Asset Protection Strategies,9780735523494

Asset Protection Strategies

by ;
Edition: 2nd
ISBN13: 9780735523494
ISBN10: 0735523495
Format: Hardcover
Pub. Date: 2001-06-01
Publisher(s): Wolters Kluwer
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Table of Contents

Preface xxiii
Short Reference List xxv
Introduction
1(14)
Overview of Asset Protection
3(1)
Overview of Asset Protection Tools
4(2)
Practical Approach to Asset Protection Planning
6(9)
Initial Meeting
6(3)
Retainer Letter
9(1)
Screen Client
10(2)
Correspondence Stating What Planner Has Done and Not Done
12(1)
Opinion Letter of Special Counsel
12(1)
Execution of Documents
12(1)
Follow-Up Correspondence Stating What Planner Has Done and Not Done
13(2)
Fraudulent Conveyance Concepts
15(32)
Fraudulent Conveyance Concepts Generally
17(2)
Choice of Law Issues
19(2)
Actual Intent Fraudulent Conveyance
21(6)
Constructive Fraudulent Conveyance Generally
27(9)
Less Than Reasonably Equivalent Value
29(3)
Insolvency
32(1)
Unreasonably Small Capital
33(3)
Intentionally Incurring Debts Beyond Ability to Pay
36(1)
Bankruptcy Fraud
36(2)
Affirmative Defenses
38(3)
Remedies
41(2)
Fraudulent Conveyance Issue Checklist
43(4)
Choice of Law
43(1)
Actual Intent Fraudulent Conveyance
44(1)
Constructive Fraudulent Conveyance
45(1)
Affirmative Defenses
45(1)
Remedies
45(2)
Choice of Business Entity: Nontax Aspects
47(80)
Generally
51(1)
Sole Proprietorships
52(1)
Corporations
53(19)
Limited Liability Generally
54(1)
Piercing the Corporate Veil
54(1)
Whether the Liability Arises Out of a Contract or Tort Action
55(1)
Whether the Corporation Is Adequately Capitalized
55(2)
Whether the Corporation Is Formed for an Illegal Purpose
57(1)
Whether the Equity and Justice of the Situation Indicates the Corporate Veil Should Be Pierced
57(1)
Whether the Corporation Follows Corporate Formalities
58(1)
Whether the Separateness Between the Corporation and the Shareholder Is Maintained
58(3)
Defective Incorporation
61(2)
Unpaid Stock Subscriptions and Watered Stock
63(1)
Liability for Illegal Dividends
64(1)
100-Percent Penalty
64(2)
Other Exceptions and Planning Strategies
66(2)
Other Nontax Considerations
68(1)
Expenses and Formalities of Forming the Corporation
69(1)
Management and Control of the Corporation
69(1)
Continuity of Existence of Corporation
70(1)
Transferability of Corporate Interests
71(1)
General Partnerships
72(1)
Limited Partnerships
72(30)
Limited Liability
73(1)
Liability of General Partners
73(3)
Liability of Limited Partners
76(1)
Limited Partner Participation
77(3)
Compliance with Statutory Requirements
80(1)
Unlawful Use of Limited Partner's Name
81(2)
Liability for False Statements
83(1)
Liability for Contribution
84(1)
Rights of Judgment and Other Creditors
85(2)
Family Limited Partnerships
87(5)
Limited Liability Partnerships
92(3)
Other Nontax Considerations
95(1)
Expenses and Formalities of Organization
95(4)
Management and Control of Limited Partnership
99(1)
Continuity of Limited Partnership Existence
100(1)
Transferability of Limited Partnership Interests
101(1)
Limited Liability Companies
102(18)
Generally
102(1)
Limited Liability
103(1)
Generally
103(1)
Liability for Unpaid Contributions
104(1)
Piercing the Limited Liability Veil
105(1)
Liability Arising from Defective Formation
106(1)
Other Nontax Considerations
106(1)
Expenses and Formalities of Organization
107(3)
Management and Control of the LLC
110(1)
