Wealth preservation is an ongoing process. How, when, and where assets are transferred or acquired affect protections. As the New Year begins, individuals can take a step back and review legislation changes that affect our year ahead and those to come:
- Protecting Inherited IRAs. In 2014 the United States Supreme Court ruled that inherited Individual Retirement Accounts (IRAs) are not protected under federal bankruptcy law. This leaves inherited IRAs vulnerable for most U.S. residents in bankruptcy. However, a handful of jurisdictions, such as North Carolina, protect inherited IRAs from creditor claims during bankruptcy otherwise. Additional protection is available to the families of those who properly establish an IRA Beneficiary Trust. Retirement assets held in trust are not subject to creditor claims in any state and are also structured to benefit from long-term tax-deferred growth.
- Foreign Account Power of Attorney Responsibilities. Last year brought many tax changes for foreign accounts. One change affects liability. Individuals who are named in a power of attorney granting authority over a foreign account are subject to filing rules if the account reaches or exceeds $10,000 during the year. Foreign Bank and Financial Account (FBAR) requirements impose criminal and monetary penalties on individuals who fail to file required documents. Review paperwork and deadline rules with a tax attorney annually.
- Domestic Asset Protection Trust Options. Domestic Asset Protection Trusts (DAPTs) are not available in every state, but individuals need not reside in a state that permits DAPTs to take advantage of them. One of the states our asset protection lawyers serve, Tennessee, consistently ranks as one of the best states to form a DAPT. In 2014 this remained the same, and state legislation changes around the country expanded DAPT options. Mississippi joined the ranks of states that permit DAPTs. See how all the states rank.