Domestic Asset Protection Trust Summary

Several states have enacted statutes which provide asset protection of a debtor’s interest in a trust which the debtor sets up for his own benefit and which the debtor capitalizes with  his own non-exempt assets. These trusts are referred to as “domestic asset protection trusts” (DAPT). The trusts legislation attempts to create domestic trust with the same asset protection benefits of offshore asset protection trusts.

Many of my asset protection clients suggest using a DAPT as part of their asset protection program. Whether a DAPT is an effective asset protection tool depends mostly upon where the debtor lives and owns assets. Here is a good summary of DAPT options from Jay Adkisson’s asset protection blog published in Forbes Magazine. Jay provides an easy to understand chart which illustrates when a DAPT will, and will not, work, and he provides also legal citations for the application of DAPT law in different forums.

Jay’s chart shows why DAPT created in other states usually will not protect assets of Florida debtors in Florida courts.
 

Who Can I Claim As a Dependent?

The age-old question, Who can I claim as my dependent?, has remained a confusing topic for many taxpayers and an area where tax deductions are often missed or misstated on tax returns.

Did you know, you may be able to claim your couch potato friend as a dependent?  Did you realize that support of your struggling aunt who didnt live with you may qualify you for the dependency deduction?  Dont feel bad, you would be surprised how many people dont understand the dependency tax laws.

The bottom line is a dependent must be your qualifying child or qualifying relative and meet specific tests in order for you to claim them.

There are 5 test that will qualify a child as a dependent as follows:

• Relationship Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these.
• Residence Must have the same residence for more than half the year.
• Age Must be under age 19 or under 24 and a full-time student for at least 5 months. They can be any age if they are totally and permanently disabled.
• Support Must not have provided more than half of their own support during the year.
• Joint Support The child cannot file a joint return for the year.

There are 4 tests that will qualify a relative as a dependent as follows:

• They are not the qualifying child of another taxpayer or your qualifying child.
• Gross Income Dependent earns less than $3,700 TY 2011 and $3,650 TY 2010.
• Total Support You provide more than half of the total support for the year.
• Member of Household or Relationship The person must live with you all year as a member of your household or be one of the relatives that doesnt have to live with you see IRS Publication 501 for a list of qualifying relatives.

Many taxpayers are surprised to find they may be able to claim a boyfriend, girlfriend, domestic partner, or friend as a qualifying relative if:

• They are a member of your household the entire year.
• The relationship between you and the dependent does not violate the law .
• You meet all the other criteria for qualifying relatives .

Here are  some common questions from our users that we answered:

Question:  My 26 year old is living with me.  He works and has made more than $3,600.  Can I claim him as a dependent?

Answer:  No, because your child would not meet the age test, which says your qualifying child must be under age 19 or 24 and a full-time student for a least 5 months out of the year.

Question:  I start work in September of this year and had my baby in March.  Can I claim my baby as a dependent on my taxes?

Answer:  Yes, even if you have a baby on December 31, you can claim them as a dependent on your taxes.

Question:  My boyfriend fully supports me.  We live with his mother, but we pay for our full support including rent.  His mother wants to claim us as dependents.  Who can claim the deduction?

Answer:  As long as your boyfriend is not married, supplies over half of your support, and you lived with him the entire year, you did not earn more than $3,650 TY 2010 and $3,700 TY 2011, you would qualify as his dependent.  His mother could not claim you since she did not provide more than half of the support.

Question:  My spouse has not worked all year except for a month, can I claim him as a dependent?

Answer:  You cannot claim a spouse as a dependent.  If you file married filing jointly, you will get a personal exemption of $3,650 for TY 2010 and $3,700 for TY 2011 for each of you.

Now that you are armed with more knowledge about dependent tax laws, you may want to reconsider kicking out your free-loading friend.  They may help you get a larger refund.

Mortgage rates on the move

In a turbulent economy, it pays to make good use of technology. In fact, few homeowners can afford to be without certain tools, not least a real-time mortgage calculator.

As high inflation continues to prompt talk of the Bank of England increasing the base rate, homeowners with tracker and variable rate mortgages can ill afford to take their eyes off the market.

