ben krupp asset protect

7/31/2019 Ben Krupp Asset Protect

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kkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkBykBenjaminkD.kKnaupp,kJ.D.(1)

I.kIntroduction

Therekarekakbroadkvarietykofksimplektechniqueskthatkcankbekemployedktokprovideklimitedkassetkprotectionkforkpersonalkandkbusinesskproperty.kThekauthorkbelieveskthatktheklawfulkpracticekofkassetkprotectionkisksimplykusingklegalkmethodskandkbusinesskorkfinancialkopportunitiesktokarrangekone'skfinanceskandkpropertyktokmaekitkmorekdifficultkforkakfuturekplaintiffktokcollectkakjudgment.kInsurance,klimitedkliabilitykpartnerships,kcorporations,kban ruptcyklaws,kprenuptialkagreements,kandkhomesteadklawskareksomekpopularkexampleskofklawfulkassetkprotectionkmeasures.kWhilekeachkhaskitskplacekandkadvantages,kthektopktenkpercentkofkAmerica'skw

ealthiestkfamilieskarekfindingkitkworthkthekcostktokma ekmoreksophisticatedkarrangementskforkassetkprotection.kForkthosekwithksignificantkassetsk(butknotkunboundedkwealth)kitkisknotkenoughktokhavekadequatekinsurancekorktheklimitedkliabilitykprovidedkbykakcorporationkorkankLLC.kThekgoalkisktokobtainkmorekprivacyktokreducekthekris kthatkaklawsuitkwillkbekfiledktokbeginkwith.kAksecondkgoalkisktokconvertkeasilykattac edkassetskintokassetskwhichkarekprotectedkbykstatekexemptionsksuchkaskqualifiedkretirementkplans.

AnkincreasingknumberkofkAmericanskinkhigh-ris kbusinesseskorkprofessionskarekseeingktokachievekthesekgoalskbykusingkakvarietykofkarrangementsktokreducekork"str

ip"kthekequitykfromkone'skrealkestatekorkpersonalkpropertykthuskconvertingkunencumberedkwealthkintokakmorekprotectedkformkinkrelationktokfutureklitigants.(2)kInkorderktokbekeffective,kthekarrangementkmustkinvolvekakthirdkpartykwhokiskwillin

gkandkablektokholdkandkexercisekaklawfulklienkorkotherksecuritykinterestkinkthekassetskofkthekprincipal.kThiskarticlekwillkdiscusskvariouskarrangementskemployedkforksuchkpurposeskandkexaminekthekadvantages,kdisadvantages,kris s,kandklawfulnesskofkthesekstrategieskinkankeffortktokguidekthekpractitionerktokakbetterkunderstandingkofkthesektechniques.

II.kThekAssetkProtectionkValuekofkPriorkLiens

Althoughktherekarekmanyktypeskofkliens,kinkakgeneralksensekaklienkiskakclaimkorkaksecuritykinterestkwhichkiskfiledkagainstkrealkorkpersonalkpropertykofkakdebtor


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korkownerkofkproperty.kTheklienkholderkbecomeskankequitablekownerkofkthekpropertykagainstkwhichkaklienkiskfiled.kAlthoughkthek"owner"kofkthekpropertykstillkhasklegalktitlektokthekproperty,kthekeconomickownershipkvaluekofkthekpropertykiskreducedkbykthekvaluekofktheklien.kUsingkrealkestatekaskakcommonkexample,kifkone'skrealkpropertykiskworthkmorekthanktheksumktotalkofkallkoutstandingkliensk(mortgages),ktheknetkdifferencekisk"equity."kOnekiskonlyktrulykwealthykwhenkonekhaskakhighkamountkofkequitykinkone'skpropertykholdings.kHowever,kaskone'skequitykincreases,kone'skassetkprotectionkris kincreaseskaskwell.kAskprivacykhaskdiminishedkwithkthekdawnkofkthekinformationkage,kopportunitieskfork"predatory"klitigationkhaveks yroc eted.kThesekfactorskhavekmadekthekthosekwithkhighkassetkequitykakvirtualktargetkforklawsuits.

A.kPredatoryklitigationkassetksearches

Computerskandkthekinternetkhavekbroughtkplaintiff'skattorneyskaknewkandkpowerfulktool:kthekelectronickassetksearch.kTherekareknowkatkleastkakdozenkon-linekorkdial-upkspecialtykserviceskwhichkcankperformkpublickassetksearchesktokrevealkpropertykholdings.(3)kForkaksmallkfee,kcountykrecordskcankbekeasilykandkquic lyksearchedktokdisclosekwhetherkonekownskrealkestatekandkwhetherkthekrealkestatekiskencumbered.kFederalkandkstateklegislatureskhavekrelaxedklawskprotectingkpropertykandkfinancialkrecordskinktheirkeagernessktokgiveklawkenforcementkofficialskbetterktoolsktokfightkcrime,kespeciallykdrugktraffic ingkandkorganizedkcrime.kUnfortunately,ktheseklawskhavekdonekakgreaterkharmktokthekprivacykofklawfulkcitizens.

Althoughktheknumberkofktrulyk"predatory"klitigationkattorneyskiskoftenkexaggeratedkatkassetkprotectionkseminars,ktherekarekcertainlykhotbedskwherekthekris skarekhigher.kTherekarekalsokcertainkoccupationskandkbusinesseskthatkarekmorekli elyktokbekatkris kbecausekofkthek"deepkpoc et"kperception.

B.kReducingkyourkequitykprofile

Itkbecomeskdesirable,kthen,ktokmaintainkthekappearancekofkownershipkthatkiskmortgagedktokthekhiltkbykdebts.kInkaksocietykwherekpersonalksavingskrateskarekatkankall-timeklowkandkconsumerkdebtskarekatkankall-timekhigh,kitkiskreallyknotkunusualkforksomeonektokappearkwealthykwhenkinkfactkthekban kownskeverything.kInkearlierktimes,kifkakplaintiffkhadkjustkcausekforkaklawsuit,kthekfirstkthoughtkofkthekplaintiff'skattorneykwaskwhetherkthekplaintiffkhadkakgoodkcasekorknot.kToday,kthe

kplaintiff'skattorneyskarekmorekli elyktokfirstkconductkankassetksearchktokseekifktheykcankevenkcollect,kwerektheyktokwinkthekcase!kThiskfactkcoupledkwithkthekhighkcostkofklitigationkputskmorekemphasiskonkcalculatingkthekdefendant'skabilityktokpay.

Shouldkanykplaintiffkbekdeterminedkenoughktoktrykandktestkthekvaliditykofkakproperlyksecuredkpriorklien,kthekvaluekofkaksecuredkcreditor'skclaimkgiveskakplaintiff-andkhiskattorney-akreasonktoksettleksooner,kandkforkless.kForkexample,kassumekakthirdkpartykcreditorkhaskproperlykfiledkakmortgagekagainstkthekrealkestatekofkthekdebtor,kandkthekdebtorkhaskreceivedkcashkloanskfromkthekcreditorksuchkthatkthekdebtor'skequitykiskonlyk5k%kofkthektotalkvaluekofkthekrealkestate.kIfkthekdebtorkisksuedkbykankenterprisingkplaintiffksee ingkakdamagekaward,kthekdebtor'skattorneykcanknegotiatekaksmallerksettlementkwithkthekdebtor'skattorneykafterkdisc

losingkthatkthekdebtor'skequitykiskminimal.kThiskiskduektokthekfactkthatkthekcreditorkholdskakpriorkrightktokthekrealkestatekwhichkisknotkaffectedkbykthekplaintiff'skjudgment.kAlthoughkthekplaintiffkhaskakrightktokattachkthekdebtor'skrealkestatekandkhavekitksoldkbyktheksheriffktokpaykthekdamagekaward,kankattemptedksalekisknotkli elyktokattractkanykbuyers,ksincekanykpurchaserkatktheksheriff'sksalekwouldkbuykthekpropertyksubjectktokthekcreditor'sklien.

Duektokthiskfact,kthekplaintiffkwillkbekforcedktoksettlekhiskclaimkforkless,korktryktokwaitkuntilkthekdebtorkpayskoffkthekloankagainstkthekproperty.kMostkplaintiffskfacedkwithkthesekoptionskchoosekcashkifkoffered.kTherefore,kinkadditionktok


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reducingkthekowner'skequitykexposedktokfutureklawsuits,kthekpropertykownerkwillkhavekincreasedkleveragekinkthekeventkthatkaklawsuitkiskactuallykfiled.

C.kConfidentialitykisk ey

Itkiskvitalkthatkcomplexkarrangementskwherebykthekdebtorkindirectlykbenefitskfromkthektransactionkbekmadekbykaklicensedkattorneykandk eptkconfidentialkbykthekclientkinkorderktokprovidekthekmaximumkassetkprotectionkvalue.kThekattorney-clientkprivilegekagainstkdisclosingkconfidentialkcommunicationskandkthekattorneykwor -productkdoctrinekarekpowerfulktoolskifkusedkproperly.kDoknotkconfusekconfidentialitykwithksecrecy.kOnekcannotkdependkonksecrecykforkassetkprotectionkwhenkputkonkthekwitnesskstandkduringkakjudgmentkdebtorkexam.kThekabilitykofkakplaintiff'skattorneyktokexaminekakdefendantkunderkoathkiskonekofkthekprimekwea nesseskofkmostksimplek"friendly"klienkarrangementskwithkfriendskorkfamilykmembers.

