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This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

Read more about asset protection or contact Chicago business lawyer Don Thompson and see what he can do for you.

This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

4. Putting your assets in limited partnerships or LLC’s created under the laws of a few states where the creditors can get only a charging order (a right to get distributions from the entity) rather than an order to sell the ownership interest. You can get the money out in salary – not distributions on the ownership interest.

5. Trusts in general. An irrevocable trust (for someone else’s benefit) puts assets in it (but not distributions) beyond the claim of your creditors. A revocable trust that provides how its assets are distributed after your death protects the assets from your (not the beneficiary’s) creditor’s claims after your death – but not before.

6. Spendthrift trusts. These are trusts that do not allow a creditor of a beneficiary to attach the beneficiary’s interests. They are valid, but only if the beneficiary is someone other than the creator of the trust.

7. Domestic irrevocable asset protection trusts are now permissible in several states. In effect they are spendthrift trusts for the benefit of the creator of the trust. They basically provide that a creditor of the grantor cannot get the trust assets. Illinois has no such law. To have the law of one of these other states apply to a trust set up by an Illinois resident that state must have a substantial relationship to the trust such as a trustee being in that state and/or location of the assets there. Since domestic asset protection trusts are new, certain questions, such as what state’s laws will apply, are not yet settled.

8. Foreign asset protection trusts. Some countries don’t grant “full faith and credit” to a foreign judgment. A creditor having a U.S. judgment cannot enforce it in those countries. The creditor must institute a new law suit there. This alone discourages creditors. If a creditor does sue the trust assets can be distributed to another trust in another country with similar laws before the creditor gets judgment.

9. Limited liability entities. These are corporations, limited liability companies, limited partnerships and limited liability partnerships. If these are set up and operated properly creditors of the business can only get the business assets. They cannot go outside the business and collect from assets of the owners. Note that creditors of the owners can get the owner’s interests in the corporation or partnership and to some degree, the limited partnership and limited liability company.

10. Keeping ownership of assets used by a business outside the business. The creditors of a business can get its assets. They cannot get assets it leases. For this reason owners of assets like real estate used by businesses they own often do not put the real estate in the entity owning the business. They lease it to the entity. This goes for any valuable asset and often includes equipment or other things used by the business. If the asset is of a type which can generate claims, then the asset can be owned by another limited liability entity.

11. Separating risks. If two businesses are conducted or a single business is conducted in separate locations each can be owned by a separate limited liability entity. That way if one goes under the assets of the other will not be exposed.

Some of these devices can be attached by creditors under fraudulent transfer laws. If a transfer is not for equivalent value and is intended to defeat known and existing claims and the transferor does not retain sufficient assets there is a fraudulent transfer which a creditor can get a court to revoke.

Contact Chicago business attorney Don Thompson for help with asset protection or visit his Chicago business law website to read further.

Estate planning often involves lifetime gifts to children. This gets appreciation on the assets out of the parents’ estates. This was also done in the past to shift income to children who were usually in a lower tax bracket. Now a child under 18 pays tax at the parents’ highest marginal tax rate on the child’s unearned income over $1900 if that would be higher than the child’s tax. The tax also applies if the child’s earned income does not exceed one-half of the child’s support and the child is 18 or is a full time student aged 19-23.

To learn more contact Chicago Estate Planning Attorney. Call 312-782-0844.

This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

    1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

    2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

    3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

    4. Putting your assets in limited partnerships or LLC’s created under the laws of a few states where the creditors can get only a charging order (a right to get distributions from the entity) rather than an order to sell the ownership interest. You can get the money out in salary – not distributions on the ownership interest.

    5. Trusts in general. An irrevocable trust (for someone else’s benefit) puts assets in it (but not distributions) beyond the claim of your creditors. A revocable trust that provides how its assets are distributed after your death protects the assets from your (not the beneficiary’s) creditor’s claims after your death – but not before.

    6. Spendthrift trusts. These are trusts that do not allow a creditor of a beneficiary to attach the beneficiary’s interests. They are valid, but only if the beneficiary is someone other than the creator of the trust.

    7. Domestic irrevocable asset protection trusts are now permissible in several states. In effect they are spendthrift trusts for the benefit of the creator of the trust. They basically provide that a creditor of the grantor cannot get the trust assets. Illinois has no such law. To have the law of one of these other states apply to a trust set up by an Illinois resident that state must have a substantial relationship to the trust such as a trustee being in that state and/or location of the assets there. Since domestic asset protection trusts are new, certain questions, such as what state’s laws will apply, are not yet settled.

