Bonus Not Exempt If Based Upon Company Profits

A client’s professional association compensated all of the owners through a combination of fixed salary and bonuses. The firm made no profit distributions. Bonuses were distributed quarterly by vote of the partners, and amounts were based upon available cash flow. The client asked if all the compensation is exempt as wages if the client is head of household. Continue reading

Proceedings Supplementary Extend Statute of Limitations For Fraudulent Transfers

The statute of limitations for creditors’ fraudulent transfer actions is four years. However, a recent Florida case holds that the four year limit does not apply to fraudulent transfer claims brought in the context of Proceedings Supplementary. Creditors can challenge transfers at any time during the 20 year life of a civil judgment. Continue reading

Self-Directed Retirement Plan Exposed Through Business Dealings With Third Party

Occasionally I get phone calls about buying or titling investment assets in the a client’s retirement plan. There are rules that permit self-directed IRAs or self-directed 401ks to purchase income producing investments such as rental property or businesses. The details of self-directed retirement plans are beyond by expertise; this is mostly a tax law issue. I understand which someone may want to used a self-directed retirement to defer investment income, but as I saw last week, the plan can backfire causing losses far in excess of tax savings. Continue reading

Spending or Gambling Cash Not Excuse For Non-Compliance with Court Order

I cannot recall how many times a client has suggested protecting cash from a creditor or a bankruptcy trustee by withdrawing the cash from his bank account and then telling the creditor, judge, or bankruptcy trustee that the cash was spent or lost at the casino. The problem is that judges do not find debtor’s stories to be credible. Courts will impose contempt citation if the debtor cannot produce the cash or a much better explanation of why it is impossible to find and turn over the money. Continue reading

Time Limit For Second Mortgage Lender To Sue After Foreclosure Sale

As of July 1, 2013, the statute of limitations within which a bank may seek a deficiency judgment was reduced from five years to one year for residential properties with no more than four dwelling units. An attorney called me last week and asked whether the one year time limit applies to suits brought a second mortgage holder following a deficiency action brought by the first mortgage. Continue reading

Planning To Avoid Federal Court Jurisdiction Over Fraudulent Transfers

Another attorney told me about his  Florida client anticipating a lawsuit by a creditor located in a foreign state (outside Florida) considers forming an LLC and conveying assets out of the debtor’s name to the LLC . The client accepts the risk that a creditor may challenge the conveyance as a fraudulent transfer. The attorney asked me wither his client should form the LLC in the foreign state where the creditor had his headquarters or primary place of business. Continue reading