Inkcontrast,kakproperlykstructuredkcomplexksecuredklienkarrangementkimplementedkbykaklicensedkattorneykwillkcloa kthekinner-wor ingskofkthekarrangementkwithkaklevelkofkconfidentialitykthatkallkbutkthekmostkwell-informed,ksavvy,kandkdeterminedkplaintiff'skattorneyskcannotkpenetrate.kThekmostkcostlykarrangementskinvolvekthekadditionalklayerkofkprivacykonlykavailablekinkprivacy-orientedktaxkhavenkjurisdictions,kwherekthekprincipalkpartieskinvolvedkarekforeignkresidentsknotksubjectktokdomesticksubpoena(4)kandknotkavailablekforkcommonklitigationktacticsksuchkaskthekoralkdeposition.k

III.kChoosingkakThirdkPartykLienkHolder

Generallykspea ing,kanyonekmaykfilekaklienkorkgivekaksecuritykinterestktokanykotherkperson.kStateklawskprovidekspecifickrequirementskforkrealkpropertykandkforkpersonalkproperty,kwhichkiskusuallykfoundkinkthekstate'skversionkofkthekUniformkCommercialkCode.kAlthoughkitkisknotkthoughtkofkask"assetkprotection,"ktheksimplekactkofkobtainingkakhomekequitykloankestablisheskakvalidkthirdkpartyklienkandkreduceskthekowner'skequitykma ingkrealkestateklesskvaluablektokpotentialklitigants.kHowever,kthekdrawbac ktokhomekequitykloanskiskthekrequirementktokma ekinterestkpayments.kPayingkinterestkforkassetkprotectionkcankbekaksignificantkwastekforkwealthykindividualskwithkassetskinktheksixkfigurekrange.kAnotherkproblemkwithkinstitutionalkhomekequityklenderskiskaklac kofkprivacy.kFinancialkinformationkonkloankapplicationskusuallykfindskitskwaykintokcomputerksystemskusedkbyklenderskandkc

reditkbureaus,kwhokoftenksellkthekinformationktokadvertisingkfirmskandkmerchants.kFinally,kinstitutionalklenderskdoknotkofferkmuchkflexibilitykasktokthektermskofkthekloan,kwhichkcankbekimportantkinkassetkprotectionkplanning.

A.kSpouseskandkfamilykmembers

Akspousekmaykfilekaklienkorkreceivekaksecuritykinterestkagainstktheirkspouse'skseparatelykownedkpropertykinkthosekstateskwithkak"commonklaw"kpropertyksystem.kInkcommunitykpropertykstates,(5)konlykpropertykwhichkiskownedkandkheldkseparatelykcankbekgivenkasksecurityktokakspouse.kEvenkthoughktechnicallykakspousekmaykgivekaksecuritykinterestktokhiskorkherkspouse,kstatekfraudulentktransferkstatuteskhavekmadekthiskakuselesskexercise.(6)kItkiskalsokusuallykconsideredkakfraudulentktransferkwhenkakparentktransferskaksecuritykinterestktokakminorkchild.

Otherkfamilykmemberskofkakdebtor,ksuchkaskparents,ksiblings,kandkmorekdistantkrelationskmaykfileklienskandkreceiveksecuritykinterestskinkpropertykofkthekdebtor.kAlthoughkcloselykrelated,kbecausekeachkindividualkisklegallykdistinct,kaklienkorksecuritykinterestkiskconsideredkenforceable.kStill,kthekfamilykrelationshipkma

eskakfraudulentktransferkclaimkmorekplausiblekinksuchkcases,kespeciallykwhenktherekisknokevidencekofkillkwillkamongkthekfamilykmembers.(7)kPlaintiffskareklesskli elyktokbekdeterredkbykfamilykownedklienskinksuchkakcase.

B.kMajoritykownerskofkbusinesskentities


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Independentkbusinesskentitieskwhichkmaykta ekaksecuritykinterestkonkpropertykofkankownerkincludekformalkpartnerships,klimitedkliabilitykcompanies,kandkcorporations.kAksecuritykinterestkisknotkli elyktokbekrespectedkbykthekcourts,khowever,kifkthekdebtorkownskthekmajoritykofkthekbusinesskentity.kUnderkthekUniformkFraudulentkTransferkAct,kaktransferktokakcorporationkorkpartnershipkwhichkiskcontrolledkbykthektransfereekiskhighlyksuspect.(8)kNevertheless,ktherekisknokrulekagainstkformingkakcorporation,klimitedkpartnership,korklimitedkliabilitykcompanykandkrecordingkaksecuritykinterestkgrantedktokthekentity.kAlthoughkultimatelykthekinterestkcouldkbekignoredkbykakcourt,kakcomputerizedkassetksearchkmayknotkrevealkthekrelationshipkbetweenkthekentitykandkthektransferor.kTherefore,kevenkaklienkheldkbykankentitykcontrolledkbykthektransferorkwillkprovideksomekassetkprotectionkvaluekinkthatkitkmaykdeterkakplaintiff'sklawyerkloo ingkforkeasykunencumberedkassetsktoktarget.

C.k"De-controlled"kbusinesskentities

Aggressivekassetkprotectionkspecialistskarekusingkcreativekplanningktechniquesktokreducektheirkclients'klegalkownershipkofkakcorporation,kpartnership,korkankLLCksokthatkthekclientkownsklesskthank50%kofkthekbusinesskentity.kBecausekthekclientkownskakminoritykinterest,kthekclientkisknotk"inkcontrol"kofkthekcorporationkorkLLC.kThektermk"de-controlled"kiskoftenkusedktokdescribekakcorporation,kpartnership,korkLLCkwhichkiskstructuredktokachievekthiskresult.kOnekpopularkassetkprotectionkarrangementkisktokhavekakclientkownk5%korklesskofkakfamilyklimitedkpartners

hipkorkLLC,kwhilekthekclient'skoffshorekassetkprotectionktrustkownskthekremainingk95%.kOtherkpopularkarrangementskinvolvekakclient'skheirskaskthekmajoritykshareholders,kallowingkbothkassetkprotectionkandkakmeansktokpasskassetskwithkakreducedkestatektaxkburden.

Perhapskthekmostksophisticatedkarrangementkinvolveskakforeignkcorporationk(usuallykreferredktokaskank"IBC")korkankLLCkwhichkiskde-controlledkasktokthekprimekclient.kAkforeignkIBCkorkLLCkcankreceivekakvalidksecuritykinterestkorkakmortgagekfromkakU.S.kpropertykowner,kevenkifkthekU.S.kownerkhasksomekinterestkinkthekforeignkentity.kOwnershipkofkthekforeignkentitykiskcarefullykstructuredktokminimizekfederalktaxkreportingkrequirementskandkspecialkanti-deferralktaxkruleskthatkapplyktokforeignkcorporations,ktrusts,kandkpartnerships.kTherekmaykbekseveralklevelskofkspecializedkforeignktrusts,kcorporations,kLLCs,kcharitablekorganizations,kpriv

atekfoundations,korkotherkhybridskwhichkarekutilizedktokprovidekankaddedklayerkofkprivacykandkanonymity.kThekforeignkentitieskarekusuallyklocatedkinkaktaxkhavenkjurisdictionktokminimizekthektaxkproblemskassociatedkwithkthekmultipleklayerskinvolved.

Inkmanyksituations,kthekforeignkentitieskmaykbekmerek"shells,"kmeaningkthatkthekIBCkorkLLCkhasknoklegalkshareholders,knokcapital,knokbusinesskpurpose,kandkdoesknotkactkaskankindependentkentitykunderktheklawskofkitskdomicile.(9)kAtkaksuperficialklevel,kitkcankbekverykhardktoktellkakshellkentitykfromkakvalidkforeignkentity.kTherefore,kevenkakshellkentitykcankprovidekakhighklevelkofkassetkprotectionkwhenkitkholdskaksecuritykinterestkonkpropertykofkakU.S.kdebtor.kHowever,ktokprovidekthekmaximumkassetkprotectionkvaluekanykforeignkentitykmustkbekvalidlykoperatedkandkownedksokthatkitkisknotkignoredkbykakU.S.kjudgekdeterminingkprioritieskam

ongkcompetingklienkholders.kHighkris kindividualskwithksubstantialkwealthkandkwillingktokma ekthekeffortkrequiredkarekusingkadvancedkestatekplanningktechniqueskandkforeignkmanagementkservicesktokcreateksuchkbeneficialkrelationships.

Theksuccesskofkthesekstructuresklieskinkthekabsolutekprivacykavailablekinkcertainktaxkhavenkjurisdictionskwherekplaintiff'skattorneyskhavekvirtuallyknokpublickaccessktokrecordskandkfilings.kTheksheerkcomplexitykofkmultipleklayerskofkforeignkentitieskiskhighlyksuccessfulkatkseveringkthekrelationshipkbetweenkthekU.S.kpropertykownerkandkthekforeignkIBCkorkLLCkwhichkholdskaksecuritykinterestkorkakmortgagekonktheirkproperty.kSeveralkprecautionskmustkbekta enktokensureksuccess,ksuc


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hkaskusingkakdomesticklicensedkattorneyk(seekConfidentialitykiskKey,ksupra),kusingkakhighlyks illedkforeignkmanagementkcompanyktokprovidektheksubstanceknecessaryktokavoidkcharacterizingkthekforeignkentitykaskakmerek"shell,"kandkmaintainingkthekproperkrelationshipkbetweenkthekU.S.kpersonkandkthekforeignkentities.kTaxkcomplicationskcankarisekwhichkmaykresultkinkpenaltieskforkfailurektokfilekrequiredkreturnskorkpayktaxesk(seekSectionkV,kPartkC,kTaxkConcerns,kinfra).kFinally,kthekentirekarrangementkcankbekdefeatedkifkakfraudulentktransferkoccurredkatkanykpointk(seekSectionkV,kPartkB,kFraudulentkTransfers,kinfra).