    8. Foreign asset protection trusts. Some countries don’t grant "full faith and credit" to a foreign judgment. A creditor having a U.S. judgment cannot enforce it in those countries. The creditor must institute a new law suit there. This alone discourages creditors. If a creditor does sue the trust assets can be distributed to another trust in another country with similar laws before the creditor gets judgment.

    9. Limited liability entities. These are corporations, limited liability companies, limited partnerships and limited liability partnerships. If these are set up and operated properly creditors of the business can only get the business assets. They cannot go outside the business and collect from assets of the owners. Note that creditors of the owners can get the owner’s interests in the corporation or partnership and to some degree, the limited partnership and limited liability company.

    10. Keeping ownership of assets used by a business outside the business. The creditors of a business can get its assets. They cannot get assets it leases. For this reason owners of assets like real estate used by businesses they own often do not put the real estate in the entity owning the business. They lease it to the entity. This goes for any valuable asset and often includes equipment or other things used by the business. If the asset is of a type which can generate claims, then the asset can be owned by another limited liability entity.

    11. Separating risks. If two businesses are conducted or a single business is conducted in separate locations each can be owned by a separate limited liability entity. That way if one goes under the assets of the other will not be exposed.

Donald Thompson is an expert in Illinois Asset protection. Call 312-782-0844 today to arrange meeting.

This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

    1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

    2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

    3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

    4. Putting your assets in limited partnerships or LLC’s created under the laws of a few states where the creditors can get only a charging order (a right to get distributions from the entity) rather than an order to sell the ownership interest. You can get the money out in salary – not distributions on the ownership interest.

    5. Trusts in general. An irrevocable trust (for someone else’s benefit) puts assets in it (but not distributions) beyond the claim of your creditors. A revocable trust that provides how its assets are distributed after your death protects the assets from your (not the beneficiary’s) creditor’s claims after your death – but not before.

    6. Spendthrift trusts. These are trusts that do not allow a creditor of a beneficiary to attach the beneficiary’s interests. They are valid, but only if the beneficiary is someone other than the creator of the trust.

    7. Domestic irrevocable asset protection trusts are now permissible in several states. In effect they are spendthrift trusts for the benefit of the creator of the trust. They basically provide that a creditor of the grantor cannot get the trust assets. Illinois has no such law. To have the law of one of these other states apply to a trust set up by an Illinois resident that state must have a substantial relationship to the trust such as a trustee being in that state and/or location of the assets there. Since domestic asset protection trusts are new, certain questions, such as what state’s laws will apply, are not yet settled.

    8. Foreign asset protection trusts. Some countries don’t grant "full faith and credit" to a foreign judgment. A creditor having a U.S. judgment cannot enforce it in those countries. The creditor must institute a new law suit there. This alone discourages creditors. If a creditor does sue the trust assets can be distributed to another trust in another country with similar laws before the creditor gets judgment.

    9. Limited liability entities. These are corporations, limited liability companies, limited partnerships and limited liability partnerships. If these are set up and operated properly creditors of the business can only get the business assets. They cannot go outside the business and collect from assets of the owners. Note that creditors of the owners can get the owner’s interests in the corporation or partnership and to some degree, the limited partnership and limited liability company.

    10. Keeping ownership of assets used by a business outside the business. The creditors of a business can get its assets. They cannot get assets it leases. For this reason owners of assets like real estate used by businesses they own often do not put the real estate in the entity owning the business. They lease it to the entity. This goes for any valuable asset and often includes equipment or other things used by the business. If the asset is of a type which can generate claims, then the asset can be owned by another limited liability entity.

    11. Separating risks. If two businesses are conducted or a single business is conducted in separate locations each can be owned by a separate limited liability entity. That way if one goes under the assets of the other will not be exposed.

Some of these devices can be attached by creditors under fraudulent transfer laws. If a transfer is not for equivalent value and is intended to defeat known and existing claims and the transferor does not retain sufficient assets there is a fraudulent transfer which a creditor can get a court to revoke.

Contact Chicago Business Attorney Don Thompson Today.

This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

    1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

    2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

    3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

    4. Putting your assets in limited partnerships or LLC’s created under the laws of a few states where the creditors can get only a charging order (a right to get distributions from the entity) rather than an order to sell the ownership interest. You can get the money out in salary – not distributions on the ownership interest.

    5. Trusts in general. An irrevocable trust (for someone else’s benefit) puts assets in it (but not distributions) beyond the claim of your creditors. A revocable trust that provides how its assets are distributed after your death protects the assets from your (not the beneficiary’s) creditor’s claims after your death – but not before.

