At the start of the chapter, participants should identify the following topics for study:

* Situations that create danger
* Sources of lawsuits
* Types of liability
* Basic protection concepts
* Types of creditors
* Badges of fraud
* Statute of limitations & criminal penalties
* Permissible asset transfers
* Asset protection goals
* Preparation for asset protection

1. Explain the goals and purposes of asset protection, describe the objections some people have about shielding assets from creditors, and list at least six reasons for asset protection.
2. Identify sixteen situations that can unexpectedly put assets and financial security at stake, and isolate eighteen common sources of lawsuits.
3. Analyze the author's concept of exploding and imploding liability and how dealing with them is necessary for complete asset protection plan, and implement the concepts of insurance, asset placement, and statutory protections when applied to asset protection.
4. Compare and define the three types of creditors associated with asset protection and fraudulent transfers noting salient characteristics as to each.
5. Summarize the various fraudulent transfer provisions, particularly the uniform acts, which protect current and future creditors, list several badges of fraud in the Uniform Fraudulent Transfer Act and recognize their effect on transfers, clarify the statute of limitations and potential criminal penalties associated with such fraudulent transfers, and differentiate fraudulent asset transfers from permissible asset transfers.
6. Figure net worth using a balance sheet, determine values of assets, and prepare a balance sheet in the context of determining the depth and scope of suitable asset protection planning.

       At the start of the chapter, participants should identify the following topics for study:

* Homeowner’s, automobile and disability insurance
* Life insurance
* Annuities
* Buy-sell agreements
* Entity & cross-purchase agreements
* Purchase price & terms
* Community property
* Professional corporations
* S corporations
* Sole shareholder planning

1. Compare and define the major characteristics of homeowner's, automobile, and disability insurance and what asset protection they may offer.
2. Differentiate between the four parties in whom rights are placed under a life insurance contract, cite the benefits, uses and types of life insurance, identify three variables that influence whether life insurance is taxable for federal estate tax purposes, and provide reasons for establishing an irrevocable life insurance trust in order to achieve several estate tax planning advantages.
3. Define annuities, clarify the types and characteristics of annuities, and list some of their tax advantages and disadvantages.
4. Characterize buy-sell agreements, distinguish an entity purchase agreement from a cross purchase agreement, and explain purchase prices and terms of buy-sell agreement, risks of having stock as community property and concerns about shares held by professional corporations, S corporations, and sole shareholder planning.

       At the start of the chapter, participants should identify the following topics for study:

* Individual titles & sole proprietorship
* Categories of C corporations
* S corporations
* Types of trusts
* Trust taxation
* Co-tenancy
* Partnership taxation & recapitalization
* Family partnerships
* Limited liability companies
* Retirement plans

1. Identify nine basic ways to hold property, clarify what taxpayers must do before beginning an asset protection program, and explain the advantages and disadvantages of holding property individually and through a sole proprietorship and how these pitfalls can be avoided.
2. List five basic guidelines that corporate business owners should follow to protect their corporations and two issues regarding potential personal liability for shareholders, officers and directors, identify six protection ideas for corporate business owners, and list six §469 passive loss restriction considerations.
3. Detect the advantages and disadvantages of using a corporation in asset protection planning, differentiate among the three categories of C Corporations, explain the importance of S corporations and their estate tax planning advantages, and list the advantages and disadvantages of transferring farmland to a corporation.
4. Discuss testamentary trusts, living trusts and at least eight subcategories of trusts, and elucidate where changes may be necessary when using them for asset protection planning.
5. Describe how different trusts are taxed with regard to income tax, estate tax and gift tax, summarize the grantor trust rules and the effect of the treatment on owners for income tax purposes, and explain the tax consequences of several trust types.
6. Distinguish and compare the various types of co-tenancy and the impact each has on asset protection and tax liability.
7. Define partnerships and their various types, name four ways that partnerships may be better than corporations from an estate-planning viewpoint, outline how partnerships are taxed and how estate freezing works to minimize death taxes on estate assets, and recap the structuring of family partnerships.
8. Delineate the advantages and disadvantages of a limited liability company (LLC), the problems associated with its newness, and explain how professional firms, joint ventures, and families can benefit from establishing LLCs.
9. Demonstrate how retirement plans can be used to provide substantial lifetime benefits to a business owner and to employees while simultaneously providing asset protection.
10. Explain the important characteristics of custodianship and estates as asset protection tools.