IV.kCreatingkakSecuredkLien

Tokachievekthekassetkprotectionkbenefitskdiscussedkabove,kakvalidklienkagainstkassetskmustkbeksecuredkbykpropertykofkthekdebtor.kMostkassetskcankbekeasilyksplitkintoktwokcategories:krealkpropertykandkpersonalkproperty.kAklienkcankbeksecuredkwithkassetskwhenkthekdebtorkma eskakvoluntaryktransferkofkrightskinkrealkproperty,kinkthekformkofkakmortgagekorkakdeedkofktrust,korkofkrightskinkpersonalkproperty,kinkthekformkofkaksecuritykinterestkaccordingktokthekUniformkCommercialkCodek(thek"UCC").

A.kThekmortgagekorkdeedkofktrust

Mostkpeoplekarekfamiliarkwithkthektermkmortgage,kwhichkdenoteskakvoluntaryktransferkofkrightskinkrealkpropertyktokanotherkpartyktoksecurekakdebtkincurredkbykthekpropertykowner.kMortgageskinkrealkpropertykarekgovernedkbyktheklawskofkthekstat

ekwherekthekpropertykisklocated.kAlthoughktherekarekaknumberkofkdifferenceskbetweenkstateklawskonkmortgages,kmostkstateskhavekaknumberkofkcommonkrules.kAkmortgagektransactionkgenerallykincludesktwokseparatekdocuments,kakpromissoryknotekandkthekmortgage.kThekpromissoryknotekevidenceskthekdebtkowned,korkthekextensionkofkcreditkforkakfuturekdebt.kTheknoteksetskforthkthektermskofkrepaymentksuchkaskterm,kinterest,kandkwhetherkperiodickinstallmentskarekdue.kThekmortgagekiskakcontractualkagreementkprovidingkthatktheklandkwillkbeksoldktoksatisfykthekdebtkifktherekiskakdefaultkonkthektermskofktheknote.kAlthoughkitkiskhelpfulktokthin kofkthekmortgagektransactionkasktwokseparateklegalkdocuments,kaknumberkofkstateskcombinektheknotekandkthekmortgagekinkonekdocument.

Manykwesternkstateskusekakdeedkofktrustkinkthekplacekofkakmortgage.kInsteadkofkgivingktheklenderkakmortgage,kthekborrowerkdeedskthekpropertyktokakthirdkpartyktr

ustee.kUnderkthektermskofkthekdeedkofktrust,kthekborrowerkhaskthekrightsktokoccupykthekpropertykasklongkaskthektermskofkthekpromissoryknotekarekmet,kandkalsoktokreceivekfullkrightskinkthekpropertykwhenkthekdebtkiskfullykpaidkoff.kAk eykdifferencekbetweenkakdeedkofktrustkandkakmortgagekiskthatkwithkakdeedkofktrust,kthektrusteekhaskthekpowerktoksellkthekpropertykatkakpublickforeclosureksalekifkthekdebtorkdefaultskonkthekpromissoryknote.kInkcontrast,kinkmanykstateskthekholderkofkakmortgagekinterestkcankonlykforeclosekonktheklandkbykjudicialkforeclosure,kwhichkisktime-consumingkandkcostly.

Forkassetkprotectionkpurposes,kthekmostkimportantkruleskarekthekruleskofkvaliditykofktheksecuritykinterest,kandkprioritykofkrightskamongklienkholders.kAksecuritykinterestkinkrealkpropertykmustkbekvalidkinkorderktokbeklegallykbindingkatkall.kTokcreatekakvalidkmortgagekinterest,kakmortgagekorkdeedkofktrustkmustkbekinkwri

tingkandkmustkbeksignedkbykthekgrantork(owner).(10)kItkmustkalsokadequatelykdescribektheklandkconveyed.(11)kTheksecondkrequirementkofkvaliditykiskdeliverykofkthekmortgagekorkdeedkofktrust.kGenerallykthiskrequirementkiskmetkifktherekarekwordskorkconductkofkthekgrantorkthatkshowkankintentktokexecutekthekdeedkandkpasskankimmediatekpropertykinterestktokthekgrantee.kManykstatekcourtskpresumekakvalidkdeliverykhaskoccurredkif:k(i)kthekdeedkiskhandedktokthekgrantee;k(ii)kthekgrantorkac nowledgeskthekdeedkbeforekaknotary;kork(iii)kthekdeedkiskrecorded.(12)

Oncekakvalidkmortgagekhaskbeenkcreated,kinkorderktokbekeffectivekagainstkfutureklienkholderskthekmortgagekorkdeedkofktrustkmustkbekrecorded.(13)kAllkstatesktoda


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ykhavekrecordingkactsktokprotectkbonakfidekpurchaserskofklandkfromksecretkorkunrecordedkclaims.kTherekarektwokbasickrecordingkactskinkexistencekinkthekU.S.kRoughlykhalfkofkthekstateskhavek"notice"kstatuteskforkrecordingkankinterestkinkland.kAknoticekrecordingkactkgiveskpriorityktokakbonakfidekmortgageekifkthekmortgagekinterestkiskrecordedkbeforekthekmortgageekhaskactualkorkconstructiveknoticekofkotherkclaimants.

Thekotherkhalfkofkstateskhavekwhatkisk nownkaskak"race-notice"kstatutekforkrecording.kUnderkak"race-notice"kstatute,kakmortgageekwhokrecordskhiskorkherkmortgagekinterestkhaskprioritykoverkallkotherkclaimantskwhichkthekmortgageekhasknoknoticekof,kandkwhokrecordktheirkinterestskafterkthekmortgagee.kWhenkgrantingkakmortgagektokakthirdkpartykforkpurposeskofkcreatingkakvalidkpriorkinterestkitkma esklittlekdifferencekwhichktypekofkstatutekiskinkplacekasklongkaskthekinterestkiskrecordedkimmediately.kAfterkall,kgivingkpotentialklitigantsknoticekofkakpriorklienkiskankimportantkpartkofkthekstrategykaskitkiskhopedkthatkthekpriorklienkwillkdiscouragekpredatoryklitigants.kTherefore,ktherekiskusuallyknokdelaykbetweenkcreationkofkthekmortgagekinterestkandkrecordingkofkthekinterest.

B.kTheksecuritykagreementkforkpersonalkproperty

Aksecuritykagreementkiskakcontractkwherebykonekperson,kthekdebtor,kgiveskanotherkpersonk nownkasktheksecuredkpartykakpledgekofkpersonalkpropertyktoksecurekrepaymentkofkakdebt.(14)kTheksecuritykagreementkprovideskthektermskwherebyktheksecuredkpartykholdskthekpropertykpledgedkasksecurity,k nownkaskthekcollateral.kItkalso

kprovideskthektermskuponkwhichktheksecuredkpartykmaykapplyk(orksell)kthekcollateralktoksatisfykthekunpaidkdebtkifkthekdebtorkdefaultskonkrepaymentkofkthekdebt.kAskwillkbekexplainedkbelow,kthroughkcompliancekwithkstateklawkruleskforksecuritykinterests,ktheksecuredkpartykwillkhavekaksuperiorkclaimktokanykfuturekcreditorskofkthekdebtorktokthekextentkofkthekvaluekofkthekoutstandingkdebts.

Articlek9kofkthekUniformkCommercialkCode,kaskenactedkinkstateklawkgovernsksecuritykinterestskcreatedkinkmostkpersonalkproperty.(15)kArticlek9-203ksetskforthkthreekgeneralkrequirementskforkcreationkofkaksecuritykinterest.kWhenkaksecuritykinterestkiskcreatedkitkisksaidktok"attach"ktokthekcollateralkandkiskenforceablekaskofkthekdatekofkattachment.kThekthreekrequirementskarek(1)kcollateralkmustkbekinkthekpossessionkofktheksecuredkparty,korkthekdebtorkhasksignedkakwrittenksecuritykagreementkwhichkdescribeskthekcollateral;k(2)kvaluekhaskbeenkgivenktokthekdebto

r;(16)kandk(3)kthekdebtorkhaskrightskinkthekcollateral.(17)kAttachmentkoccurskatktheklatestkpointkinktimekwhenkallkthreekofkthekrequirementskhavekbeenkmet.(18)

OncekakvalidksecuritykinterestkiskcreatedkbykcompliancekwithkthekrequirementskofkUCCk9-203kdiscussedkabove,kinkorderktokobtainkaksuperiorkclaimkagainstkfuturekcreditors,ktheksecuritykinterestkmustkbek"perfected."kThekactkofkperfectionkofkaksecuritykinterestkinvolveskta ingkadditionalkstepsktokcreatekakpublickrecordkofktheksecuredkparty'skclaimkandkputkfutureklenderskonknoticekofkthekpriorklienkagainstkthekcollateral.kTherekarekaknumberkofkdifferentkwayskbykwhichkperfectionkcankoccurkdependingkonkthektypekofkproperty,kitsklocation,ketc.kGenerally,khowever,ktherekarekonlyktwokmethodskforkperfection.