Structure Without an Operating Agreement
111(1)
Authority to Bind the LLC
112(1)
Voting
113(1)
Powers and Purposes for Formation
113(2)
Continuity of LLC Existence
115(3)
Transferability of LLC Interests
118(2)
Business Entities Compared
120(1)
Choice of Entity Worksheet
120(1)
Checklist of Choice of Entity Issues
120(7)
Sole Proprietorships
120(3)
Corporations
123(1)
General Partnerships
123(1)
Limited Partnerships
124(1)
Limited Liability Companies
125(2)
Choice of Business Entity: Tax Aspects
127(54)
Generally
129(1)
Corporations
129(24)
Types of Corporations
129(1)
Taxation of C Corporation Income
130(1)
Alternative Minimum Tax
131(1)
Taxation of C Corporation Dividends
132(1)
Generally
132(1)
Constructive Dividends
133(2)
Double Taxation
135(2)
C Corporation Losses and IRC Section 1244 Stock
137(1)
C Corporation Choice of Fiscal Year
138(1)
C Corporation Corporate Formation
139(1)
Transfer of Corporate Interests
140(1)
Death or Retirement of Shareholder
141(1)
C Corporation Liquidation
142(1)
S Corporations
143(1)
Generally
143(1)
Taxation of S Corporation Income at Corporate Level
144(1)
Taxation of S Corporation Income at Shareholder Level
145(2)
Taxation of S Corporation Dividends
147(1)
Taxation of S Corporation Losses
148(2)
S Corporation Choice of Fiscal Year
150(1)
Death or Retirement of S Corporation Shareholder
150(1)
S Corporation Liquidation
151(1)
Termination of S Corporation Election
151(2)
Partnerships
153(13)
Taxation of Partnership Income
154(1)
Allocation of Tax Consequences
155(3)
Nonallowable Allocations
158(2)
Treatment of Partnership Losses
160(3)
Choice of Fiscal Year
163(1)
Partnership Formation
163(2)
Transfer of Partnership Interests and Death or Retirement of a Partner
165(1)
Partnership Liquidation
166(1)
Limited Liability Companies Generally
166(11)
Tax Treatment of Limited Liability Companies
167(1)
Generally
167(1)
The Final Regulations
167(1)
Step 1-Is There a Separate Entity for Tax Purposes?
168(1)
Step 2-If There Is a Separate Entity for Tax Purposes, Is It a Business Entity or a Trust?
169(1)
Step 3-Is the Entity a Corporation?
170(1)
Mandatory Corporation Classification
170(4)
Election Available for All Other Entities
174(1)
Default Provisions-Domestic Business Entities
175(1)
Default Provisions-Foreign Business Entities
175(1)
Method of Making Election
176(1)
Comparison by Tax Aspects
177(4)
Use of Domestic Trusts
181(110)
Generally
185(1)
Creditors' Rights Against Trust Parties
186(16)
Trustee Liability
186(2)
Settlor Liability
188(5)
Spousal Rights
193(4)
Bankruptcy
197(2)
Effect of Illegal Purpose Trust
199(1)
Beneficiary Liability
199(2)
Donees of Powers of Appointment
201(1)
Income Taxation of Trusts
202(8)
Grantor Trust Rules
204(1)
Reversionary and Remainder Interests
204(1)
Power to Control Beneficial Enjoyment
205(2)
Administrative Powers
207(1)
Power to Revoke
208(1)
Possibility of Income Paid to Grantor or Grantor's Spouse
208(1)
Foreign Trusts
209(1)
Trusts Owned by Someone Other Than the Grantor
209(1)
Gift Taxation of Transfers to Trusts
210(1)
Estate Taxation of Interests in Trusts
211(5)
Retained Life Estate
212(1)
Retained Reversionary Interests and Transfers Taking Effect at Death
213(1)
Gift with Power to Alter, Amend, Revoke, or Terminate
214(1)
Reciprocal Trust Doctrine
215(1)
Certain Transfers within Three Years of Death
216(1)
Generation-Skipping Transfer (GST) Tax
216(1)
Generation-Skipping Transfers
216(1)
