Could your assets be seized?

[boont]

I have been reading about the exceptions to asset seizure. Would your assets be safe in a seizure action by the courts?

We all read that OJ's pension could not be seized. What about the assets that provide your retirement income?

If you have a stock portfolio that is your major source of retirement income, that would be wiped out in a court action against you.

The Enron executives, found culpable, are losing everything.

But those with a qualifying annuity may be safe.

"In 1992, the Supreme Court made a landmark decision (Patterson v. Shumate) relative to the rights of creditors to tax qualified savings subject to the Employee Retirement Income Security Act (ERISA). Basically, the court held a person's qualified plan assets are protected from creditors in bankruptcy. Many commentators imply that this is the final word on the topic."

"If your annuity contract is part of a pension or qualified retirement plan,then many of the states provide substantial or even total protection of those assets from your creditors."

Might be a reason to look more closely at an annuity even though it would be more costly.

boont

 

[uncledrz]

Boont
Martha, who was/is a trustee in bankruptcy, has written about this topic before, and may be worthwhile to do a search to find her thoughts on the topic.

Yes, qualified pensions, 401/403 plans, IRAs all have a high level of protection from creditors. This is not true from all creditors, however. Family support (read alimony and child support, etc) can cut through this protection.

Additional, many states have laws that provide additional protection. Often homestead is exempt from execution.

If you are still involved in high degree of risk (i.e. business, real estate development, hazardous waste disposal ) it will be worthwhile to sit down for an hour or so with a local attorney who will doubtlessly be more familiar with your state's laws than I and see if you are protected.

Uncledrz

 

[Ed_The_Gypsy]

boont,

From what I have read and seen, a Panama corporation can be pretty thorough protection for assets from civil suits. Don't expect cheap and don't expect it to keep out the feds.

Just out of curiosity, what Enron-type scam corporation are you an officer in?

 

[lets-retire]

OJ is a resident of Florida. Florida has very strong protections for your homestead and retirement accounts. By retirement accounts they mean 401's, IRA's, TSP's, etc. You can't put money into a savings account and claim it is for retirement. If you are pulling money out of your retirement accounts and putting it into a normal investment account then the money transferred out is not protected. I don't know anything about the federal level.

 

[Martha]

"In 1992, the Supreme Court made a landmark decision (Patterson v. Shumate) relative to the rights of creditors to tax qualified savings subject to the Employee Retirement Income Security Act (ERISA). Basically, the court held a person's qualified plan assets are protected from creditors in bankruptcy. Many commentators imply that this is the final word on the topic."

"If your annuity contract is part of a pension or qualified retirement plan,then many of the states provide substantial or even total protection of those assets from your creditors."

Might be a reason to look more closely at an annuity even though it would be more costly.

Yes, the Shumate case held that ERISA qualified plans are exempt from creditors in a bankruptcy case, except for claims by the federal government for taxes and as Uncledz mentions, claims of a spouse.

People don't general buy an annuity in their ERISA qualified plan as it makes no tax/financial sense.  Annuities are usually established as a different way to provide for retirement outside of 401ks, pensions and IRAs.  So, to see if annuities are protected against creditor claims you have to look at  both bankruptcy law (if you file bankruptcy) and your state's law.  Because I am no longer practicing in the bankruptcy area, I am not keeping up with how bankruptcy law and state law treat annuities.  My recollection is that different states provide different levels of protection for annuities.  For example, Wisconsin had very broad protections for annuities that people established to fund retirement.  Minnesota was far less generous and looked closely at why and when the annuity was established and generally limited the amount that could be claimed exempt, if any.  

 

[FinanceDude]

I knew a guy in Florida that sold annuities to doctors in practices that had high risk for malpractice. That way, if they got a big settlement against them, the annuity would stay out of the settlement if it went against their personal assets.

The NFL pension OJ gets would no doubt be exempt from the civil case settlement the Goldman/SImpson families sought................

 

[Martha]

I knew a guy in Florida that sold annuities to doctors in practices that had high risk for malpractice.  That way, if they got a big settlement against them, the annuity would stay out of the settlement if it went against their personal assets.

The NFL pension OJ gets would no doubt be exempt from the civil case settlement the Goldman/SImpson families sought................

Why did OJ establish his residence in Florida? Because it has one of the broadest sets of what is exempt from creditors. The last I heard annuity contracts were fully exempt in Florida.

 

[boont]

"Just out of curiosity, what Enron-type scam corporation are you an officer in?"

Ed The Gypsy


Not me, I'm just trying to save some of you guys. I'm as honest as the day is long.

Not a full daylight savings day, but one of those around December 22.

boont

 

[Ed_The_Gypsy]

Not me, I'm just trying to save some of you guys. I'm as honest as the day is long.

Not a full daylight savings day, but one of those around December 22.

In Yellowknife?

 

[FinanceDude]

People don't general buy an annuity in their ERISA qualified plan as it makes no tax/financial sense.  

You would be surprised to know it happens more than you think, and for some there's a good reason for it............