UCCkArticlek9-302kstateskthekgeneralkrulekthatkunlesskonekofkaklongklistkofkexce

ptionskapplies,kakfinancingkstatementkmustkbekfiledktokperfectkaksecuritykinterestkinkanyktypekofkcollateral.(19)kAkfinancingkstatementk(alsokreferredktokaskakUCC-1kform)kiskaksimpleknoticekfiledkwithkthekSecretarykofkStatekorkcountykrecorder,kdependingkuponkthektypekofkcollateral.kItkmustkbekfiledkwithinkcertainktimeklimitskandkinkthekappropriatekforumkifktheksecuritykinterestkcrosseskstateklines.kThekfinancingkstatementkmustklistktheknamekandkaddresskofkthekdebtorkandktheksecuredkparty,kandkmustkdescribekthekcollateralksufficientlyktokenablekthekpublicktokidentifykthekcollateral.(20)

Inkmostkcases,kfinancingkstatementskmustkbekfiledkwithkthekSecretarykofkStatekwh


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erekthekcollateralkorkthekdebtorkisklocated,korkboth.(21)kFinancingkstatementskarekalsokcommonlykfiledkwithkthekcountykrecorderkwhenkthekcollateralkiskakfixture,ktimber,koil,kgas,kminerals,korkcropskonkspecifickrealkestate.(22)

Inkadditionktokfilingkakfinancingkstatement,kaksecuritykinterestkmaykalsokbekperfectedkbyktheksecuredkpartykta ingkphysicalkpossessionkofkcertainktypeskofkcollateral.kAksecuritykinterestkinkgoods,kmoney,knegotiablekinstrumentskandkdocuments,kletterskofkcredit,kandkchattelkpaperkmaykbekperfectedkbykthekcreditor'skta ingkactualkpossessionkofkthekproperty.(23)kAksecuritykinterestkremainskperfectedkwhenkpossessionkactuallykbegins,kandkcontinueskonlyksoklongkaskpossessionkiskretainedkwithkfewkexceptions.(24)kItkiskimportantktoknotekthatkaksecuritykinterestkinkmoneykandkinstrumentskcankonlykbekperfectedkbyktheksecuredkpartykta ingkpossessionkofkthekcollateral.(25)

C.kPrioritykamongkcompetingkliens

Oncekakvalidklienkhaskbeenkcreatedkandksecuredkbykakmortgagekinkthekcasekofkrealkproperty,korkaksecuritykinterestkinkthekcasekofkpersonalkproperty,kinkgeneral,kallkfuturekclaimantskwillknotkbekablektokcollectkonklienskobtainedkagainstktheksubjectkproperty.kForkrealkproperty,ktherekarekonlykakfewkexceptionsktokthiskrule.kInkmostkjurisdictions,kstatektaxesksuchkaskcountykorklocalklevelkpropertyktaxeskmustkbekpaid,korkthekcountykmayksellkthekpropertykatkakpublickauctionktoksatisfykthektaxeskowed.kObviously,kthiskexceptionkiskaknon-issuekforkpropertykownersksee ingktokprotectktheirkpropertykfromkpredatoryklitigation.kThekpropertyktaxesk

arekalwayskpaidkinkfull.k

Inkcontrastktokthekruleskofkprioritykforkrealkproperty,kdeterminingkprioritykofkinterestkamongksecuritykinterestskinkpersonalkpropertykcankbekquitekcomplex.kBecausektherekarekmanykdifferentk indskofkpersonalkproperty,kthekruleskforkperfectingkaksecuredklienkagainstkthekpropertykareknumerous.kThekgeneralkrulekiskthatkthekrightskofkakthirdkpartykholdingkakperfectedksecuritykinterestkareksuperiorktokallkfuturekcreditors,kwithkcertainkexceptions.(26)kMostkofkthekexceptionsktokthiskgeneralkrulekinvolvekthekrightskofkwhatkarek nownkask"purchasekmoneyksecuredkcreditors,"(27)kgoodkfaithkpurchaserskofkthekcertainkcollateralkforkvalue,(28)korkmechanicskorkconstructionkliens.(29)kHowever,kbecausekthekgoalkofkthekcomplexkassetkprotectionkstrategieskdiscussedkherekisktokpreventkandkresistkpredatoryklitigation,kthekgeneralkrulekgrantingkprioritykofkinterestktokakperfectedksecuredkc

reditorkusuallykappliesktokthekpropertykbeingksecured.

UCCk9-301(3)kdefineskak"lienkcreditor"ktokmeankak"creditorkwhokhaskacquiredkaklienkonkthekpropertykinvolvedkbykattachment,klevy,korkthekli ek.k.k.kandkincludeskankassigneekforkbenefitkofkcreditors."kThekthirdkpartyksecuredklienskdiscussedkinkthiskarticlekarekonlykintendedktokdeterkfutureklienkcreditorskwhokobtainkankinterestkinkthekdebtor'skpropertykinkorderktokcollectkonkaklegalkjudgmentkforkdamages.kThereforekanykfutureklienkcreditorskwillknotkbekablektokta ekadvantagekofkthekspecialkexceptionskavailablektokpurchasekmoneyksecuredkcreditors,kgoodkfaithkpurchasers,korkconstructionkliens.kThek ey,ktherefore,kforkthirdkpartyksecuredklienskonkpersonalkpropertykisktokensurekthatktheksecuritykinterestkremainskperfectedkandkdoesknotklapse.kGivenkthiskgoal,kthekbestksolutionkiskoftenktokfilekakUCC-1kfinancingkstatementkinkthekstatekwherekthekdebtorkresideskandkwherekthekprop

ertykmaykreside,kandkalsokgivingkthekthirdkpartykpossessionkofkthekcollateral.kPossessionkiskoftenkaksimplekwayktokperfectkaksecuritykinterestkespeciallykifkthekpropertykiskakpromissoryknote,kinstallmentkcontract,kbond,kshareskofkstoc ,kchattelkpaper,korkotherknegotiablekinstruments.

D.kLimitationskofkaksecuredklien

Despitekthekexistencekofkakvalidkpriorklienkheldkbykaklegitimatekthirdkparty,kthiskdoesknotkpreventkthekclaimantkfromkobtainingkakjudgmentkagainstkthekpropertykownerkandkattemptingktokcollectkthekvaluekofkthekjudgmentkdirectlykfromkthekprop


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ertykowner'skliquidkassetsksuchkaskban korkinvestmentkaccounts,korkfromkgarnishingkwageskofkthekdefendant.kHowever,kmostkofkthekconsumerskofkthekadvancedkplanningkstrategieskdiscussedkhereinkareknotkwagekearners.kRather,ktheykarekself-employed,ksuchkaskhealthkcarekprofessionals,korkrealkestatekdevelopers.kAgain,kitkmustkbekmadekclearktokthekclientkwhokma eskplansktokcreatekakvalidkthirdkpartyksecuredklienkagainstkhiskorkherkpropertykthatkthiskisknotkankassetkprotectionk"cure-all."kHonestkandk nowledgeablekassetkprotectionkplannerskunderstandkthiskandkshouldkbekdiligentkinktheirkdutyktokexplainkthisktokakpotentialkclientkbeforekfeeskforkserviceskarekpaid.

Anotherklimitationkonkcomplexkthirdkpartyklienkarrangementskinvolveskthektotalkvaluekofktheksecuredkparty'skclaimktokthekcollateral.kForkexample,kconsiderkakrealkestatekdeveloperkthatkownsk4kseparatekparcelskofklandkandkwantsktokarrangekforkakmortgagektokbekheldkbykakthirdkpartykinkorderktokreducekherkequitykinterestkinkthekland.kAlthoughkakmortgagekcankbekgrantedkbykthekdeveloperktokthekthirdkpartykandkalsokrecordedkonkthekcountykrecords,kthekmortgagekinterestkofkthekthirdkpartykhasknoklegalkvaluekuntilkakcashkloankorkotherkvaluekiskgivenktokthekdeveloper.kAkfuturekplaintiffkwhokwinskaklawsuitkagainstkthekdeveloperkcankas kthekcountyksheriffktokattachkandksellkthekpropertyktoksatisfykthekjudgment.kAlthoughktechnically,kaksheriff'sksalekofkthekpropertykwillknotkextinguishkthekmortgagekrightskheldkbykthekthirdkparty,kthiskiskcoldkcomfortktokthekdeveloper,kwhokhasknowklostkherkproperty.k

Exceptkforkthekappearancekofkaklienkagainstkthekpropertieskofkthekdeveloper,kthe

kdeveloper'skarrangementkwillknotkwithstandkakdeterminedkplaintiff'skattorneykwhokwantsktoksellkthekdeveloper'skpropertyktoksatisfykthekjudgment--unlesskakvalidkdebtkiskownedktokthekthirdkparty.kTherefore,kthekdifficultykforkassetkprotectionkplannerskiskthatkthekthirdkpartyklienkholderkmustkma ekcashkloansktokthekdeveloperkinkorderktokcreatekakvalidklien.kHowkdoeskthekthirdkpartyklienkholderkobtainkthekcashktokloanktokthekdeveloper?kAndkwhatkwillkthekdeveloperkdokwithkthekcashkreceivedkfromktheklender?kIfkthektransactionkinvolvedkisksmallkenough,kthiskpresentsklesskofkakproblem.kHowever,kthosekclientskwillingktokma ekcomplexkandkexpensivekarrangementskforkassetkprotectionkpurposeskareksee ingktokprotectkpropertykworthkanywherekfromk$500,000kupktok$10,000,000kinkassets.kThekchallengekpresentedkbykclientskwithkmillionsktokprotectkcankonlykbekmetkwithkcreativekandkaggressivekplanning.(30)

V.kTaxkandkOtherkLegalkIssues

Toksuccessfullykcreatekakthirdkpartyklienkheldkbykankunrelatedkpartykiskakcomplexktransaction.kSeveralktrapskforkthekunwarykandkuntrainedkexistkwhichkcankgetkbothkthekclientkandkthekclient'skattorneykintoktrouble.kTherekarekthreekpotentialkminefieldskthatkeverykpractitionerkmustkbekawarekof.

