U.S. Supreme Court changes rules on IRA’s

Date: 06/16/2014
Publication: Website
CooperLevenson Publication: Website
Summary: On June 12, 2014, the U.S. Supreme Court resolved a key question that has lingered for nearly a decade: Are funds in an inherited IRA protected in bankruptcy? The answer was a unanimous, “No.”
Article: U.S. Supreme Court changes rules on IRA’s.pdf

The Art of Asset Protection

The average individual spends most of his adult life working to maintain or improve the lifestyle of his family and loved ones. Many have the foresight to create and follow strategic plans which maximize economic return on their investment of time, energy and effort. Frequently, these same individuals have the foresight to retain accountants and/or tax attorneys to minimize the amount of federal and state taxes paid annually or upon their death.

Unfortunately, few of these individuals devote any meaningful resources to
protecting these assets which they have worked so hard to enlarge. Sure, most obtain the requisite insurance to protect hard assets from fire, flood or other catastrophe. Many even obtain general liability insurance with the expectation that this will protect them from future claims by individuals injured on their residential or commercial property.

Far too few take the next step and incorporate in their business plan any
meaningful level of asset protection. In today’s litigious society, this failure can
quickly eradicate a lifetime of business and personal successes. Irrespective of the industry or profession, there exists an everpresent risk that someone will successfully convince a jury that these assets should be liquidated to compensate someone for their alleged physical or other loss.

Art of Asset Protection.pdf

Important Warnings with Respect to Property Held as Tenancy by the Entireties

Several states, including Florida and Texas, have statutory laws which prevent creditors from seizing real property held by, among others, married individuals under defined circumstances. These states explicitly make property held by Florida or Texas residents as a primary resident exempt from execution, levy and sale by a creditor.

New Jersey protects real property held by spouses that is deemed to be held as
tenancies by the entireties from the reach of one spouse’s creditors. This is designed to provide protection for the surviving spouse. Ten Eyck v. Walsh, 139 N.J. Eq. 533 (Prerog. Ct. 1947); See Also Gery v. Gery, 113 N.J. Eq. 59 (E. & A. 1933).

Each spouse is deemed to have a right of survivorship which entitles him or her to obtain the property by operation of law upon the death of the other spouse. If a creditor of one spouse obtains a judgment against the one spouse, he can execute and levy upon the interest of this spouse in the property but he cannot terminate the right of survivorship in the other spouse and force the sale or partition of the property. See Newman v. Chase, 70 N.J. 254 (1976). The creditor would have to wait for the other spouse to die before he could force the partition of the property. If the other spouse, who is not indebted to the creditor, outlives the spouse who has a judgment against him, then the creditor would lose all
interest in the property.

Important Warnings (EB).pdf

Important Warnings with Respect to Property Held as Tenancy by the Entireties

Several states, including Florida and Texas, have statutory laws which prevent creditors from seizing real property held by, among others, married individuals under defined circumstances. These states explicitly make property held by Florida or Texas residents as a primary resident exempt from execution, levy and sale by a creditor.

New Jersey protects real property held by spouses that is deemed to be held as tenancies by the entireties from the reach of one spouse’s creditors. This is designed to provide protection for the surviving spouse. Ten Eyck v. Walsh, 139 N.J. Eq. 533 (Prerog. Ct. 1947); See Also Gery v. Gery, 113 N.J. Eq. 59 (E. & A. 1933).

Each spouse is deemed to have a right of survivorship which entitles him or her to obtain the property by operation of law upon the death of the other spouse. If a creditor of one spouse obtains a judgment against the one spouse, he can execute and levy upon the interest of this spouse in the property but he cannot terminate the right of survivorship in the other spouse and force the sale or partition of the property. See Newman v. Chase, 70 N.J. 254 (1976). The creditor would have to wait for the other spouse to die before he could force the partition of the property. If the other spouse, who is not indebted to the creditor, outlives the spouse who has a judgment against him, then the creditor would lose all
interest in the property.

Important Warnings with Respect to Property.pdf