Of course, juggling everyday commitments whilst maintaining careful watch of mortgage rates can be extremely difficult, but certainly not impossible, thanks to the leading smartphone mortgage apps.

Mortgage apps are available for the main types of smartphone, including the iPhone and BlackBerry and those running the immensely popular Android operating system.

One of the most popular and highly rated mortgage apps for the iPhone is London & Country’s Mortgage Assistant app, which can be download free of charge from the iTunes store.

Produced by London & Country, one of the UK’s most successful independent mortgage brokers, Mortgage Assistant comprises all of the features that a homeowner might require and expect of such an app.

In addition to a calculator, the Mortgage Assistant app displays information on early repayments, rate changes, stamp duty and overpayments. Crucially, the app also provides up-to-date mortgage rates supplied by the leading lenders.

Not everybody has an iPhone. The Android operating system, in fact, is slowly beginning to dominate the smartphone market but are there any good mortgage apps for Android devices?

Yes. Plenty. Karl’s Mortgage Calculator, Vincent It Mortgage Calculator and various other apps with or without a proper noun prefix are available for Android devices. Importantly, most are free to download and use.

Arguably the best Android mortgage app is Mortgage Calculator UK by Shivam Gadhia. Available at no cost to the user, the app focuses heavily on its most important feature, which is the calculator itself.

Although not as comprehensive as many other mortgage apps, especially those affiliated with some of the leading lenders and brokers in Europe, Gadhia’s app is easy to use and surprisingly accurate.

Another popular app for Android smartphones is called Mortgage Refinancing PRO, which is a free-to-use program (an option to upgrade to the full PRO version costs £2.79) that provides invaluable guidance for people who are looking to remortgage their properties.

Cheaper than Mortgage Refinancing PRO, the Get Your Home Refinanced app for Android devices includes even more details of refinancing and remortgaging, but only costs a fraction of the cost – £0.87 for the full app.

Finally, Mortgage Refinancing Pro is arguably one of the most popular and useful mortgage apps available for BlackBerry smartphones. Priced at $2.99 USD, the app is designed by Davide Perini, who also developed the more expensive Mortgage Calculator PRO.

Mortgage Refinancing Pro is actually a scaled down version of the Pro calculator software, so similarities exist between the pair. The app is an invaluable reference tool for anybody who needs an accurate, up-to-date mortgage refinance calculator.

In conclusion, there are plenty of ways to keep track of mortgage rates on the move by using modern technology. Smartphone apps provide instant access to real time mortgage rates, calculators and refinancing.

TLC singer files bankruptcy for second time

TLC singer Tionne Watkins, or T-Boz, recently filed for personal bankruptcy.  According to the filing, Watkins owes $768,643 to creditors.

In addition, the filing shows that the four-time Grammy award winner only receives about $1,200 a month in royalties from the music she produced with TLC.  She currently has a monthly income of about $11,700, but spends about $8,821 a month.

The majority of the singer’s debt is related to a mortgage on a $1.2 million house.  Watkins’s financial troubles are also related to about $250,000 in owed child support from her ex-husband, rapper Mack 10.

The singer first filed for bankruptcy in 1995 with the band.  The Chapter 11 bankruptcy surprised many TLC fans because it came at about the same time as the peak of the group’s success.

To speak with an attorney about the bankruptcy process, contact the West Palm Beach bankruptcy lawyers of Eric N. Klein & Associates, P.A. by calling 561-353-2800 today.

Bankruptcy Panel Rules Debtors Not Responsible for Guarantee Made by Franchisor to Bank – In re Unterreiner

As Fontana personal bankruptcy lawyers, we were pleased to see a recent bankruptcy appeals panel ruling that declined to hold bankrupt small businesspeople responsible for a loan guarantee made by their franchisor. In In re Unterreiner, bankruptcy filers Jeffrey and Lisa Unterreiner were once part of a business that co-owned three Dairy Queen restaurants in Missouri. When the business ran into financial difficulties, it took out a loan that, unbeknownst to them, was guaranteed by the franchisor, Dairy Queen of Greater St. Louis, Missouri Inc. (DQSTL). When they could not pay back the loan and the Unterreiners filed for bankruptcy, DQSTL’s owner, the Samuel J. Temperato Trust, successfully sued to have the loan declared not dischargeable. The Eighth Circuit’s BAP reversed in this decision.