       At the start of the chapter, participants should identify the following topics for study:

* Tax law changes
* Bankruptcy types
* Automatic stay
* Preferences
* Priorities
* Debt discharge
* Individual bankruptcy estate
* Individual debtor
* Corporate bankruptcy
* Homesteading & garnishment

1. Summarize the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, how it changed the procedures, qualifications and tax law, implement important new changes, and identify the three most common types of bankruptcy filings that can influence how the individual or business “goes bankrupt.”
2. Delineate the rules of automatic stay and levy action, and their impact on individuals and businesses who file bankruptcy, and on tax assessment and collection.
3. Differentiate between preferential and nonpreferential payments, and determine the priority of creditor claims.
4. Discern when debt is discharged under Chapter 7, Chapter 11, and Chapter 13 bankruptcies, describe how to establish an individual bankruptcy estate and the filing requirements of the estate, figure taxable income of the bankruptcy estate, and outline the special rules that apply to individual debtors, partnership bankruptcies, and corporate bankruptcies.
5. Define homesteading, distinguish debts that are covered under homesteading from those that are not covered, calculate permissible garnishment by creditors, and list four special rules that apply in the garnishment area.

       At the start of the chapter, participants should identify the following topics for study:

* Qualified farm debt exclusion
* Real property business debt
* General ordering of tax attribute reduction
* Reduction of tax benefits
* Basis reduction
* Partnership bankruptcy
* Corporation stock-for-debt rule
* S corporation bankruptcy
* Foreclosure
* Discounted acquisition of debt

1. Explain the effect that debt cancellation has on net worth and potential income inclusion from cancellation of indebtedness income, list six exceptions to the general income inclusion rule, and discuss their effect on the taxpayer.
2. Put the tax attribute reductions in order and apply the reductions to the amount of canceled debt, describe the special basis reduction rules, advise clients on the depreciable property election permitting them to reduce the basis of depreciable property before reducing any other tax attributes, explain individual, partnership and S corporation bankruptcies, and identify at least three variables that are considered in determining whether shares of stock issued to a creditor are nominal or token.
3. Figure gain or loss resulting from foreclosure or repossession, summarize reporting and filing requirements, define the timing and character of the gain or loss, and point out the hidden income tax danger of directly or indirectly acquiring one's own debt at a discount.

       At the start of the chapter, participants should identify the following topics for study:

* Premarital agreements
* Application of §1041
* Incident to divorce
* Property basis
* Purchase of residence between spouses
* Purchase of business & investment property between spouses
* Division of corporate business interests
* Division of partnership business interests
* Deferred v. present division of benefits
* Individual retirement arrangements

1. Identify three formats that courts typically follow if a couple does not have an enforceable premarital agreement, and compare post-nuptial and premarital agreements and how they relate to divorce settlements and divisions.
2. Apply §1041 to interspousal transfers, avoid the tax trap of deferred tax liability, and calculate the transferor’s and transferee’s property basis under §1041(b).
3. Figure deferred gain or loss associated with selling an interest in the marital residence, apply §1041 to selected business, retirement and investment assets, and identify at least three conditions that must be met for a like-kind exchange to be nontaxable.
4. State particular tax consequences resulting from the division of certain types of property between spouses or former spouses incident to divorce, and list the elements of a Qualified Domestic Relations Order (QDRO).

       At the start of the chapter, participants should identify the following topics for study:

* Managing the estate
* Medicare
* Medicaid & countable assets
* Medicaid & non-countable assets
* Medicaid & inaccessible assets
* Private insurance
* Health care decisions
* Supplemental Security Income
* Income & assets
* Disability benefits

1. List four ways to manage an incompetent person’s estate, define joint tenancy and its benefits, and identify at least three levels of conservatorship that can influence assistance in management and protection of an estate and/or personal care.
2. Discuss durable power and where changes may be necessary in elderly and disabled planning to maximize its use, and identify funded revocable living trust variations and their advantages.
3. Compare and contrast the basic eldercare benefits of Medicare and Medicaid, determine countable income and divide assets into three separate groups for Medicaid.
4. Describe possible health care decisions such as having a living will, distinguish Supplemental Security Income from Social Security disability benefits, separate assets into two groups for SSI, and outline requirements for both SSI and Social Security disability benefits.

CHAPTER 1 - Introduction to Asset Protection

Why Asset Protection?

