan litigation. In 2014, the claimant loaned one of the settlor's companies' money to finance a luxury real estate development project in Michigan. The deal wasn't successful and the claimant sued. In 2019, the Michigan Court entered a judgement of almost $14 million in favor of the claimant. A Michigan court held in favor of the claimant and gave him an award the settlor of the trust plan was personally required to pay. Because the settlor had no assets to pay the claim, the claimant tried to pierce the trust plan involved in this case to get at the valuable real estate assets it held. Pause and consider how much time all this litigation took, and the costs in terms of not only legal fees, but also, lost time, and undoubtedly incredible stress. Wonky Transfers and Transactions by the Settlor For reasons that are unclear the settlor engaged in a number of unusual transactions with the properties or LLCs that were ultimately held in the trust. Many of these were bad facts that would have been better to have been avoided. Below are a few excerpts of some of the transactions that the settlor had with the properties and/or entities in the trust [footnotes from the case omitted]: 'The Birmingham Property is currently owned by the 305 LLC. But it was originally the Respondent's, personally. On June 30, 1999, the Respondent purchased the Birmingham Property for $450,000. To finance construction, the Respondent then procured a loan of approximately $1.3 million, secured by a mortgage on the Birmingham Property. After construction, the Respondent used, or claimed, the Birmingham Property as his primary residence from 2001 to 2018. Ownership of the Birmingham Property changed hands several times through transactions initiated at the whims of the Respondent. In 2004, the Respondent quitclaimed the Birmingham Property to a bonding agency for collateral related to a lawsuit. Then in 2006, the Respondent transferred ownership from himself (presumably having regained ownership after the 2004 quitclaim) to the 305 LLC for $1.00. That transfer did not last long, though, and on the same day, the Respondent transferred the Birmingham Property back to himself for the same de minimus price. He again transferred the Birmingham Property to the 305 LLC on March 19, 200735 and several years later, on March 4, 2014, shored up that conveyance. Finally, in early 2020, the Birmingham Property went through successive transfers out of the 305 LLC to the Respondent, personally, who pledged the property toward a personal indebtedness, before quitclaiming it back to the 305 LLC a few days later. It remains owned by the 305 LLC.' The repeated transactions with respect to a property that had been a residence should not have been undertaken, and regardless of the success in this case such repeated transfers that some, such as the claimant, interpreted to reflect control over the property should be avoided. Similar odd transactions occurred with other assets and entities. Claims Made Against the Trust and LLC The case was brought by a creditor of the trust's grantor or settlor. Requirements for a Delaware Asset Protection Trust. The Qualified Dispositions in Trust Act (the 'Act') permits someone to create an Asset Protection Trust, and irrevocably transfer assets to the trust, to protect those assets from claims against the grantor/former owner. The requirements are contained in 12 Del. C. §§ 3570–76. The requirements include: A qualified disposition to a qualified trustee may only be reached by a claimant in limited circumstances. Pre-transfer creditors (claims that existed before the transfers were made to the trust), can be overturned if they were fraudulent transfers. For post-transfer creditors, they must prove that the qualified disposition was made with an actual intent to defraud such creditor. Court's Rulings The trust was found to have met the statutory requirements for the protections of a Delaware asset protection trust. The trustees were found to be a qualified trustees as required under the Delaware statute for an asset protection trust. The claimant argued that the settlor was a de facto trustee because of transactions with the LLCs held by the trust, and for serving as investment trustee, but the Court found that he had not acted as a trustee. Finally, the claimant failed to prove that the spendthrift provision in the trust, which is critical to the protection the trust provided, should be invalidated. Lessons to Learn from the Case There are many lessons to learn from this case. Most of the points below are based on specific facts or court comments in the case, a few suggest planning points that were not addressed in this case but which may be helpful. Conclusion If you have not undertaken asset protection steps, or might benefit from further protective measures, review the possible use of a self-settled asset protection trust holding entities that hold underlying assets with your estate planning attorney.