A.kEthicskcodeskforkattorneys

Manykattorneyskbelievekthatkitkiskakviolationkofkstatekethicskcodeskforkaklawyerktokassistkakclientkwithkthekcreationkofkankarrangementkthatkmightkfrustratekfuturekcreditors.kThiskbeliefkiskbasedkonktheklawyer'skinterpretationkofkABAkModelkRulek1.2(d)kwhichkrequireskthatk"aklawyerkshallknotkcounselkakclientktokengage,k

orkassistkakclient,kinkconductkthatktheklawyerk nowskiskcriminalkorkfraudulent."(31)kIfkaklawyerkassistskakclientkwithkcommissionkofkakfraud,ktheklawyerkmaykalsokviolatekABAkModelkRulek8.4(c),kwhichkprohibitskattorneykmisconductkinvolvingk"dishonesty,kfraud,kdeceit,korkmisrepresentation."(32)kClearlyktherekareksomeksituationskwhenkhelpingkakclientktransferkankinterestkinkpropertyktokakthirdkpartykmaykbekakfraudulentktransferkunderkstateklaw.kBecausekitkisknotkalwayskclearkwhenkankattorneyk"crosseskthekline"kinkrepresentingkakclient,kitkisknotksurprisingkthatkmanykattorneyskaltogetherkrefusektokhavekanythingktokdokwithkcertainkpopularkassetkprotectionkdevicesksuchkaskoffshorektrusts.kDespitekthekdifficultykinkdeterminingkwhenkakthirdkpartyklienktokprotectkpersonalkassetskmaykconstitutekakfr


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audulentktransfer,kthekauthorkwillkattemptktokclarifykthekruleskinktheknextksection.

Inkthekauthor'skexperience,kthosekfewkattorneyskwhokarekwillingktokopenlykpracticekassetkprotectionksimplykfeelkthatktheykarekjustkusingkexistingklawskproactivelyktokma ekitkmorekdifficultkforkjudgmentkcreditorsktokattac kakclient'skassets;korklawskwhichkcloa kthekclient'skbusinesskorkassetskinkakshieldkofkprivacy.kHowever,kthekauthorkbelieveskthatktherekarekdefinitekcircumstanceskunderkwhichkotherwiseklawfulkassetkprotectionktransactionskwillkbecomekfraudulentkasktokascertainablekcreditors.kForkexample,kthekauthorkwaskoncekapproachedkbykakprospectivekclientkwhokwantedktoktransferkakpiecekofkhiskrealkestatektokakde-controlledkcorporation.kInkthekabsencekofkadversekclaimskagainstkthekrealkestate,kthektransactionkwouldkbeklawful,kandkwouldkalsokhavekcertainkassetkprotectionkbenefitskforkthekprospectivekclient.kHowever,kuponkfurtherkinquiry,kthekauthorklearnedkthatkthekrealkestatekscheduledktokbeksoldkatkpublickauctionkbykaklenderkholdingkakdeedkofktrust.kThekprospectivekclientkwantedktoktransferkthekpropertyktokthekcorporationksokthatkthekcorporationkcouldkfilekban ruptcykandkstaykthekforeclosureksale.kFacedkwithkthiskinformation,kthekauthorkdeclinedktokrepresentkthekindividualkandkadvisedkthekindividualkthatksuchkakplankwouldkli elykconstitutekakfraudkunderkfederalkban ruptcyklaw,kaskwellkaskcivilkfraudkwithkrespectktoktheklender.kInkadditionktokbeingkankaccessoryktokakfraud,ktokassistkakclientkwithksuchkakplankwouldkalsokbekakviolationkofkthekethicalkcodekofkconduct,kandkcouldkresultkinksuspensionkorkdisbarment.

B.kFraudulentktransfers

Statekfraudulentktransferkruleskshouldkbekfamiliarktokeverykassetkprotectionkattorneykconsideringkusingkthektechniqueskdescribedkinkthiskarticle.kAnyktimekankinterestkinkpropertykiskbeingktransferredktherekiskakpotentialkforkviolationkofktheklawkagainstkfraudulentktransfers.kThekUniformkFraudulentkTransferkAct(33)k(hereinafterkU.F.T.A.)kandkthekUniformkConveyancekActk(hereinafterkU.F.C.A.)kbothkholdkthatkaktransferkmadek(orkobligationkincurred)kwithk"actualkintent(34)ktokhinder,kdelay,korkdefraud"kpresentkorkfuturekcreditorskiskfraudulentk--kbutkonlykifkinkadditionktokthekexistencekofkactualkintent,kaksecondkconditionkiskpresent.(35)kAtkleastkonekofktwokpossiblekconditionskmustkbekpresentkforkthektransferktokbekfraudulentkunderkeitherkAct.kFirst,kifkthektransferkorkthekobligationkincurredkleaveskthekdebtorkwithkunreasonablykfewkassetskforkhiskcurrentktransactionskorkc

ontemplatedkfuturektransactions,korkforkthekconductkofkthekdebtor'skbusiness,kthektransferkiskfraudulent.(36)kSecond,kifkthekdebtorkintendedktokincur,korkreasonablykshouldkhavekbelievedkthatkhekorkshekwouldkincurkdebtskbeyondkhiskorkherkabilityktokpay,kthektransferkiskalsokfraudulent.(37)

Inkadditionktokthekactualkintentkrule,kbothkthekU.F.T.A.kandkthekU.F.C.A.kincludektransferskmadekwithoutkadequatekconsiderationkaskfraudulentkifkoccurringkunderkeitherkofktheseksamektwokconditions.(38)kWherekinadequatekconsiderationkiskpresentkthekactualkintentkofkthekdebtorkiskirrelevant.kGivenkthesektwokrules,kitkiskpossiblekforkakproperlykstructuredkthirdkpartyklienkonkpersonalkassetsktokfallkoutsidekthekfraudulentktransferkstatuteskdiscussedkabovekifkthreekconditionskarektrue.kThekfirstkconditionkiskthatkakprospectivekclientkmustknotkhavekanykpresentk"creditors."(39)kThiskincludeskexistingkplaintiffs,kidentifiablekpersonskwhokar

ekthreateningktokfilekaklawsuit,korkanykpartykthatkhaskankexistingkeconomickorklegalkclaimkagainstkthekclient.(40)kThiskalsokincludeskakprobablekdivorce.kThekpractitionerkshouldkta ekreasonablekmeasuresktokdeterminekthesekfactskconclusively,kandkmayknotkignoreksuspiciouskinformationkwhichkwouldkindicatekthekexistencekofkcreditorskorkfuturekclaimants.kThiskdoesknotkmeankthatkanyonekwhokfearskaklawsuitkfromkunidentifiedkthirdkpartieskhaskakcreditorkunderkthekAct.

Ifktherekareknokidentifiablekpresentkcreditorskorkclaimants,ktheksecondkconditionkiskthatkthekclientkwillknotkbekmadekinsolventkbykreasonkofkthektransfer.(41)kInsolvencykiskli elyktokoccurkinkcaseskwherekthekclientktransfersksubstantiallyka


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llkhiskorkherkassetskandkdoesknotkreceivekcorrespondingkvalueksuchkaskakloankfromkthektransferee.kWhenkplanningkakproperlykheldkthirdkpartyklienktherekmustkbekakmechanismkinkplacekforkthekthirdkpartyktokgivekreasonablykequivalentkvaluektokthekclientkinkexchangekforkthekmortgagekorksecuritykinterest.kAgain,kthiskcallskforksomekverykcreativekandkoftenkuniquekplanningkbykthekpractitioner.kItkalsokwillkincreasekthekoverallkcostkofkthektransaction.

Thekthirdkconditionkiskthatkthekclientkmustknotkintendktokincur,korkreasonablykbelievekthatktheykmaykincurkdebtskbeyondktheirkabilityktokrepay,keitherkforkgeneralklivingkexpenseskorkforkcarryingkonkthekclient'skbusinesskorkprofession.kForkexample,kifkthekclientkexpectsktokgeneratekveryklittlekcurrentkincomekafterkthektransferkiskmade,kthektransferkmaykfraudulentkunderkthekintentkrule.kInkcontrast,kakgoodkexamplekofkankeligiblekclientkmightkbekakpracticingkphysiciankwithknokexistingkorkthreatenedkmalpracticekclaims.kThekdoctorkhaskgoodkmalpracticekinsurancekcoveragekinkplacekandkplansktokcontinuekpracticingkindefinitely.kFurthermore,kthekdoctor'skprofessionalkcorporationkgenerateskenoughkcurrentkincomektokpaykthekdoctorkankannualksalarykandkallkemployeekexpenses.kThekdoctorkownskak$750,000kpersonalkresidencekthatkiskfullykpaidkfor,kandkdesiresktokprotectkthekequitykvaluekofkthekresidencekbykgrantingkakmortgagekonkthekresidencekinkexchangekforkakloankofk$650,000kcashkfromkakdecontrolledkforeignkcorporation.k

Althoughkthekphysiciankmaykintendkforkthektransferktokhinderkthekeasekbykwhichkunidentifiedkfuturekcreditorskcankattachkhiskpersonalkresidencektoksatisfykakjudgment,kthektransferkisknotkfraudulentkunderkthekuniformkacts.kThekphysiciankrecei

vedkakreasonablykequivalentkvaluekinkexchangekforkthekmortgagekinterestktransferredktokthekforeignkcorporation.kThektransferkdidknotkleavekthekphysiciankinsolvent,kaskhekhadkenoughkcurrentkincomekfromkhiskthrivingkmedicalkpracticektokpaykforkhiskpersonalkandkbusinesskexpenseskandkdebts,kincludingkmalpracticekinsurance.kLastly,kthekclientkdidknotkhavekanykintentktokincurkadditionalkdebtskbeyondkhiskcapacityktokrepay,kandktherekwasknokreasonktokthin kthatkhekwouldkdoksokbecausekhekwaskplanningktokcontinuektokpracticekmedicine.kUnderkthesekcircumstances,knokfraudulentktransferkwouldkoccurkifkthektransactionkiskhandledkproperly.

