Using Partner’s Trust To Protect Debtor’s Business Interest

People facing potential litigation should be careful when they start a new business venture with a partner. The interest acquired in the business may be vulnerable to future judgment creditors, and the non-debtor partner may be embroiled in the judgment collection. There are alternatives to taking ownership of a business interest in your individual name(s) that provide better asset protection. Continue reading

Purchase of Annuities Before Becoming Florida Residents

Two clients had the same question last week about purchasing annuities. Both client were planning to move to Florida from another state where judgments were about to be entered against them. They are interested in buying annuities which are exempt under Florida law. They want to know if their annuities would be exempt in Florida if they are purchased while resident of another state. Continue reading

C Corporation Planning May Avoid Imputed Income From Mortgage Debt Forgiveness

Often, the biggest problem with mortgage deficiency actions related to foreclosed investment property is the possibility of imputed income from debt forgiveness. Even if the mortgage lender does not pursue collection of a deficiency judgment, or if the lender settles with the mortgagor for partial payment of the total deficiency, the lender is likely to send a 1099 tax form to the mortgagor in the amount of uncollected or forgiven debt. Continue reading

Liability of Personal Representative To Pay Decedent’s Mortgages

Husband and wife each have previously been married with separate children. The husband’s estate plan names surviving spouse as personal representative. The will leaves a mortgaged property jointly to two of the husband’s children in a testamentary trust. . Two years after the husband’s death the children find they cannot afford to pay the mortgage. They believe that the surviving spouse should pay the mortgage from estate funds, or her personal funds, because she represents the decedent who personally signed the mortgage note. Continue reading

Umbrella Insurance Against Breach of Fiduciary Duty Claims

In past years I’ve had several clients sued by members of their own family because the client allegedly had mismanaged or had improperly benefited from an estate or trust for which they were named as personal representative of trustee.  This past week one of my clients who was the target as trustee discovered that claims that could be filed against him would be covered by his existing insurance policies. Continue reading

Protection of Payments Received Monthly From Promissory Note

One of my clients holds an unsecured promissory note give to him as consideration for the sale of a business, and he receives monthly payments. He has a judgment against him. The judgment creditor may garnish note payments by serving a writ of garnishment upon the person who pays the note. I suggested that my client sell the note before payments are garnished. The client wants to know how much money he has to sell the note for to avoid having the sale undone as a fraudulent transfer. Continue reading

Navigating Financial Account Applications To Create Tenants By Entireties Ownership

The general rule is that married accounts with rights of survivorship are presumed to owned by married couples as tenants by entireties unless the couple has disclaimed entireties ownership on the account application or elsewhere. The most common disclaimer of entireties protection occurs when a debtor selects the incorrect ownership on a financial institution’s account application. Not all bank provide a tenants by entireties option on an account application, but most securities firms do offer both a joint survivorship alternative and a separate entireties option. Continue reading

Foreclosure of Equitable Lien on Florida Homestead

The Florida Supreme Court established in the Havoco case that  equitable liens are  an exemption from Florida’s homestead protection. A judgment creditor may be entitled to an equitable lien on the homestead for the amount of money obtained by fraud or other egregious actions a judgment and subsequently used to purchase or improve a homestead. The creditor my trace the money wrongfully obtained in to the debtor’s home. Continue reading