All Forum Posts by: Brian Bradley

Just to put perspective of the misconception of the Series LLC being a new entity, it is not. It was first created in 1996 in Delaware. 22 years ago. The traditional LLC first became available in Wyoming in 1977, but most other states did not follow suit until the 1990s). The next state was Delaware in 1991 to enact the LLC. In 1994/5 CA. It was not until 1996 that all states had a LLC. The same year the Series LLC was statutorily crested. So it’s interesting how people quickly fall in love with the traditional LLC thinking it’s been around forever but fairly after the creation of the LLC in most states, the series LLC immediately came in the game. In fact just one year after CA codified the traditional LLC. Just a quick timeline of history and the LLC relating to the misconception of the “novelty” of the Series LLC.

Just to put perspective of the misconception of the Series LLC being a new entity, it is not. It was first created in 1996 in Delaware. 22 years ago. The traditional LLC first became available in Wyoming in 1977, but most other states did not follow suit until the 1990s). The next state was Delaware in 1991 to enact the LLC. In 1994/5 CA. It was not until 1996 that all states had a LLC. The same year the Series LLC was statutorily crested. So it’s interesting how people quickly fall in love with the traditional LLC thinking it’s been around forever but fairly after the creation of the LLC in most states, the series LLC immediately came in the game. In fact just one year after CA codified the traditional LLC. Just a quick timeline of history and the LLC relating to the misconception of the “novelty” of the Series LLC.

@Jason Gilroy you are going to have to sue your neighbor for negligence. This is to bad. And next time get insurance. Horrible lesson.

@Ashish Acharya The asset protection benefit of irrevocable trusts comes mainly from the separation of the grantor from his or her assets. ... Assets in an irrevocable trust are shielded from creditor claims, estate taxes and a Medicaid spend-down. A revocable trust allows a grantor to retain a fair amount of control over trust assets. So even with a spendthrift clause you are not as protected from creditors as a revocable trust.

@Ashish Acharya depends if their is a spendthrift provision in place or not.

@Ashish Acharya   a common medicaid asset protection trust is a Power Irrevocable trust. By using an irrevocable trust to hold estate assets, the grantor is no longer in control of the assets, rather the trustee now has the task of controlling the assets. Once assets are conveyed into the medicaid irrevocable asset protection trust, they generally will not count against them, and the client will become eligible to medicaid and have long-term care and nursing home costs covered. Since the assets are held by their irrevocable trust, instead of the client / recipient, the government does not count those assets for qualification purposes. SO LONG AS neither the person applying for medicaid nor their spouse has direct access to the principle nor named as the trustee. The client sill gets the benefits of the assets in the trusts. The provisions in the trust are set to where the beneficiaries received the assets after death, just like a normal trust.

The goal is to dissociate the client from the assets. That way they are not considered in determining their eligibility fo Medicaid.

So, basically ANY domestic or off shore irrevocable trust will accomplish the goal and act as a medicaid trust. It is not a matter of ‘hiding’ assets, but rather legally protecting assets from Medicaid through the irrevocable trust. 

The name of the game really is getting the planning done early enough before long term care is needed to avoid the 5 year look back period. 

We are moving on to multiple new pages in the forum, so for a refresher of what this discussion / forum is about, and for those who are not going to read the entire forum pages in full, trust me I get it, this forum is about how to use, and the benefits of the Delaware Statutory Trust as a Asset Protection system, and particularly for those CA investors who want to Series out their properties into child series like with Series LLCs, without paying the $800 Franchise Tax for each child series. The Delaware Statutory Trust (DST) as we will call it, is found in Delaware Statutory Trust Act 12 Del.C. section 3801 (1988). It allows for the Series structure like protection of a Series LLC.

This is not an investment DST, but a Business Trust DST, and to keep that classification of a trust by the IRS it must maintain strict compliance or the asset protection structure will collapse. This is where working with your team CPA and lawyer are a must. There are lots of other purposes of DST. Some use for 1031 exchange's, some use as an investment tool to as accredited investors in institutional investments, etc etc. This is not what this forum is about. This is about the DST for Asset Protection as a trust asset holding company.

A lot of the specific code sections have been discussed already. You should scroll up to see those. Some of these are:12 Del.C. 380; IRC Section 301.7701-4(a); Senate Bill No. 355, 66 Del. Laws Ch. 279 (1988); IRC Section 301.7701-4(a);California's Revenue and Taxation Code (R&TC) section 23101; California law, specifically Public Law 86-272. 

@Karen T. And another thing that shows how off you are is that we do not sell or use DSTs as investments but asset protection holding trusts. Huge difference. I suggest you take your own advice and learn the ways DSTs can be used. Your blind ignorance is causing the issue. Asset Protection vs investment. Theirs a distinction. One you don’t seem to see or ask. Asset Protection is to protect owners from personal liability and minimize judgments and loss. Asset protection systems are not investments you purchase. You can also use DSTs as a business investment as in let’s say institutional investing for accredited investors. But that’s not what we are discussing. We are talking about assst protections and the benefit the DST has for CA investors and others.

@Karen T. Like I said baseless mongering with zero facts. @Scott Smith and I set up an enormous amount of these for our clients nation wide and in CA. YES, DST as in delawre Statutory Trust. WE use DST as asset protection for clients. As licensed attorneys we take our jobs and ethics very seriously and Anytime somebody like you attack’s with zero basis and facts and can’t support a single claim you make I will push back. AND Hard. You sell deferred tax trusts. Big difference. AnD the exact title of this forum is Delaware Statutory Trust. Again reading comprehension! Sorry you Are a victim monger who has contributed zero to this forum. Read the Statutes posted númerous times as well as the title of the forum, and the first two posts and the statutes I told you to read. But I guess actually research into something different is to much to ask you. You sell deffered tax trusts not Delaware statutory trusts that we are talking about in this forum. Support on thing you claim. Just one. Oh wait you can’t since it’s baseless accusations.

@James Galla yes thats a good question. A Delaware Statutory Trust is treated as a trust, rather than an incorporated entity such as a limited liability company, for tax purposes. There are several things you must do to keep a the DST from being pierced or having the Series structure collapse. To maintain that treatment you must stay in compliance with the IRS regulations, or they will classify you as a business entity. The IRC is the internal revenue code which is the foundation of our legal knowledge to know how the trust will be treated for federal and franchise taxes. IRC Section 301.7701-4(a). Taxation of the DST as structured use accomplishes tax treatment as a trust and not as a business entity. We maintain strict compliance with the IRC code and 12 Del.C. 3801.