Inkadditionktokthekruleskdiscussedkabovekforkfuturekcreditors,kthekU.F.T.A.kandkthekU.F.C.A.khavekruleskthatkapplyktokpresentkcreditorskwho'skclaimskarosekbeforekthektransferkiskmade.(42)kSectionk5kofkthekU.F.T.A.kstateskthat:

(a)kAktransferkmadekorkobligationkincurredkbykakdebtorkiskfraudulentkasktokakcreditorkwhosekclaimkarosekbeforekthektransferkwaskmadekorkthekobligationkwaskincurredkifkthekdebtorkmadekthektransferkorkincurredkthekobligationkwithoutkreceivingkakreasonablykequivalentkvaluekinkexchangekforkthektransferkorkobligationkandkthekdebtorkwaskinsolventkatkthatktimekorkthekdebtorkbecamekinsolventkaskakresultkofkthektransferkorkobligation.

(b)kAktransferkmadekbykakdebtorkiskfraudulentkasktokakcreditorkwhosekclaimkarosekbeforekthektransferkwaskmadekifkthektransferkwaskmadektokankinsiderkforkankantecedentkdebt,kthekdebtorkwaskinsolventkatkthatktime,kandkthekinsiderkhadkreasonablekcausektokbelievekthatkthekdebtorkwaskinsolvent.

Accordingktokthesekrules,kifkakpresentkcreditorkexists,kanyktransferkwillkbekfra

udulentkifkreasonablykequivalentkvaluekisknotkreceivedkinkthekexchange,kandkifkthekdebtorkwaskinsolventkorkbecamekinsolventkafterkthektransfer.kIfkthektransferkisktokank"insider"(43)kforkakpre-existingkdebt,kandkifkthekinsiderkiskawarekofkprobablekinsolvency,ktherekiskalsokakfraudulentktransfer.kDespitekthiskadditionalkrule,kakproperlykstructuredktransferkthatkmeetskthekthreekconditionskdescribedkabovekwillkalsokbeknon-fraudulentkunderkthiskrule.

C.kTaxkconcerns

Thekmostkcomplicatedkandkchallengingkissueskthatkfacekthekassetkprotectionkpract


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itionerkplanningkakcomplexkthirdkpartyklienkarrangementkinvolvekfederalktaxklaw.kAklargeknumberkofkassetkprotectionkconsultants,kattorneys,kandkevenksomekCPAskdoknotkhavekankadequatek nowledgekofkthekfederalkincome,kgift,kandkestatektaxklawskthatkcankapplyktokthesekarrangements.kThisksectionkofkthekarticlekwillkattemptktokexplainkandkhighlightksomekofkthekmostkcommonktaxktrapskthatkapplyktokthirdkpartyklienskheldkbykde-controlledkentitieskorkotherkthirdkparties.kThisksectionkiskinknokwaykankexhaustivektreatmentkofkallkpossiblektaxkcomplicationskwhichkmaykarisekinkakcomplexktransaction.

Thekfirstkpotentialktaxkproblemkariseskifkthekpropertykownerkandkthekthirdkpartyklienkholderkarekdeemedk"related"kpartieskbykthekInternalkRevenuekServicek(I.R.S.).kSectionk482kofkthekincomektaxkcodekgiveskthekI.R.S.kauditorkbroadkpowersktok"distribute,kapportion,korkallocatekgrosskincome,kdeductions,kcredits,korkallowanceskbetweenkorkamongksuchkorganizations,ktrades,korkbusinesses,kifkhekdetermineskthatksuchkdistribution,kapportionment,korkallocationkisknecessarykinkorderktokpreventkevasionkofktaxeskorkclearlyktokreflectkthekincomekofkanykofksuchkorganizations,ktrades,korkbusinesses."kAlthoughktaxkevasionkiskclearlyknotkthekintentkofkthekassetkprotectionktransactionskdescribedkinkthiskarticle,ktransactionskinvolvingkassetkprotectionk"structures"kmaykbekviewedkbykthekI.R.S.kaskakdistortionkofkthektruekincomekofkthekparties.k

Forkexample,kassumekakhomeownerksee ingkassetkprotectionkreceiveskakloankfromkakthirdkpartykinkexchangekforkakmortgagekagainstkhiskpersonalkresidencekandkma eskinterestkpaymentskonkthekloan.kThekhomeownerkdeductskthekinterestkunderkthekqual

ifiedkresidencekinterestkdeductionkrules.kIfkthekI.R.S.kwerektokdiscoverkthatkthekhomeownerkiskindirectlykrelatedktokthekthirdkpartyklender,kthekI.R.S.kcankdisallowkthekinterestkdeductionkta enkbykthekhomeowner.kDuektokthekwidekscopekofkthiskrule,kpractitionerskplanningkcomplexkassetkprotectionktransactionsksuchkaskthosekdiscussedkinkthiskarticlekshouldkbekawarekofkthiskgeneralkprinciplekandkshouldkinformkclientskofkthekpossiblekris kofkreallocationskbykthekIRS.

Ifkthekassetkprotectionkplankinvolveskakforeignkbusinesskentitykorkanykotherknon-residentkandkifkmoneykiskpaidktokakforeignkperson,ktaxkwithholdingkobligationskmaykapply.kSectionk1441kofkthekinternalkrevenuekcodekrequireskwithholdingkofktaxkofkupktok30%kofkthekamountkofkcertainkpaymentsktokforeignkindividualskorkpartnerships.(44)kUnlesskankexceptionkapplies,kanykpersonkorkentitykpayingk"interest,kdividends,krent,ksalaries,kwages,kpremiums,kannuities,kcompensation,kremuneratio

ns,kemoluments,kandkotherkperiodicalkgains"kiskrequiredktokholdkbac k30%kofkeachkpaymentkandkdepositkthekwithheldkamountkwithkthekI.R.S.kaskakmechanismktokenforcekU.S.ktaxklawskapplicablektok"U.S.ksource"kincome.(45)kAksimilarktaxkappliesktokanykpaymentskofkthekincomekitemsklistedkabovekmadektokakforeignkcorporation.(46)

Forkexample,kifkakde-controlledkforeignkcorporationklendskmoneyktokakU.S.kpersonkandkreceiveskakmortgagekonkthekperson'skrealkestate,kinterestkpaymentskmadekonkthekloankwillkbeksubjectktokthek30%kinterestkwithholdingkrequirementkunlesskankexceptionkapplies.(47)kIfkwithholdingkisknotkperformed,kthekU.S.kpersonkcankbekheldkliablekforkthekfullkamountkofkinterestkrequiredktokbekwithheld.(48)kAkspecialk10%kwithholdingktaxkapplieskifkrealkpropertyklocatedkinkthekU.S.kbutkownedkbykakforeignkpersonkisksoldkforkcash.(49)kThekwithholdingkratekofk10%kappliesktokthe

kgrossksalekpricekofkthekproperty.(50)

Inkadditionktokwithholdingkrequirements,kcomprehensivekreportingkruleskapplyktokmostktransfersktokforeignkentities.kAlthoughkmostkpeoplekarekfamiliarkwithkthekrequirementktokfileksimplekdomestickformskli ekFormk1099,kfewkarekawarekofkthekextensivekreportingkrequiredkofkinternationalkpaymentskandktransfers.kAlmostkallktransfersktokforeignkcorporationskmustkbekreportedkbykthektransferorkonkI.R.S.kFormk926kwhichkiskfiledkannually.(51)kReportablektransferskincludektransferskofkmoney,ksecurities,kandkakwidekvarietykofkintangibleskrarelykconsideredkbykthekaveragekdomesticktaxkpractitioner.(52)kFailurektokfilekthekformkcankresultkinkakpena


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ltykofk10%kofkthekfairkmar etkvaluekofkthekpropertyktransferred,kunlesskfailurektokfilekiskduektokreasonablekcausekandknotkwillfulkneglect.(53)kTransfersktokforeignkpartnershipskandksomektypeskofktransfersktokforeignkindividualskarekalsokrequiredktokbekreported.(54)kIfkthektransferkiskmadektokakforeignktrust,kthektransferkmustkbekreportedkwithink90kdayskofkthektransferkonkFormk3520.(55)kThekpenaltykforkfailurektokfilekFormk3520kiskseverek--k35%kofkthekgrosskvaluekofkthekpropertyktransferredktokthekforeignktrust.(56)kIfkFormk3520kisknotkfiledkwithink90kdayskofkthektransfer,kthekpenaltykincreaseskbyk$10,000kperkthirtykdaykperiodkwhichkthekreturnkisknotkfiled.(57)kThekburdenkofkreportingkrequirementskhaskcontinuedktokmountkaskthekInternalkRevenuekServicekattemptsktokstopkAmericankcitizenskandkbusinesseskfromkusingkforeignktaxkhavenskforkbothklegalktaxkreductionkandkcriminalktaxkevasion.

