Garnishment of Debtor’s Interest In An Irrevocable Charitable Trust

Many years ago one of my clients transferred a substantial amount of money to  an irrevocable charitable lead trust. Under the terms of the trust agreement the client receives a stream of income each year, and upon the client’s death all money in the charitable trust goes to a charity. The client wanted to know if trust assets or his  income is vulnerable to his lifetime creditors. Continue reading

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