Criminal Restitution Orders, Limited Liability Companies, Fraudulent Transfers, Nominees and Other Related Topics Coming Together in USA v. Michael David Wilhite (June 2019)
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
Mr. Wilhite was convicted of mail fraud and aiding and abetting in violation of federal law. He was also a delinquent taxpayer with an outstanding federal income tax liability and, at the time of certain alleged fraudulent transfers, he was being investigated for the federal crimes he ultimately pled to. During the time period Mr. Wilhite would be considered a “debtor” under Colorado’s UFTA, his wife, Mrs. Wilhite, formed several companies establishing herself as sole owner while Mr. Wilhite was the person essentially controlling and operating the companies. This case is instructive on so many ..read more
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Bankrupt IRA Holder’s IRA Assets Reachable By IRA Holder’s Creditors in Bankruptcy
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
The debtor in this bankruptcy case was a resident of Florida and claimed an exemption for his IRA under Florida’s set of exemptions. Under normal circumstances the trustee would not object to the exemption claimed and the IRA would indeed not be included as an asset of the bankruptcy estate. However, the debtor engaged in a series of prohibited transactions with his IRA. He had the IRA purchase a condominium in Puerto Rico which he impermissibly stayed in for no viable IRA-related purpose. Additionally, the debtor and his wife purchased two used automobiles with IRA funds. The IRA paid for tho ..read more
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Creditors’ Remedies Under Michigan’s Domestic Asset Protection Trust Statute
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
Michigan enacted the Qualified Dispositions in Trust Act (the “Act”) effective March 8, 2017 becoming the 17th state to enact asset protection trust legislation. A more general description of the Act was provided in an earlier blog. The purpose of this blog is to point out how the drafters of this legislation very deliberately included provisions geared to blocking creditors’ access to assets held in a Michigan Asset Protection Trust (hereafter “MAPT”). Creditors can only reach assets held in an MAPT by bringing an action under Michigan’s Voidable Transactions Act (which has now superseded the ..read more
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Can a Debtor’s Years-Old Fraudulent Transfer Preclude the Debtor from Obtaining a Discharge in Bankruptcy?
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
A 2016 Supreme Court case, Husky International v. Ritz, holds that if a debtor makes a fraudulent transfer, even if several years prior to filing the petition, any debt related to such fraudulent transfer will be nondischargeable. Section 523(a)(2)(A) of the Bankruptcy Code denies a debtor’s discharge of any debt obtained by false pretenses, false representations or actual fraud. There had been a split among the Circuits over whether “actual fraud” (e.g., a fraudulent transfer) required that a false representation be made to the creditor before a discharge would be denied. The Court in Husky c ..read more
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Michigan Enacts Domestic Asset Protection Law
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
For those of us attorneys who have devoted substantial time to and assisted clients with asset protection planning over the years it is welcome news that Michigan has adopted the Qualified Dispositions in Trust Act, effective February 5, 2017. Michigan estate planners traditionally employed Delaware, Nevada or Alaska domestic asset protection trusts (“DAPT”) to obtain the benefits of those states’ laws. However, decisions in bankruptcy cases over the last few years brought into question whether a trust established by a resident of a non-DAPT state in a jurisdiction authorizing such trusts is g ..read more
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Annuities are Exempt from Creditors – In Wisconsin
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
The Seventh Circuit Court of Appeals has sustained a Bankruptcy Court decision holding that annuities qualifying for income tax deferral under Section 72 of the Internal Revenue Code (“IRC”) are exempt assets and therefore cannot be executed upon by the debtor’s judgment creditors. In Wittman v. Koenig (July 26, 2016), the debtors sought to exempt three annuities with a value of $292,185.97. The Bankruptcy Court decided that the annuities are exempt assets. The parties, along with the Seventh Circuit, agreed that it was appropriate to invoke a procedure permitting a direct appeal to the Sevent ..read more
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Asset Protection for the Criminal Defendant
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
One of the inevitable problems facing suspects in a criminal proceeding is the availability of funds to pay for a legal defense. Frequently, applicable laws authorize government seizure of defendants’ assets which effectively impoverishes them. Obtaining private counsel then becomes problematic. However, the Supreme Court recently decided in Luis v. United States that criminal defendants should be allowed to use untainted assets; that is, assets unrelated to their alleged crimes, to pay for their criminal defense. The Supreme Court in a 5-3 decision reversed the 6th Circuit Court of Appeals an ..read more
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Anonymity of Business Entities … Soon to Be a Thing of the Past?
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
We have become so used to it that we no longer give it any thought. There is no requirement under Michigan law (as well as most other states’ laws) to disclose the beneficial owners of limited liability companies and corporations. Lawyers, formation agents and business owners routinely sign Articles of Organization as organizers and Articles of Incorporation as incorporators but are under no obligation to disclose their relationship to the entity being formed nor the entities’ beneficial owners. In many cases, such signers never become a beneficial owner or have any active involvement in the e ..read more
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New Twist on Charging Orders
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
It is not surprising that in the world of asset protection planning we have written extensively about charging orders. This is the collection remedy employed by creditors against debtors owning a membership interest in a limited liability company or a partnership interest in a partnership. These laws are fairly consistent throughout the United States and provide, in the case of a member of an LLC, that a court of competent jurisdiction may charge the member’s interest with payment of the unsatisfied amount of the judgment plus interest. The charging order works in this fashion. Assume the LLC ..read more
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IRS Successfully Liens Beneficiary’s Interest in Support Trust
Michigan Asset Protection Lawyer Blog
by Weisman, Young & Ruemenapp, P.C.
5y ago
There is the understandable perception that by establishing a trust for your beneficiary which contains substantial restrictions on distributions and gives a trustee discretion to determine the timing and amount of distributions that creditors of the beneficiary cannot access trust assets. However, in the recent Arizona case of Duckett v. Enomoto, the IRS was able to attach a federal tax lien to assets held in a discretionary support trust. The facts are straight-forward. The beneficiary of the trust owed substantial funds to the IRS. One of the IRS’ enforcement tools is the right to impose a ..read more
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