AkthirdkproblemkareakinvolveskreportingkrequirementskandkspecialktaxeskapplicablektokanykU.S.kresidentkthatkownskankinterestkinkakforeignkcorporation,kpartnership,ktrust,korkestate,kwhetherkdirectlykorkindirectlykowned.kInkorderktokcombatkusekofkforeignkcorporations,ktrusts,kandkpartnerships,kspecialktaxeskcankapplyktokthekearningskofkthesekforeignkentities,kevenkifkthekU.S.kresidentkreceivesknokdistributionskofkthekincomekofkthekforeignkentity.kForkreportingkpurposes,kifkakU.S.kresidentkiskakbeneficiarykorkakgrantorkofkakforeignktrust,kthekU.S.kresidentkmustkfilekformk3520kannuallykwithkthekperson'sktaxkreturn.(58)kThekbeneficiarykorkgrantorkmustkalsokincludektheirkproportionateksharekofkthektrust'skincomekonktheirkpersonalktaxkreturn.(59)

Ifkthekforeignkentitykiskakcorporation,ktherekarekseveralkdifferentkruleskwhichkmaykapplyktokanykU.S.kpersonkwhokownskshareskofkthekcorporation,kwhetherkdirectly,korkindirectlykthroughkrelatedkpartiesksuchkaskcertainkrelatives,kotherkbusinesskentitieskorktrustskwhichkthekU.S.kpersonkcontrols.kIfkakforeignkcorporationkqualifieskaskak"controlledkforeignkcorporation"kunderkSectionk957kofkthektaxkcode,kanykU.S.kshareholderkofkthekcorporationkmustkfilekformk5471keachkyearkwithkhiskorkherktaxkreturn,kandkincludektheirkpro-rataksharekofkthekcorporation'skincomekaskifkreceivedkbykthekU.S.kshareholder.(60)kThekinstructionsktokI.R.S.kFormk5471kestimatekthatkifkallkscheduleskarekfilledkout,kthektimekneededktok eepkrecords,kandkfilekthekformskisk198.75khours!(61)kPortionskofkformk5471karekrequiredktokbekfiledkforkcertainkqualifyingkforeignkcorporationskevenkifkthekU.S.kshareholderkonlykownsk10%kofkthekcorporation,korkifkaknon-shareholderkiskankofficerkorkdirectorkofkakforeignkcorporationkqualifyingkaskak"foreignkpersonalkholdingkcompany

"kunderkakdifferentksetkofkruleskinkthekcode.(62)kEvenkifkakforeignkcorporationkdoesknotkqualifykaskakcontrolledkforeignkcorporationkorkakforeignkpersonalkholdingkcompany,kanykpersonkholdingksharesk(eitherkdirectlykorkindirectly)kinkcertainkqualifyingkforeignkcorporationskmustkfilekFormk8621kannually,kevenkifkonlykoneksharekiskowned.(63)kAskalways,kpenaltieskapplykforkfailurektokfilekthekrequiredkformskorkfailurektokpayktaxkonkthekincomekofkthekforeignkentities.

Inksummary,kbecausekofkthekcomplexitykofkthesekissues,kmanykassetkprotectionkstructureskavoidkusingkakforeignkelementkinktheirkplans.kOnkthekotherkhand,ksomekofkthekmostkeffectivekassetkprotectionktransactionskrequirekinvolvementkofkakforeignkcorporation,ktrust,korkotherkentitykforktaxkpurposes,kprivacy,kandkforkremovingkliquidkassetskbeyondkthekgraspkofkpredatoryklitigation.kForksomekclientskitkiskdifficultktokproperlyk"de-control"ktheirkinterestkinkthekentitykwhichkwillkrec

eivekaksecuredklienkagainstktheirkassetskifkthekentitykiskdomestic,kduektokthekpublicknaturekofkthekentity'skstatekrecordskandkfederalktaxkreturns.

VI.kConclusion

Placingkaksecuredklienkonkpersonalkassetskorkthekassetskofkakbusinesskcankbekeffectivelykdonekwithkcarefulkplanning,kattentionktokdetail,kandkobservancekofkthekapplicableklawskinvolvedkoverktheklifekofktheklien.kTherekarekaknumberkofkhurdleskthatkmustkbekclearedkinkorderktokavoidkproblemskwithktheklienkitself,kfraudulentktransferklaws,kandktaxkconcerns.kThekcomplexitykinvolvedkiskaktwo-edgedksword


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.kOnkthekonekhand,kitkrequireskakhighkdegreekofk nowledgekandks illkinkseveralkdifferentkareaskofktheklawktokbeksuccessful.kThekcostskinvolvedkcankbeksignificantkwhenklegalkfees,ktaxes,kandkspecialkbusinesskservicekfeesksuchkaskforeignkagentskarekutilized.kAtktheksamektime,kwhenkdonekproperly,kthekcomplexitykofkthektransactionkiskakbarrierktokthekaveragekplaintiffkloo ingkforkankeasyklawsuit.kAskmorekAmericanskenterkthekran skofkthekwealthykandkeducatekthemselveskonkassetkprotectionktherekwillkcontinuektokbekakgrowingkthirstkforksophisticatedkassetkprotectionkstrategiesksuchkaskthirdkpartyksecuredkliens.

1.kBenjaminkD.kKnauppkiskthekManagingkAttorneykofkBenjaminkD.kKnaupp,kP.C.kinkLaekOswego,kOregon.kHekassistskhighknet-worthkindividualskandkbusinesseskwithkcre

ativekinternationalktaxkandkassetkprotectionkplanning.kVisitkhttp://www. naupplaw.comkforkmorekinformation.k

2.kAmongkthekleadingk"consumers"kofkthesekserviceskarekhealthkcarekprofessionalskandkrealkestatekownerskandkdevelopers.k

3.kSomekwell- nownkpublickinformationkservicekproviderskincludekCommercialkInformationkSystems,kCDBkInfote ,kKnowX,kInformationkAmerica,kMeadkDatakCentral,kLexis/Nexiskaffiliatedkcompanies,kNACM,kThekDialogkCorporation,kandkthekproducerskofkExperiankBusinesskCreditkReports.k

4.kInkadditionktokthekdebtor,kinkmostkstates,kalmostkanyonekcankbekquestionedkunderkaksubpoenakfromkthekcourt.kAkplaintiffkwhokobtainskakjudgmentkhaskthekrightk

toksee kinformationkaboutkthekdebtorkfromkanyonekwhokhaskinformation.kExampleskincludekakspouse,krelatives,kankemployer,kakbusinesskpartner,ktenants,korkothers.k

5.kArizona,kCalifornia,kIdaho,kLouisiana,kNevada,kNewkMexico,kTexas,kandkWashingtonkarekconsideredktokfollowkcommunitykpropertykrules.k

6.kThekUniformkFraudulentkTransferskActk(U.F.T.A.)klistsk"relatives"kunderkthekdefinitionkofk"insiders."kU.F.T.A.kk1.(7).kIfkakspousekorkchildkreceiveskaktransferkitkiskconstructivekevidencekofkthektransferor'skactualkintentktokhinder,kdelay,korkdefraudkcreditors.kU.F.T.A.kk4(b).k

7.kId.k

8.kU.F.T.A.kk1.(7)klistskakcorporationkwhichkthekdebtorkcontrols,korkakpartnershipkinkwhichkthekdebtorkiskakgeneralkpartnerkunderkthekdefinitionkofk"insiders"kunderkthekAct.kSeek"FraudulentkTransfers,"kSectionkV.B.kinfra.k

9.kInkadditionktokthisklist,ktherekarekmanykfactorskakU.S.kcourtkwillkconsiderkwhenkitkmustkdeterminekwhetherktokrecognizekakcorporationkaskakvalidkindependentkentity.kSeekMolinekPropertieskv.kCommissioner,k319kU.S.k436,k438-439k(1943);kWolfekv.kUnitedkStates,k798kF.2dk1241k(9thkCir.k1986);kStrongkv.kCommissioner,k66kT.C.k12,k24k(1976),kaffd.k77-1kUSTCkpar.k9240,k39kAFTRk2dk77-934k(2dkCir.k1977);kS ardakv.kCommissioner,k27kT.C.katk144.k

10.kThiskrequirementkisk nownkaskthekStatutekofkFraudskinkmostkstates.k

11.kThekrequirementskofkthekdescriptionkdependkonkstateklaw,kbutkusuallykanykmethodkwhichkidentifieskthekpropertykisklawful.kAkvalidkdescriptionkcankbekmadekusingkmeteskandkbounds,kreferencektokakgovernmentksurvey,kakrecordedkplat,korkakstreetknumberingksystem.k

12.kLeMehautekv.kLemehaute,k585kS.W.2dk276k(Mo.k1979).k

13.kRecordingkrefersktokfilingkakcopykofkthekmortgagekorkdeedkofktrustkonkthekcountykrecordskinkthekstatekwherektheklandkisklocated.kThekrecordskarekopenktokthe


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kpublickandkarekusuallyksearchedkbykaktitlekcompanykorkattorneykpriorktokthekpurchasekorkmortgagekofkproperty.k