Jeffrey Underreiner and a business partner, Edward Radetic, owned the three Dairy Queens through King William Management Inc., which franchised from and paid part of its earnings to DQSTL. In 2005, because of King William’s difficulties, an employee of the Temperato Trust arranged for a loan to King William. This was a no-document loan from a bank King William had never before done business with. The Unterreiners, Radetic and his wife all personally guaranteed the loan, and they also gave a security interest in the business assets of two of the Dairy Queens. Without the Unterreiners’ knowledge, the loan also fell under a preexisting blanket loan guarantee issued by the Trust. It was revealed that a separate business entity owned the majority of the business assets in the restaurants at issue, making the security interest problematic at best.

Unfortunately, King William was unable to repay the loan. The Unterreiners paid the bank $20,000 in exchange for a release of any claims related to the loan, and the bank went to the Trust, which ultimately paid $185,000. After the Unterreiners filed for bankruptcy, the Trust brought an adversary proceeding against them to collect that money, alleging they knowingly misrepresented the ownership of the assets, thus causing the loss to the Trust. The Unterreiners argued that they had no knowledge of the Trust’s blanket guarantee to the bank, and that their release of liability from the bank should release them from this debt. The bankruptcy court ultimately found the debt nondischargeable, and they appealed.

The bankruptcy court had found that Jeffrey Unterreiner knowingly made a false statement by pledging the collateral King William did not own, and that the Trust reasonably relied on it when it agreed to guarantee the loan. The Eighth Circuit BAP disagreed. To exempt the debt from discharge, it said, the Trust would have to show that it paid the money directly to Unterreiner at the time of the misrepresentation, which is not true. The Trust could argue that Underreiner did get the guarantee from DQSTL, a thing of value, at the time of the misrepresentation — but DQSTL is not the plaintiff in this case, the court noted; the Trust is. Furthermore, loan guarantee between the Trust and the bank preexisted the loan to King William, the court said. Thus, the Trust could not have relied on the security agreement by Unterreiner when it made the original guarantee. Thus, the Eighth sent back the case with instructions to reverse the determination of non-dischargeability.

Our Tustin consumer bankruptcy attorneys are pleased to see this decision go for the debtors, who undoubtedly cannot muster the high-priced legal representation of their former franchisor. In a sense, the decision breaks no new ground at all because it simply reiterates the rules for nondischargeability: the deception must have been made knowing that the party seeking nondischargeability would lose money. While it’s possible that Unterreiner did indeed intend to deceive, it does not appear to be disputed that he didn’t know about the preexisting blanket loan guarantee. Our Rancho Santa Margarita individual bankruptcy lawyers may be able to apply the ruling for other bankruptcy filers fighting a claim for nondischargeability, whether the dispute arises from business or another matter.

Social Networking, DNA may Affect Credit Soon

Living in the Information Age has a number of advantages: we can avoid holiday crowds to shop from the comfort of our living rooms, and even ditch the commute to work remotely from home. But new stirrings in the credit card industry about future plans for collecting and using customer information have raised warning cries from a number of consumer advocates.

A recent article in Time magazine discusses plans that credit card issuer Visa has to gather more information from consumers to better target ads and evaluate credit card applicants. Sources report that the company has plans to collect information from a number of sources, including:

• Social networking websites, on which many consumers discuss their interests and post (even if indirectly) about their desires and spending habits.
• Credit bureaus, which they already use. This is why filing for bankruptcy has an effect on a filer’s ability to get credit in the future: credit card issuers can see that the bankruptcy took place for seven to ten years after it’s filed.
• Search engines, such as Google and Bing. This information could include not only shopping habits and interests but also information about everything a person researches, including words like “mortgage loan help” and “payday loans offers.”
• Insurance claims, which might paint a picture of a person’s health, driving habits, and more.
• DNA databanks. This last information source has caused the most uproar: information hardly gets more personal than a person’s genetic code, and the potential applications of such data are mind-boggling.