Situations That Create Danger

Sources of Lawsuits

Types of Liability

Basic Protection Concepts

Types of Creditors 

Evading Creditors 

Fraudulent Transfers 

Badges of Fraud 

Statute of Limitations 

Criminal Penalties 

Permissible Asset Transfers 

Asset Protection Goals 

Preparation 

CHAPTER 2 - Insurance

Homeowners Insurance

Automobile Insurance

Disability Insurance

Life Insurance

Purpose

Tax Overview

Income Tax

Transfer for Value Rule

Employee Death Benefit - §101(b) Repealed

Premiums

Lifetime Benefits

Section 72

Estate Taxes 

Ownership 

Gift Taxes 

Community Property Gift Danger

Life Insurance Trust

Considerations 

Annuities 

Deferred Annuity 

Private Annuity 

Unsecured Promise 

Regulations Restrict Private Annuities 

Buy-Sell Agreements 

Definition 

Contractual Format

Funding 

Life Insurance Funding 

Term vs. Whole Life 

Policy Ownership & Premium Payment

Entity & Cross Purchase Agreements 

Tax Consequences - Cross Purchase Agreements 

Non-Deductible Premiums 

No Dividend Danger

Tax Consequences - Entity Purchase Agreements 

Non-Deductible Premiums 

Dividend Danger - §302 

Exception to Dividend Treatment

Constructive Ownership (Attribution) Rules 

“Estate/Beneficiary” Rule 

“Family/Trust/Corporation” Rule 

No Gain on Sale 

Estate Tax Valuation 

Using the Buy Sell Agreement to Set Value 

Buy-Sell Agreements - §2703 

Exceptions to §2703 

Arm’s Length Bargain 

Substantial Modifications 

Exceptions 

Purchase Price & Terms 

Valuation 

Community Property 

Professional Corporations 

Marketability Problems 

Controlled Disposition 

S Corporations 

Sole Shareholder Planning 

Complete Liquidations 

Alternative Dispositions 

Use of Life Insurance 

Estate Valuation 

One-Way Buy-Outs 

CHAPTER 3 - Asset Placement

Ownership Vehicles & Entities

Individual Titles & Sole Proprietorship

Individual

Marital Property

Timing & Domicile

Community Property

Tax Basis Advantage

Sole Proprietorship

Corporate 

Categories of C Corporations 

Personal Holding Company - §541 

Attribution Rules 

Penalty Tax 

C Corporation 

No Pass Through 

Getting Money Out of the C Corporation 

Passive Loss Restrictions 

Partnership vs. Corporation 

Personal Service Corporation - §269A  

The S Corporation - §1361 

Minors as Shareholders 

Bequests & Estate Ownership 

Trusts as Shareholders 

S Corporation Assets 

Built-In Gains Tax - §1374 

Incorporation of a Farm  

Land Partnership Advantage 

Leasebacks 

Trusts 

Types of Trusts 

Revocable Trust

Land Trusts 

Irrevocable Trusts 

Testamentary Trust

Business Trusts 

Foreign Trusts - §679 

Grantor Trust Rules - §§671 through 679 

Asset Protection Trusts - APTs 

Foreign Jurisdictions 

Alternatives 

Income Taxation 

Estate & Gift Tax 

Creditor Protection 

Family Trusts 

Medicaid Trusts 

Living Trust

Reversion 

Advantages of a Living Trust

Disadvantages 

Priority 

Pour-Over Will

Trust Taxation 

Income Tax 

Grantor Trusts - §671 to §678 

Grantor Retained Income Trust

Irrevocable Trust Taxation 

Throwback Rules 

Capital Gains 

Deduction of Estate Planning Expenses 

Deductibility of Death Expenses 

Domestic Trust Exemptions 

Gift Tax 

Estate Tax 

Unlimited Marital Deduction 

Outright to Spouse 

Marital Deduction (QTIP) Trust

Qualified Terminable Interest Trust

“A-B” Format

“A-B-C” (QTIP) Format

Valuation & Tax Basis 

Alternate Valuation 

Choice of a Trustee 

Corporate Trustee Factors 

Individual Trustee Factors 

Co-Tenancy 

Tenancy in Common 

Percentage Interests 

No Survivorship 

Joint Tenancy with Right of Survivorship 

Taxation 

Percentage Interests 

Tenants by the Entirety 

Partition 

Partnership 

Partnership Taxation 

Allocation of Income & Deduction 

Partnership Recapitalization 

Two Class Format

Valuation 

Guaranteed Payment

Control & Management

Estate Issues 

Family Partnerships 

Charging Orders 

Phantom Income to Creditor

Tax Issues 

Estate Savings 

Income Tax Savings 

Family Partnership Requirements 

Recognizing a Partner

Control

Transferability 

Donee as a Partner

Trusts as Partners 

Minor As a Partner

Purchased Interests 

Capital Interest in the Partnership 

Capital as a Material Income Producing Item  

Source of Capital

Family Partnerships Not Within §704(e)