55 Percent GST Tax Rate
216(1)
$1 Million GST Exemption
217(1)
Revocable Trusts
217(7)
Asset Protection Aspects
218(3)
Tax Aspects
221(1)
Gift Tax Implications
221(1)
Estate Tax Consequences
222(2)
Income Tax Consequences
224(1)
GST Tax Consequences
224(1)
Irrevocable Trusts
224(15)
Asset Protection Benefits
225(5)
Tax Aspects
230(1)
Gift Tax Implications
231(1)
Estate Tax Consequences
231(4)
Income Tax Consequences
235(4)
Spendthrift Trusts
239(6)
Discretionary Trusts
245(3)
Support Trusts
248(2)
Charitable Remainder Trusts
250(12)
CRT Rules
251(4)
Valuation of Remainder Interests
255(1)
Income Tax Consequences of Gift
256(1)
Gift Tax Consequences of Gift
257(2)
Estate Tax Consequences of Gift
259(1)
Generation-Skipping Transfer Tax Consequences of Gift
260(1)
Income Taxation of CRT
260(1)
Income Taxation of CRT's Income Beneficiary
261(1)
Qualified Personal Residence Trusts
262(10)
Estate Planning Aspects of QPRTs
263(1)
Requirements for Forming QPRT
264(4)
Asset Protection Aspects of QPRTs
268(2)
Structuring the QPRT
270(1)
QPRT Term
270(1)
QPRT Remainder Interest
271(1)
Selection of QPRT Trustee
271(1)
Continued Possession of Residence After QPRT's Initial Term
271(1)
Alaska- and Delaware-Type Asset Protection Trusts
272(19)
Alaska Trusts
274(1)
Requirements for Alaska Trust Statute
274(1)
Some Assets Must Be Deposited in Alaska and Administered by a Qualified Person
274(1)
Trust Instrument or Court Must Designate a Qualified Person (i.e., Alaskan Person) as a Trustee
275(1)
Trust Provides Trustee with Required Powers
276(1)
Alaska Administration
276(1)
Effect of Application of Alaska Law
276(1)
Alaska Spendthrift Trust Provisions
277(2)
Alaska Fraudulent Conveyance Provisions
279(1)
Other Alaska Provisions
280(2)
Delaware Asset Protection Trusts
282(1)
Requirements for Delaware Trust Statute
282(3)
Effect of Application of Delaware Law
285(1)
Generally
285(1)
Statute of Limitations
286(1)
Burden of Proof
287(1)
Protection for Trustees and Advisors
287(1)
Exceptions to Asset Protection
287(2)
Tax Consequences of Alaska- and Delaware-Type Trusts
289(2)
Use of Foreign Trusts
291(50)
Generally
293(2)
Creditor's Rights under United States Law
295(11)
Settlor Liability Generally
296(4)
Settlor Liability: Spousal Rights
300(2)
Settlor Liability: Bankruptcy
302(1)
Settlor Liability: Effect of Illegal Purpose Trust
303(1)
Beneficiaries Generally
304(1)
Donees of Powers of Appointment
305(1)
Creditor's Rights under Foreign Law
306(8)
Cook Islands
306(3)
Cayman Islands
309(2)
The Bahamas
311(3)
Situs of Trust
314(1)
Trust Features
315(10)
Irrevocable for Term of Years
315(2)
Beneficiaries
317(1)
Trustees
318(3)
Duress Provision
321(3)
Blind Trust Feature
324(1)
Tax Impact
325(10)
Small Business Job Protection Act of 1996
325(1)
New Reporting Requirements for Foreign Trusts
325(1)
Prior Law
325(1)
New Provisions on Reporting after a Reportable Event
326(1)
Inbound Foreign Trusts with Foreign Grantors
326(1)
Prior Law
326(1)
Act Provisions
327(1)
Effective Date
328(1)
Outbound Foreign Grantor Trusts
329(1)
Exception for Fair Market Value
329(1)
Pre-immigration Trusts
329(1)
Outbound Trust Migrations
330(1)
Attribution Rules
330(1)
Exceptions to Foreign Grantor Trust Rules
330(1)
Effective Date
330(1)
Nongrantor Foreign Trusts
331(1)
Prior Law
331(1)
Act Provisions-Accumulation Distributions
331(1)
Act Provisions-Loans from Foreign Trusts
332(1)
Effective Date
333(1)