    6. Spendthrift trusts. These are trusts that do not allow a creditor of a beneficiary to attach the beneficiary’s interests. They are valid, but only if the beneficiary is someone other than the creator of the trust.

    7. Domestic irrevocable asset protection trusts are now permissible in several states. In effect they are spendthrift trusts for the benefit of the creator of the trust. They basically provide that a creditor of the grantor cannot get the trust assets. Illinois has no such law. To have the law of one of these other states apply to a trust set up by an Illinois resident that state must have a substantial relationship to the trust such as a trustee being in that state and/or location of the assets there. Since domestic asset protection trusts are new, certain questions, such as what state’s laws will apply, are not yet settled.

    8. Foreign asset protection trusts. Some countries don’t grant "full faith and credit" to a foreign judgment. A creditor having a U.S. judgment cannot enforce it in those countries. The creditor must institute a new law suit there. This alone discourages creditors. If a creditor does sue the trust assets can be distributed to another trust in another country with similar laws before the creditor gets judgment.

    9. Limited liability entities. These are corporations, limited liability companies, limited partnerships and limited liability partnerships. If these are set up and operated properly creditors of the business can only get the business assets. They cannot go outside the business and collect from assets of the owners. Note that creditors of the owners can get the owner’s interests in the corporation or partnership and to some degree, the limited partnership and limited liability company.

    10. Keeping ownership of assets used by a business outside the business. The creditors of a business can get its assets. They cannot get assets it leases. For this reason owners of assets like real estate used by businesses they own often do not put the real estate in the entity owning the business. They lease it to the entity. This goes for any valuable asset and often includes equipment or other things used by the business. If the asset is of a type which can generate claims, then the asset can be owned by another limited liability entity.

    11. Separating risks. If two businesses are conducted or a single business is conducted in separate locations each can be owned by a separate limited liability entity. That way if one goes under the assets of the other will not be exposed.

Some of these devices can be attached by creditors under fraudulent transfer laws. If a transfer is not for equivalent value and is intended to defeat known and existing claims and the transferor does not retain sufficient assets there is a fraudulent transfer which a creditor can get a court to revoke.

Contact Chicago Probate Attorney Donald Thompson for further information.

A variety of steps can be taken to protect assets from creditors. One simple step is to transfer your assets to your spouse. This assumes you have a healthy marriage and that your spouse’s creditors are not a problem. It may also interfere with planning to avoid estate taxes. Other devices which are sometimes used are:

Statutory exemptions from enforcement of judgments. By statute a creditor cannot reach certain assets. In most states creditors cannot get your residence if the equity in it is below a certain level. In Illinois this is $7500 for a single person or $15,000 for married persons. In some states the amount of the exemption is unlimited. Under the bankruptcy laws the assets protected by state law are also exempt assets in bankruptcy.

Retirement vehicles. In most states pension, profit sharing and other retirement the entity are at risk, not your other assets outside the entity. This does not work when you do the act creating certain liabilities yourself, such as when you are driving the company truck which runs someone over. It also does not work for certain professionals like doctors or lawyers with respect to their malpractice liability. It does work with respect to contract liability, so long as you sign in the entity’s name and do not personally guaranty the contract. It also does not work against liability generated outside the business. The creditors can get your interest in the business and then liquidate it.

Limited liability companies and limited partnerships. If you own an interest in such a company under some states’ laws your creditors cannot get your interest in the entity. They can only get a charging order which allows them to get distributions which might otherwise go to you, if there are any.

Tenancy by the entirety. This is a type of joint tenancy between spouses in a residence. The creditors of only one of the spouses cannot get the property.

Bearer stock. In some countries corporate stock can be issued only to the bearer. No records of ownership are kept. If your creditors can’t find your assets they can’t get them. However, creditors can require you to tell them under oath what you own so use of this device involves potentially breaking the law. You can be sentenced to jail for contempt of court if your answers are shown to be false.

Foreign asset protection trusts. These are trusts set up, usually, in certain foreign jurisdictions where it is difficult to enforce U.S. judgments. In the time it takes the creditor to get anywhere you can move the assets to another country with similar laws. These arrangements are very expensive and at least one U. S. court has ordered the trust owner who lives here to produce the assets or go to jail.

Living Trusts. After death your creditors cannot get the trust assets.

If you are going to use these devices you must do so before you have lawsuits or judgments against you. Transfer of your assets for less than the full value is a fraudulent conveyance and void if you made the transfer to avoid a creditor. Some of these devices also have a waiting requirement before they become effective.