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Tag Archive for Trusts

A Brief Overview of the Judicial Reasoning That Has Thwarted Foreign Asset Protection Trusts

Hale Stewart, Tax Advisor

As I have documented previously, there are several cases where courts have ruled against the grantors of a foreign asset protection trust, thereby nullifying the asset protection benefit. In this post, I want to briefly sum up the judicial reasoning used by the courts to thwart these trusts.

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FTC v. Affordable Media: Foreign Asset Protection Trust Failures

Hale Stewart, Asset Protection

High net worth individuals are loathe to transfer assets to any entity over which they have no control. This fact creates an unresolvable problem when forming an offshore asset protection trust: so long as a U.S. person can exert even a modicum of control over a foreign entity, a U.S. court has sufficient grounds to rule that a U.S. based debtor can repatriate assets. More importantly, failure to comply with a repatriation order could lead to contempt citation against the U.S. debtor. The facts of Federal Trade Commission v. Affordable Media typify this problem. Read more

U.S. Taxation of Entities, Associations, and Partnerships: What’s Your “Situs” Roger?

In the U.S. tax system, there is no characteristic of associations or entities (partnerships, corporations, and trusts) that corresponds exactly to the “nationality” or “residence” of individuals. For most organizations, however, there is a place – or at least a distinct legal environment – that establishes their existence and identity. This place, sometimes referred to as an entity’s “situs”, bears heavily on its taxation.

Corporations

The situs of a corporation is inextricably tied to the country of its incorporation. To that end, two simple words define the tax treatment of a corporation: “domestic” and “foreign.” A “domestic” entity (including a partnership or a corporation) is one “organized in the United States under the laws of the United States or of any State.” § 7701(a)(4). Colloquially, Read more

Non-Statutory Asset Protection Trusts

Introduction

In the United States, there has been a malpractice crisis for the medical profession for a number of years. It has at its roots the American Trial Lawyers who advocate a position that the medical profession is not adequately regulated for physicians whose practice causes harm to their clients. Its associations vigorously contend that victims of malpractice by physicians are inadequately compensated from injury and demand that no limits can be imposed as to the amounts mandated by the jury. The insurance underwriters of medical professionals assert that large verdicts have caused them to raise premiums where they depart from economic reality. When a physician factors in the cost of insurance in terms of doing business, the risk-reward analysis in specific Read more

Recent Developments in Estate and Trusts Planning: Part 1

iStock_000009598906XSmallNote: An Article Written By Justin P. Ransome, J.D., MBA, CPA, and Frances Schafer, J.D, in the AICPA, The Tax Advise on 9/1/13 and was reviewed, edited and posted by Harold Goedde Ph.D on TaxConnections Worldwide Tax Blogs.

The uncertainty about transfer-tax rates and exemption amounts that has plagued taxpayers and practitioners since 2001 was finally settled in 2013. On Jan. 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (ATRA [1]. For estate, gift, and generation-skipping transfer (GST) tax purposes it makes permanent the following: (a) certain income and transfer-tax provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) [2], (b) income tax provisions in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) [3], income and certain transfer-tax provisions in the Tax Relief,

(d) Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act). [4]

In most instances the effective date of the act is Jan. 1, 2013. Read more