U.S Persons Subject to Reporting Requirements for Foreign Gifts
333(1)
Prior Law
333(1)
Act's Provisions
333(1)
Penalties for Failure to Report
334(1)
Effective Date
334(1)
Residency of Trusts
334(1)
Prior Law
334(1)
New Provisions
335(1)
Effective Date
335(1)
Checklist of FAPT Issues
335(4)
Generally
335(1)
Creditor's Rights Against Trust Parties
336(1)
Structure of the FAPT Transaction
337(1)
FAPT Taxation
338(1)
FAPT Cost-Benefit Worksheet
339(2)
Retitling Assets: Concurrent Ownership of Property
341(36)
Generally
343(1)
Tenancy by the Entirety
344(17)
Characteristics of Tenancy by the Entirety
345(1)
No Unilateral Partition
346(1)
Husband's Control over Property
346(2)
Right of Possession
348(1)
Tenancy by the Entirety as an Asset in Bankruptcy
349(1)
Asset Protection Aspects
349(4)
Creation of Tenancy by the Entirety
353(5)
Termination of Tenancy by the Entirety
358(3)
Tenancy in Common
361(1)
Joint Tenancy
362(2)
Tax Consequences of Nonspousal Concurrent Ownership
364(4)
Tax Consequences of Spousal Concurrent Ownership
368(2)
Checklist of Concurrent Ownership Issues
370(5)
Generally
370(1)
Tenancy by the Entirety
371(2)
Tenancy in Common
373(1)
Joint Tenancy
374(1)
Estate and Gift Tax Consequences
374(1)
Concurrent Ownership Cost-Benefit Worksheet
375(2)
Exempt Property
377(62)
Generally
379(1)
Homestead Exemption
380(19)
Consequences of Homestead Protection
381(1)
Protects Property from Creditor's Reach
381(4)
Spousal Consent for Conveyance of Property
385(1)
Homestead Rights of Surviving Spouse
386(2)
Requirements for Homestead Protection
388(1)
Family
388(1)
Property That Qualifies for Homestead Protection
389(1)
Property Interests for Homestead Protection
389(1)
Size and Value Limitations on Property
390(1)
Occupancy and Use of Property
391(1)
Formal Declaration
391(2)
Exceptions to Homestead Protection
393(1)
Liabilities Arising Before Homestead Establishment
393(1)
Liabilities Arising Before Homestead Acquisition
394(1)
Liabilities Incurred to Mortgage or Purchase Homestead Property
394(1)
Liabilities Incurred to Improve Homestead Property
395(1)
Criminal Penalties
396(1)
Taxes
396(1)
Tort Liability
397(1)
Alimony
397(1)
Claims Based on Superior Title
398(1)
Loss of Homestead Protection
398(1)
Life Insurance
399(15)
Generally
399(2)
Exceptions to Life Insurance Exemptions
401(2)
Extension of Life Insurance Exemptions
403(2)
Gift Tax on Life Insurance
405(3)
Estate Tax on Life Insurance
408(5)
Income Tax on Life Insurance
413(1)
ERISA Qualified Retirement Plans
414(13)
Generally
414(1)
Bankruptcy Context
415(7)
Nonbankruptcy Context
422(2)
Taxes on Retirement Plans
424(1)
Gift Taxation
424(1)
Estate Taxation
425(2)
Income Taxation
427(1)
Other Income Exemptions
427(1)
Interaction Between State and Bankruptcy Exemptions
428(1)
Limits on Exemption Planning
429(2)
Exemption Planning Checklist
431(5)
Generally
431(1)
Homestead Exemption
431(2)
Life Insurance
433(2)
ERISA Qualified Retirement Plans
435(1)
Other Income Exemptions
436(1)
Interaction Between State and Bankruptcy Exemptions
436(1)
Limits on Exemption Planning
436(1)
Exemption Planning Cost-Benefit Worksheet
436(3)
Foreign Bank Accounts
439(36)
Generally
441(1)
Bank Secrecy Act
441(12)
BSA Reporting Requirements for Foreign Bank Accounts
442(2)
BSA Reporting Requirements for Imports and Exports of Currency and Monetary Instruments
444(2)
BSA Reporting Requirements Imposed on Financial Institutions
446(1)
