Asset Protection Strategies - Learning Objectives

Upon successful completion of this course, participants will be able to:

• Chapter 1
• Explain the goals and purposes of asset protection, describe the objections some people have about shielding assets from creditors, and list at least six reasons for asset protection.
• Identify sixteen situations that can unexpectedly put assets and financial security at stake and isolate eighteen common sources of lawsuits.
• Analyze the author's concept of exploding and imploding liability and how dealing with them is necessary for complete asset protection plan and implement the concepts of insurance, asset placement, and statutory protections when applied to asset protection.
• Compare and define the three types of creditors associated with asset protection and fraudulent transfers, noting salient characteristics as to each.
• Summarize the various fraudulent transfer provisions, particularly the uniform acts, which protect current and future creditors; list several badges of fraud in the Uniform Fraudulent Transfer Act and recognize their effect on transfers; clarify the statute of limitations and potential criminal penalties associated with such fraudulent transfers; and differentiate fraudulent asset transfers from permissible asset transfers.
• Figure net worth using a balance sheet, determine values of assets, and prepare a balance sheet in the context of determining the depth and scope of suitable asset protection planning.
  
• Chapter 2
• Compare and define the major characteristics of homeowner's, automobile, and disability insurance and what asset protection they may offer.
• Differentiate between the four parties in whom rights are placed under a life insurance contract; cite the benefits, uses, and types of life insurance; identify three variables that influence whether life insurance is taxable for federal estate tax purposes; and provide reasons for establishing an irrevocable life insurance trust in order to achieve several estate tax planning advantages.
• Define annuities, clarify the types and characteristics of annuities, and list some of their tax advantages and disadvantages.
• Characterize buy-sell agreements; distinguish an entity purchase agreement from a cross-purchase agreement; and explain purchase prices and terms of buy-sell agreement, risks of having stock as community property, and concerns about shares held by professional corporations, S corporations, and sole shareholders.
  
• Chapter 3
• Identify nine basic ways to hold property, clarify what taxpayers must do before beginning an asset protection program, and explain the advantages and disadvantages of holding property individually and through a sole proprietorship and how these pitfalls can be avoided.
• List five basic guidelines that corporate business owners should follow to protect their corporations and two issues regarding potential personal liability for shareholders, officers and directors, identify six protection ideas for corporate business owners, and list six §469 passive loss restriction considerations.
• Detect the advantages and disadvantages of using a corporation in asset protection planning, differentiate among the three categories of C Corporations, explain the importance of S corporations and their estate tax planning advantages, and list the advantages and disadvantages of transferring farmland to a corporation.
• Discuss testamentary trusts, living trusts, and at least eight subcategories of trusts and elucidate where changes may be necessary when using them for asset protection planning.
• Describe how different trusts are taxed with regard to income tax, estate tax, and gift tax; summarize the grantor trust rules and the effect of the treatment on owners for income tax purposes; and explain the tax consequences of several trust types.
• Distinguish and compare the various types of co-tenancy and the impact each has on asset protection and tax liability.
• Define partnerships and their various types, name four ways that partnerships may be better than corporations from an estate planning viewpoint, outline how partnerships are taxed and how estate freezing works to minimize death taxes on estate assets, and recap the structuring of family partnerships.
• Delineate the advantages and disadvantages of a limited liability company (LLC), identify the problems associated with its newness, and explain how professional firms, joint ventures, and families can benefit from establishing LLCs.
• Demonstrate how retirement plans can be used to provide substantial lifetime benefits to a business owner and to employees while simultaneously providing asset protection.
• Explain the important characteristics of custodianship and estates as asset protection tools.
• Chapter 4
• Summarize the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and how it changed the procedures, qualifications, and tax law; implement important new changes; and identify the three most common types of bankruptcy filings that can influence how the individual or business “goes bankrupt.”
• Delineate the rules of automatic stay and levy action and their impact on individuals and businesses who file bankruptcy and on tax assessment and collection.
• Differentiate between preferential and non-preferential payments and determine the priority of creditor claims.
• Discern when debt is discharged under Chapter 7, Chapter 11, and Chapter 13 bankruptcies, describe how to establish an individual bankruptcy estate and the filing requirements of the estate, figure taxable income of the bankruptcy estate, and outline the special rules that apply to individual debtors, partnership bankruptcies, and corporate bankruptcies.
• Define homesteading, distinguish debts that are covered under homesteading from those that are not covered, calculate permissible garnishment by creditors, and list four special rules that apply in the garnishment area.
• Chapter 5
• Explain the effect that debt cancellation has on net worth and potential income inclusion from cancellation of indebtedness income and list six exceptions to the general income inclusion rule and discuss their effect on the taxpayer.
• Put the tax attribute reductions in order and apply the reductions to the amount of canceled debt; describe the special basis reduction rules; advise clients on the depreciable property election, permitting them to reduce the basis of depreciable property before reducing any other tax attributes; explain individual, partnership, and S corporation bankruptcies; and identify at least three variables that are considered in determining whether shares of stock issued to a creditor are nominal or token.
• Figure gain or loss resulting from foreclosure or repossession, summarize reporting and filing requirements, define the timing and character of the gain or loss, and point out the hidden income tax danger of directly or indirectly acquiring one's own debt at a discount.
• Chapter 6
• Identify three formats that courts typically follow if a couple does not have an enforceable premarital agreement and compare post-nuptial and premarital agreements and how they relate to divorce settlements and divisions.
• Apply §1041 to interspousal transfers, avoid the tax trap of deferred tax liability, and calculate the transferor’s and transferee’s property basis under §1041(b).
• Figure deferred gain or loss associated with selling an interest in the marital residence; apply §1041 to selected business, retirement, and investment assets; and identify at least three conditions that must be met for a like-kind exchange to be nontaxable.
• State particular tax consequences resulting from the division of certain types of property between spouses or former spouses incident to divorce and list the elements of a Qualified Domestic Relations Order (QDRO).
• Chapter 7
• List four ways to manage an incompetent person’s estate, define joint tenancy and its benefits, and identify at least three levels of conservatorship that can influence assistance in management and protection of an estate and/or personal care.
• Discuss durable power and where changes may be necessary in elderly and disabled planning to maximize its use and identify funded revocable living trust variations and their advantages.
• Compare and contrast the basic eldercare benefits of Medicare and Medicaid, determine countable income, and divide assets into three separate groups for Medicaid.
• Describe possible health care decisions such as having a living will, distinguish Supplemental Security Income from Social Security disability benefits, separate assets into two groups for SSI, and outline requirements for both SSI and Social Security disability benefits.