So how would credit card issuers use such a bevy of private data to their benefit? In a lot of ways, according to analysts. And many of them could seriously hurt consumers.

DNA or insurance claim data, for example, could reveal to credit card issuers a person’s health history or likelihood for developing a genetic condition. If that condition typically leads to significant medical expenses, the credit card issuer might deny the person credit—after all, many people end up discharging high medical bills in bankruptcy, and credit cards often get the same treatment in Chapter 7 cases.

What worries some analysts is that the U.S. currently has no laws in place to prevent such elaborate information gathering or denying credit on the basis of information like genetic code. As usual, the technology available has progressed far faster than the legislation designed to regulate that technology.

Another major concern? Identity theft and data breaches. It’s hardly uncommon to hear about data leaks and breaches in the news, but imagine the potential fallout if thieves had access to more than names and social security numbers.

At present, of course, neither Visa nor any other credit card issuer has such information on hand. But it could be a less distant future than we first imagine.

Do you really need a credit report monitoring service?

If you live in USA, then you must be familiar with the terms like credit report and monitor credit report. Now over here we would like to search for the answer of the question – why would you be interested in having a company monitor your credit history? Can a person do it by himself/herself? Well, the answer is no, you cannot do that by your own. But the benefits of the credit report monitoring are several.

This is where it pays to understand the difference between getting your annual free credit report and having your credit record constantly monitored. According to the federal law of the US, we are all eligible for getting a free credit report online for free of cost from the three major finance bureaus. The name of these free credit report agencies are: Equifax, Experian and Transunion. You can get your credit report from the other organization too through the internet. But these three agencies are considered as the most authentic and the most accurate agency for the famous 3 bureau credit report creation.

This score is based on a complicated (and secret) algorithm and usually ranges between 300 and 850. The credit score for your credit card can vary along with the agencies. However, the most universally recognized credit score is created by Fair Isaac, the company that produces FICO scores. A credit monitoring is important to get a fair idea about your actual credit score. It will help you to achieve success via proper decision making for your business.

What Happens To You When Your Employer Files for Bankruptcy?

When Your Employer Files Bankruptcy

In today’s economic climate, it’s not enough to be careful with your own finances – you may face the bankruptcy of your employer.  Then what?  Does your employer have to continue to pay you, and give you health and retirement benefits?  Will you still be able to get paid what you are already owed?

The Type of Bankruptcy Matters

Much of the result of employer bankruptcy will depend on the type of bankruptcy the employer files.  If your employer files for Chapter 11 restructuring, you may find yourself in a relative unchanged position, if you are not laid off as part of the restructuring, that is.

In Chapter 11 bankruptcy, your employer may continue to operate as normal, and will probably not face closure unless the plan fails or there are unforeseen setbacks.  Often, companies file for Chapter 11 as a preventative measure, to avoid closure and liquidation.

In Chapter 7 bankruptcy, however, the situation begins to look a bit more dire.  In Chapter 7, your employer is closing its doors, liquidating its assets, and attempting to pay off as much as possible of its debts:  debts that include your salary.  And in many cases, Chapter 7 is filed when liabilities exceed assets, which means that some of those debts will not be paid in full.

Will You Lose Your Job?

This means that, not only may you lose your job, but you may have trouble recovering salaries, and your benefits may end.  Although your employer still owes you for past work, and such debts have priority status, it may take a while for the case to be administered and for you to receive that money.

As for retirement plans, such as 401ks, there are laws in place to protect employees from losing their assets.   Such money must be dept in trust so that the employer cannot use it in tough times.  This money should be safe, but your employer will probably have to stop matching contributions that you make.   Whether pensions are paid may depend on what happens in your employer’s bankruptcy case.   However, these matters are complicated, and it is worthwhile to talk to an experienced Phoenix creditor rights and Phoenix bankruptcy attorney to determine what options you have.