Transaction Recordkeeping Requirements
446(1)
Currency Transaction Reporting Requirements
447(2)
Bank and Security Broker and Dealer Recordkeeping Requirements
449(1)
Failure to Comply with Bank Secrecy Act
449(1)
Civil Penalties
450(1)
Forfeiture
450(1)
Criminal Penalties
451(1)
Administrative Penalties
452(1)
Money Laundering Control Act
453(2)
Cayman Islands Law: Example of Bank Secrecy Law
455(10)
Confidential Relationships (Preservation) Law, 1976
456(1)
Confidential Relationships (Preservation) (Amendment) Law, 1979
457(2)
Mutual Legal Assistance (United States of America) Law, 1986
459(6)
United States Ability to Pierce Foreign Bank Secrecy
465(5)
Subpoenas or Summonses to Obtain Foreign Information Directly
466(1)
Subpoenas or Summonses to Obtain Testimony of Nonresidents Who Are Temporarily in the United State
466(1)
Compelled Directives to Obtain Disclosure of Financial Matters Covered by Foreign Bank Secrecy Laws
467(1)
Court Orders Directing Parties Not to Take Blocking Measures in Foreign Courts
467(1)
Equitable Measures to Reach Assets Located in Foreign Countries
468(1)
U.S Tax Court Orders Requiring Foreign Parties to Produce Evidence Located in Foreign Countries
469(1)
IRC Section 982 Formal Document Requests
469(1)
Foreign Bank Account Checklist
470(5)
Bank Secrecy Act
470(2)
Money Laundering Control Act
472(1)
Foreign Bank Secrecy and U.S Ability to Pierce It
472(3)
Overview of the Enforcement of Its Claims
475(32)
Generally
477(1)
Tax Lien
477(2)
Origination of Tax Lien
479(1)
Duration of Tax Lien
480(4)
Scope of Tax Lien
484(3)
General Characteristics of Tax Lien
484(1)
Application of Tax Lien to Certain Types of Commonly Used Asset Protection Property
485(1)
Homestead Property
485(1)
Concurrent Interests
485(1)
Life Insurance
486(1)
Trusts
486(1)
Methods of Enforcing Tax Lien
487(3)
Suit to Reduce Tax Assessment to Judgment
488(1)
Lien Foreclosure Suit
488(2)
Foreign Enforcement of Tax Liens
490(1)
Estate Tax Lien
490(2)
Gift Tax Lien
492(1)
Tax Levy
492(1)
When and How IRS May Make Tax Levy
493(2)
Scope of Tax Levy
495(6)
General Characteristics of Tax Levies
495(1)
Property Exempt from IRS Levy
496(2)
Application of Tax Levies to Certain Types of Commonly Used Asset Protection Property
498(1)
Salary and Wages
498(1)
Insurance Policies
498(1)
Bank Accounts
498(1)
Limitations on IRS Use of Tax Levy
499(1)
Surrender of Property Subject to Tax Levy
499(2)
Seizure and Sale
501(6)
Presale Procedures
501(1)
Sale Procedures
502(2)
Redemption Procedures
504(3)
Appendix A The International Trusts Act 1984 507(74)
Appendix B The Confidential Relationships (Preservation) Law (Law 16 of 1976) 581(4)
Appendix C The Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979) 585(6)
Appendix D The Mutual Legal Assistance (United States of America) Law, 1986 (Law 16 of 1986) 591(26)
Appendix E Conveyancing Amendment Act, 1993 (Bermuda) 617(8)
Appendix F The Trusts (Special Provisions) Act 1989 (Bermuda) As Amended By The Trusts (Special Provisions) Amendment Act 1998 625(20)
Appendix G Alaska Trust Statute 645(8)
Appendix H Delaware Trust Statute 653(8)
Appendix I Trustee Act 1975 (As Amended By The Trustee Amendment Act 1999, Effective 10 July 1999)(Bermuda) 661(48)
Table of Cases 709(14)
Table of Internal Revenue Code Sections 723(6)
Table of Treasury Regulations 729(2)
Table of Internal Revenue Service Releases 731(2)
Index 733

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