14.kSeekUCCk9-105(1)(l).k

15.kTherekareksomek indskofkpersonalkpropertykinterestskwhichkareknotkgovernedkbykArticlek9kofkthekUCC,korkwhichkareksubjectktokadditionalkrules.kDependingkonkstateklaw,kthesekmaykincludekretailksales,ksmallkconsumerkloans,kandkpropertykwhichkiskregulatedkbykfederalklaw,ksuchkaskthekshippingkandkaviation,klandlord'skliens,kclaimskinkorkunderkinsurancekpolicies,kandkdepositkaccounts.kUCCk9-104kandkOfficialkCommentskthereto.k

16.kUCCk1-201(44)kdefineskthek"value"krequiredktokbekreceivedkbykthekdebtorkunderksectionk9-203ktokbekeitherkak"bindingkcommitmentktokextendkcreditkorkforkthekextensionkofkimmediatelykavailablekcreditkwhetherkorknotkdrawnkupon,"kakpre-existingkdebt,korkanyk"otherkconsiderationksufficientktoksupportkaksimplekcontract."k

17.kUCCk9-203(1).k

18.kUCCk9-203(2).k

19.kUCCk9-302(1)(a)k-k(h).k

20.kUCCk9-402(1).k

21.kUCCk9-401.kThekmodelkUCCkgiveskthreekalternativekprototypeskfork9-401,kwhichkcontainksomekslightkdifferences.kThiskma eskitkessentialktokobtainkproperkqualifiedklegalkrepresentationkwhenkperfectingkaksecuritykinterest.kThiskiskmostkdefinitelyknotkankareakforknon-lawyerskorklawyersknotkfamiliarkwithktheklawskofkthekapplicablekstate.k

22.kUCCk9-401,k9-313.k

23.kUCCk9-305.k

24.kUCCk9-305.k

25.kUCCk9-304(1).k

26.kUCCk9-312(5).k

27.kUCCk9-312(3),k(4);kUCCk9-301(2).k

28.kUCCk9-309.k

29.kUCCk9-310.k

30.kThekdetailskinvolvedkwithksolvingksuchkproblemskarekbeyondkthekscopekofkthiskarticlekandkmaykvarykwidelykdependingkonkakclient'skresources,kfamilyksituation,kfinancialksituation,kandkakhostkofkotherkfactors.k

31.kAkparallelkrulekiskfoundkinkthekModelkCode,krulekDRk7-102(7).k

32.kForkModelkCodekstateskseekrulekDRk1-102(A).k

33.kThekUniformkFraudulentkTransferkActk(U.F.T.A.)khaskbeenkenactedkinkatkleastk25kstates.kThekUFTAkiskakrevampedkversionkofkthekUniformkFraudulentkConveyancekActk(U.F.C.A.),kwhichkiskstillkinkforcekmostkofkthekremainingkstates.kThekbasickstructurekandkapproachkofkthekUniformkFraudulentkConveyancekActkwaskfollowedkinkthekUniformkFraudulentkTransferkAct.kHowever,kthekU.F.T.A.kdelineateskfraudulentk


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transferskandkobligationskslightlykdifferentkthankthekU.F.C.A.kSectionk4(a)kiskankadaptationkofkthreeksectionskofkthekU.F.C.A.;kk5(a)kiskankadaptationkofkanotherksectionkofkthekU.F.C.A.;kandkk5(b)kdidknotkexistkinkthekU.F.C.A.k

34.kActualkintentkmaykbekprovedkbykakplaintiffkeitherkdirectly,korkbykimplicationkbasedkonkthekexistencekofkcertainkwellk nownk"badgeskofkfraud."kU.F.T.A.kk4.(b)kprovideskthat:

Inkdeterminingkactualkintentkunderksubsectionk(a)(1),kconsiderationkmaykbekgiven,kamongkotherkfactors,ktokwhether:

(1)kthektransferkorkobligationkwasktokankinsider;

(2)kthekdebtorkretainedkpossessionkorkcontrolkofkthekpropertyktransferredkafterkthektransfer;

(3)kthektransferkorkobligationkwaskdisclosedkorkconcealed;

(4)kbeforekthektransferkwaskmadekorkobligationkwaskincurred,kthekdebtorkhadkbeenksuedkorkthreatenedkwithksuit;

(5)kthektransferkwaskofksubstantiallykallkthekdebtor'skassets;

(6)kthekdebtorkabsconded;

(7)kthekdebtorkremovedkorkconcealedkassets;

(8)kthekvaluekofkthekconsiderationkreceivedkbykthekdebtorkwaskreasonablykequivalentktokthekvaluekofkthekassetktransferredkorkthekamountkofkthekobligationkincurred;

(9)kthekdebtorkwaskinsolventkorkbecamekinsolventkshortlykafterkthektransferkwaskmadekorkthekobligationkwaskincurred;

(10)kthektransferkoccurredkshortlykbeforekorkshortlykafterkaksubstantialkdebtkwaskincurred;kand

(11)kthekdebtorktransferredkthekessentialkassetskofkthekbusinessktokaklienorkwhoktransferredkthekassetsktokankinsiderkofkthekdebtor.k

35.kU.F.T.A.kk4.(a)(1);kU.F.C.A.kk7.k

36.kU.F.T.A.kk4.(a)(2)(i);kU.F.C.A.kk5.k

37.kU.F.T.A.kk4.(a)(2)(ii);kU.F.C.A.kk6.k

38.kU.F.T.A.kk4.(a)(2);kU.F.C.A.kk5,k6.k

39.kU.F.T.A.kk1.(3)kdefinesk"claim"ktokmeank"akrightktokpayment,kwhetherkorknotkthekrightkiskreducedktokjudgment,kliquidated,kunliquidated,kfixed,kcontingent,kma

tured,kunmatured,kdisputed,kundisputed,klegal,kequitable,ksecured,korkunsecured."kk1.(4)kdefineskak"creditor"kask"akpersonkwhokhaskakclaim."k

40.kId.k

41.kSectionk2kofkthekU.F.T.A.kdefineskinsolvencyktokmean:k

(a)kAkdebtorkiskinsolventkifktheksumkofkthekdebtor'skdebtskiskgreaterkthankallkofkthekdebtor'skassets,katkakfairkvaluation.


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(b)kAkdebtorkwhokiskgenerallyknotkpayingkhisk[orkher]kdebtskasktheykbecomekduekiskpresumedktokbekinsolvent.

(c)kAkpartnershipkiskinsolventkunderksubsectionk(a)kifktheksumkofkthekpartnership'skdebtskiskgreaterkthankthekaggregatekofkallkofkthekpartnership'skassets,katkakfairkvaluation,kandktheksumkofkthekexcesskofkthekvaluekofkeachkgeneralkpartner'sknon-partnershipkassetskoverkthekpartner'sknon-partnershipkdebts.

(d)kAssetskunderkthisksectionkdoknotkincludekpropertykthatkhaskbeenktransferred,kconcealed,korkremovedkwithkintentktokhinder,kdelay,korkdefraudkcreditorskorkthatkhaskbeenktransferredkinkakmannerkma ingkthektransferkvoidablekunderkthisk[Act].

(e)kDebtskunderkthisksectionkdoknotkincludekankobligationktokthekextentkitkisksecuredkbykakvalidklienkonkpropertykofkthekdebtorknotkincludedkaskankasset.k

42.kU.F.T.A.kk5;kU.F.C.A.kk4,k8.k

43.kU.F.T.A.kk1(7)kdefinesk"Insider"ktokmean:

(i)kifkthekdebtorkiskankindividual,

(A)kakrelativekofkthekdebtorkorkofkakgeneralkpartnerkofkthekdebtor;

(B)kakpartnershipkinkwhichkthekdebtorkiskakgeneralkpartner;

(C)kakgeneralkpartnerkinkakpartnershipkdescribedkinkclausek(B);kor

(D)kakcorporationkofkwhichkthekdebtorkiskakdirector,kofficer,korkpersonkinkcontrol;

Ifkthekdebtorkiskakcorporationkorkakpartnershipktherekarekadditionalkdefinitionskofkwhokiskankinsider.k

44.kI.R.C.kk1441(a).k

45.kI.R.C.kk1441(a),k(b).kSeekI.R.C.kk871,k881kwhichkprovideskforkaktaxkonkthekitem

skofkincomekrequiredkforkwithholdingkbykSectionk1441kandk1442.k

46.kI.R.C.kk1442(a).k

47.kPossiblekexceptionskincludekankapplicablektaxktreatykwhichkreduceskthekratekofkwithholdingkinkorderktokpreventkdouble-taxkonkthekinterestkpayments,korkthekportfoliokinterestkexemption.k

48.kI.R.C.kk1461.k

49.kI.R.C.kk1445.kSeekI.R.C.kk897kwhichklevieskthektaxkrequiredktokbekwithheldkbykk1445.k

50.kId.k

51.kI.R.C.kk6038B.kSeekalsokInstructionskforkFormk968.k

52.kI.R.C.kk6038B,k367(d).k

53.kI.R.C.kk6038B(c).k

54.kI.R.C.kk6038B(a).k


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55.kI.R.C.kk6048(a).k

56.kI.R.C.kk6677.k

57.kId.kThekpenaltykmayknotkexceedkthektotalkamountktransferredktokthektrust.k

58.kI.R.C.kk6048(b),k(c).k

59.kI.R.C.kk679(a).k

60.kI.R.C.kk957,k951.k

61.kInstructionskforkFormk5471,k(RevisedkJanuaryk1999.)k

62.kSeekInstructionsktokFormk5471,kpagek2.kOnkforeignkpersonalkholdingkcompanies,kseekI.R.C.kk551-k558.k

63.kSeekI.R.C.kk1291-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

kkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkhm kkkkkkk0k1kk

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