FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG

The Florida Estate Planning and Probate Law Blog is focused on recent federal and state case law and planning ideas.

Showing posts with label creditor protection. Show all posts
Showing posts with label creditor protection. Show all posts

INDIANA ENACTS DOMESTIC ASSET PROTECTION TRUST STATUTE

♠ Posted by Marc J. Soss in ,,,,
On July 1, 2019, Indiana will become the eighteenth (18th) state to enact domestic asset protection legislation (“DAPT”). S.B. 265, enacted by the Indiana legislature on April 9, 2019, and signed into law on May 5, 2019 by the Governor, creates a new Section 30-4-8 to the Indiana Code to permit the establishment of “Legacy Trusts” (a form of self-settled domestic asset protection trusts). The section also provides spendthrift creditor protection to the settlors of Legacy Trusts. The new Indiana Legacy Trust statute is similar to those of other states that permit DAPTs. Under the statute, the owner of property or the holder of a general power of appointment can transfer assets to a Legacy Trust through a “qualified disposition.” To be a qualified disposition, the Legacy Trust must be irrevocable; have a “qualified trustee” (individual residing in Indiana or an entity authorized by Indiana law to act as a trustee as one of the trustees); incorporate Indiana law to govern the validity, construction and administration of the Legacy Trust; and have a spendthrift clause. The transferor of assets to a Legacy Trust must sign a “qualified affidavit” affirming that: (i) the transferor has full right to transfer property to the trust; (ii) the transfer will not cause the transferor to be insolvent; (iii) the transferor does not intend to defraud creditors with the transfer; (iv) there are no pending or threatened court actions against the transferor other than those identified by the transferor in the affidavit; (v) the transferor is involved in no administrative proceedings other than those identified in the affidavit; (vi) the transferor does not contemplate filing for bankruptcy; and (vii) the property transferred to the trust is not derived from unlawful activities. The act also provides that an Indiana court “to the maximum extent permitted by the United States Constitution and the Indiana Constitution,” must exercise jurisdiction over the trust even if a court of another jurisdiction has or may have proper jurisdiction of a matter involving the trust.
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IS A PAY-ON-DEATH OR TRANSFER-ON-DEATH ACCOUNT THE RIGHT CHOICE FOR THE ACCOUNT BENEFICIARY?

♠ Posted by Marc J. Soss in ,,,,,,
The benefits and negatives associated with establishing transfer on death (TOD) and pay on death (POD) accounts has been debated for a long-time. The main benefit of an account of this nature is that the account assets will pass directly to the beneficiary(s) named on the account without probate or being subject to the decedent’s creditor claims. This is a simple way to transfer assets at death to an individual not involved in any dispute or litigation (divorce, bankruptcy, judgment creditor, etc.). In contrast, if the individual is involved in a dispute or litigation the assets passing outright to them could be at risk to the dispute or litigants claims. Consideration must also be taken if the individual named as the account beneficiary is a “special needs” individual, as direct receipt of the account funds could result in them loosing eligibility for the government benefits they are receiving. In addition, a POD or TOD could alter the end result of the decedent's intended estate plan.
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