As we started 2011, there was a lot of uncertainty in the area of regional planning and asset protection. For most of 2010, we expect 2011 to greet us with a 55 percent property tax on all assets over $1 million. Towards the end of 2010, President Obama gave in to Republican demands for a reprieve on this exorbitant death tax and agreed to reduce the estate tax for 2011 and 2012 to 35 percent, for a total of $5 million in relief. If you plan to die within the next two years, you may feel relieved. However, if you plan to live well beyond 2012, uncertainty remains. Starting today, the property tax rate for 2013 will return to 55 percent, with only the $1 million exemption amount. We hope for the best but have to plan for the worst, which is why we recommend that our clients establish an Irrevocable Life Insurance Trust for all life insurance policies over $250,000 and a Bypass Trust for all marital property over $2 million. As estate laws change, we will continue to update you so you can better serve your clients and protect yourself and your family.
The world of asset protection also changed little in 2010. On June 24, 2010, the Florida Supreme Court issued its long-awaited opinion in the case of Shaun Olmstead, et al., v. The Federal Trade Commission and raised the question of whether Florida limited liability companies (LLCs) would continue to impose order protections. A collection order is a recovery that a member creditor in an LLC may receive from a court instructing the entity to provide creditors with any distributions that would otherwise be paid to partners or members of the entity. Generally, creditors who receive charge orders with respect to a member’s interest in the entity do not have the authority to mandate distributions from the entity or to participate in the management and affairs of the entity, nor can they access the assets of the entity. company.
A collection order is governed by state law, and in many states, a collection order is the creditor’s exclusive remedy with respect to the debtor’s LLC membership. However, Olmstead’s decision allows creditors to “break through the corporate veil” of the LLC and access the true assets of the LLC. While the LLC in question at Olmstead is a single member LLC, many attorneys are concerned about the slippery slope that would allow the piercing of multiple LLC members as well. This is definitely something we will be keeping an eye on in the coming months.
