Self-Created Impossibility of Compliance With Bankruptcy Court Orders

A federal bankruptcy court ordered a debtor to turn over to a bankruptcy trustee money the debtor had received from a property auction. Although initially admitting he received the money, at a subsequent contempt hearing the debtor said the had spent the money so there was nothing left to turn over. The court considered whether the debtor’s inability to return spent money excused the debtor from civil contempt and incarceration. Continue reading

Can IRA Be Sued For As A Recipient of a Fraudulent Transfer?

A new client invested in a ponzi scheme. He withdrew his investment, including a “profit” just before the ponzi scheme collapsed. The SEC appointed a receiver to go after investors who received profits as fraudulent transfers. Many courts have held that ponzi profits are fraudulent transfers that may be recovered to repay other investors. This client wanted to know if her profits are protected because she invested in the ponzi scheme through her self-directed Roth IRA. Continue reading

Can Bankruptcy Trustee Waive Debtor’s Attorney Client Privilege To Discover Asset Protection Plan?

Some asset protection clients eventually file bankruptcy. A bankruptcy trustee’s job is to find and possible reverse the debtor’s prior asset transfers done in the course of asset protection planning. Some trustees have sought discovery of the debtor’s communication with the debtor’s attorneys who had advised and assisted the debtor with asset protection planning in order to discover asset conveyances and the debtor’s intentions to protect the assets from creditors. There is a legal issue of whether the debtor or the bankruptcy trustee controls the debtor’s attorney-client privilege with pre-bankruptcy attorneys. Continue reading

Bankruptcy Case Confirms Non-Resident’s Exemption of Tenants by Entireties Assets

I’ve written in previous blog posts that a debtor does not have to be a Florida resident to claim tenants by entireties exemption of assets situated in Florida. The reason is that tenants by entireties protection is based upon common law traditions of property ownership rather than upon exemptions statutes enacted by the Florida and other state legislatures. A Chapter 7 bankruptcy case in 2014 4 reiterates the difference between entireties protection and state exemption statutes where exemption requires residency in the respective state. Continue reading

Island of Nevis Substantially Amends LLC Ordinance

The Nevis limited liability company is an effective and efficient offshore asset protection tool. In May, 2015, the Nevis Assembly enacted an important revisions of the Nevis LLC Ordinance. The new law significantly improved asset protection benefits of forming a Nevis LLC. The new law is called the “Nevis Limited Liability Company (Amendment) Ordinance, 2015,”. Continue reading

Are There Benefits From Forming LLC in Delaware?

Some of my clients ask me whether there is an advantage to create an LLC Delaware. There may be benefits to a Delaware LLC, but the advantages are largely misunderstood. Delaware law specifically protects single member LLCs from collection remedies other than charging liens. Many people think that if they form a single member LLC in Delaware their interest would be exempt from a creditor foreclosure in a Florida proceeding. Continue reading

Homestead Proceeds Invested In Marketable Securities May Be An Exempt “Homestead Account.”

The concept of a “homestead account” is well established in Florida. Proceeds from the sale of a Florida homestead property remain exempt for a reasonable time while the homeowner searches for a replacement homestead. The homestead account most often refers to a separate bank account where the owner deposits the sale proceeds. Is protection lost if the owner invests the proceeds in marketable securities. Continue reading

Garnishment of Bank Account Opened Outside of Florida

You would think that debtors’ accounts at a national bank such as BOA or Wells Fargo may be garnished in any state where the bank maintains a branch. I expect most Florida courts would agree, and Florida judges would permit creditors to garnish accounts of Florida debtors held at national banks regardless of whether the debtors opened the account in Florida. Continue reading