Real Estate Family Partnerships 

Business Family Partnerships 

Structuring the Family Partnership 

Limited Liability Company 

Outside Basis & Debt Share Advantage 

Substantial Economic Effect Rules 

Discharge of Indebtedness Income 

Suggested Uses 

Professional Firms 

Joint Ventures 

Substitute for Family Limited Partnership 

Retirement Plan 

Plan Types 

Retirement Fund Protection in Bankruptcy 

Employer Costs 

Profit Sharing Plan 

Money Purchase Pension Plan 

Defined Benefit Pension Plan 

Custodianship  3

Estate  3

CHAPTER 4 - Bankruptcy

Federal Bankruptcy

Means Testing

Median State Income Test

Means Test

Credit Counseling

Tax Law Changes

Chapter 13 "Superdischarge"

Subordination Of Ad Valorem Tax Liens

Interest on Tax Claims

Tax Returns

Bankruptcy Types

Chapter 7 - Liquidation

Exempt Assets

Availability

Trustee Appointment

Chapter 11- Reorganization

Availability

Creditors’ Committee

Reorganization Plan

Chapter 13 - Wage-Earner Plan

Availability

Repayment Plan

Trustee Appointment

Automatic Stay 

Tax Assessment

Suspension of Statute of Limitation 

Immediate Assessment

Levy 

Tax Court

Tax Court Petition 

Preferences 

Trust Fund Taxes 

Allocation of Tax Payments 

Priorities 

Super Priority Claims 

Secured Claims 

Federal Tax Liens 

Priority Claims 

Tax Claim Determination 

Refunds 

Priority of Tax Claims 

First Priority Tax Claims 

Second Priority Tax Claims 

Third Priority Tax Claims 

Eighth Priority Tax Claims 

Debt Discharge 

Chapter 7 Discharge 

Chapter 11 Discharge 

Chapter 13 Discharge 

Discharge of Taxes 

Tax Liens 

Individual Bankruptcy Estate 

Separate Entity 

Tax Attribute Carryovers 

Termination of the Estate 

Filing Requirements 

Disclosure of Return Information 

Taxable Income 

Taxable Year

Gross Income 

Deductions & Credits 

Administrative Expenses 

Net Operating Loss Carryback 

Transfers to Debtor

Partnership & S Corporation Interests 

Request for Prompt Determination of Liability 

Tax Liability 

Individual Debtor

Tax Year Election 

Annualizing Taxable Income 

Making the Election 

Later Bankruptcy of Spouse 

Election Considerations 

Transfers between Debtor & Estate 

Net Operating Loss Carryback Limitation 

Partnership Bankruptcy 

No Separate Estate 

Discharge of Debts 

Corporate Bankruptcy 

Exemption Return Filing 

Personal Holding Company Tax 

Tax-Free Reorganizations 

§354, §355, & §356 

Corporate Liquidations under Chapter 7 

Carryover of Tax Items - §381 & 382 

Bankruptcy Exception 

Reduction of Carryforwards 

Section 269 Presumption 

Homesteading 

Types of Homesteads 

Property & Equity Covered 

Who Can Homestead? 

Excluded Debts 

Garnishment

CHAPTER 5 - Avoiding Tax on Debt Cancellation & Foreclosure

Income Inclusion Rule

Exceptions from Income Inclusion

Order of Exclusions

Bankruptcy Case Exclusion - §108(a)(1)(A)

Insolvency Exception - §108(a)(1)(B)

Qualified Farm Debt Exclusion - §108(a)(1)(C)

Qualified Farm Debt - §108(g)(2)

Qualified Person - §108(g)(1)

Real Property Business Debt - §108(a)(1)(D)

Qualified Debt

Exclusion Limit

Ordinary Income Recapture 

Partnerships 

Deemed Distribution Rules 

S Corporations 

Student Loan Exception - §108(f)

Purchase Money Debt Reduction Exception - §108(e)(5)

Cancellation of Deductible Debt Exception - §108(e)(2)

Reduction of Tax Benefits (Attributes) - §108(b)

General Ordering of Tax Attribute Reduction 

Basis Reduction 

Depreciable Property Election 

Procedure 

Required Reduction 

Timing of Basis Reduction 

Limit on Basis Reduction 

Recapture of Basis Reductions 

Exempt Property 

Special Basis Reduction Rule for Qualified Farm Debt

Qualified Property 

Basis Reduction Order

Exclusion Limit

Individual Bankruptcy 

Partnership Bankruptcy 

Depreciable Property 

Allocation of Debt-Discharge Income 

Corporate Stock-For-Debt Rule 

Token Share Inclusion 

Workout Inclusion 

Recapture of Gain on Later Sale 

Debt Contributed to Capital

Debt-For-Debt Exchange 

Earnings & Profits 

S Corporation Bankruptcy 

Net Operating Losses 

Adjustments to Shareholder’s Basis in Debt

Bankruptcy Estate as Shareholder

Reporting 

Mortgage Debt Relief Act of 2007 (H.R. 3648)

Qualified Principal Residence Indebtedness 

Mixed Indebtedness 

Amount Realized On Sale or Other Distribution of Property 

Foreclosure 

Nonrecourse Indebtedness 

Recourse Indebtedness 

Reporting 

Form 1099A  

Timing & Character of Gain or Loss 

Gain 

Loss 

Lender’s Tax Impact

Foreclosure Sale 

Discounted Acquisition of Debt

Transactions Involving Related Parties 

Related Persons 

CHAPTER 6 - Divorce Settlements & Divisions

Premarital Agreements

Uniform Premarital Act - The California Example

Permitted Items of Agreement

Unenforceable Items

Retirement Equity Act of 1984

Benefits of a Premarital Agreement

Post-Nuptial Agreements

Divorce Settlements - The Tax Trap

Section 1041

Application of §1041 

Mandatory Scope 

Property vs. Income 

Savings Bonds 

Receivables 

Interest

Imputed Interest

Incident to Divorce 

Related To Termination 

Rebuttable Presumption 

Divorce or Separation Instrument

Transfers in Trust

Third Party Transfers 

Property Basis 

Gift Variation 

Passive Activity Loss Property 

Property Transferred In Trust

Basis in U.S. Savings Bonds 

Negotiated Property Divisions 

Adjudicated Property Divisions 

Caselaw  

General Rule - Immediate & Specific 

Liabilities 

Holding Period 

Notice & Record Keeping 

Purchases Between Spouses 

Residence 

Home Mortgage Interest

Deferral & Exclusion of Gain 

Business & Investment Property 

Recapture 

Section 1031 Exchange 

Installment Sale of Assets 

Selected Asset Divisions 

Installment Obligations 

Business Interests 

Corporations 

Section 302 Redemption 

Recapitalization 

Partnerships 

Section 736(a) Payments 

Effect on Recipient

Section 736(b) Payments 

Effect

Exclusions From §736(b) Treatment

Liabilities 

Series of Payments 

Section 754 Election 

Insurance Policies 

Pension Benefits 

Qualified Domestic Relations Order

Taxation of Distributions 

Deferred v. Present Division of Benefits 

Deferred Division Arguments 

Present Division or Alternate Property Arguments 

Individual Retirement Arrangements 

IRA Deduction Limit

Rollovers 

Divorce Distributions 

Amounts Not Rolled Over

Military & Civil Service Pensions 

CHAPTER 7 - Protecting Assets from Old Age &  Catastrophic Illness

Managing the Estate

Joint Tenancy

Conservatorship

Durable Power

Revocable Living Trust

Catastrophic illness

Medicare

Medicaid

Countable Assets 

Non-Countable Assets 

Personal Residence 

Gifting the Residence - General Rule 

Exceptions 

Inaccessible Assets 

Gifts 

Spousal Transfers 

Spousal Allowance 

Medicaid Trusts 

Limited Trust Exceptions 

Criminalization of Medicaid Asset Transfers 

Private Insurance 

Health Care Decisions 

Supplemental Security Income 

Income 

Unearned Income 

Earned Income 

Exempt Income 

Assets 

Countable Assets 

Non-Countable Assets 

Disability Benefits 

Blind 

Kidney Disease 

AIDS