ases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Commun

PART 1: ASSET PROTECTION: JOINT TENANCY, TENANCY IN COMMON, TENANCY IN ENTIRETY & COMMUNITY PROPERTY

THE CONCEPT OF ASSET PROTECTION includes the possibility of placing title in certain assets in the name of a less vulnerable spouse or other family members, or a legal entity. One should be very attentive in transferring title without an open invitation to a “fraudulent transfer” claim against the asset transferred as a result of the possibility of death by the spouse or a family member, or the possibility of a dissolute marriage, or even a court judgment.

Fraudulent conveyance has to do with transferring assets at less than the “fair cash value” thereby defrauding a potential creditor or the intentional divesting of assets which become unavailable for satisfaction of a lawsuit. Fair cash value means cash or near cash value at the time of transfer, not the price you paid for the asset. Example: you transfer your portion of your equity in your home to your wife for $100.00 and the fair cash value of your portion of the equity was $250,000 or you transfer title to your car to your brother for $10.00.

The most common methods of holding assets by INDIVIDUALS:

- Joint Tenancy - Joint Tenancy with right of survivorship - Tenants in Common - Tenancy by the Entirety - Community Property

LEGAL ENTITIES (Artificial person created by application of law):

- General Partnership - Limited Partnership - Limited Liability Company - Corporation under Chapter “C” - Corporation under Sub Chapter “S” - Revocable Trust (There are many Revocable Trust variations, since a Trust is nothing more than a Contract) - Irrevocable Trust (There are many Irrevocable Trust variations, since a Trust is nothing more than a Contract) (Read part 2 "Asset Protection: General/Limited Partnership, Corp Chapter "C"/Chapter "S", LLC, Trusts")

JOINT TENANCY

In the United States Joint Tenancy is common for real estate, bank accounts, brokerage accounts, and other assets. Husband and wife are both named on the deed to their home. This is a very bad idea. In my opinion, anyone recommending Joint Tenancy is uninformed and is perhaps guilty of malpractice.

Disadvantages of holding title in Joint Tenancy:

1. Loss of step-up in basis upon the death of the first Tenant. You bought the house for $100,000 some years later the cost basis is still $100,000 there’s no step-up in basis at the time of death. 2. Loss of estate tax protection. 3. Possible exposure of the assets to the creditor or the other Tenants. This is extremely and dangerously significant because any Tenant can transfer the asset to someone other than the other Joint Tenants WITHOUT PERMISSION from any of the Joint Tenants. 4. Joint Tenancy disinherits all other heirs, except the remaining Joint Tenant. 5. Possibility of a gift tax consequence may result from the transfer of property into Joint Tenancy. 6. Title in Joint Tenancy supercedes any provisions of a will. 7. Joint Tenancy supercedes any trust with the loss of all trust benefits.

Advantage of Joint Tenancy:

In small estates title of Joint Tenancy does avoid unnecessary delay and unnecessary cost of the probate process.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP

Joint Tenants automatically inherit the property. There are six characteristics: 1. Each Tenant acquired or was vested with the title at the same time. 2. Each Tenant acquired title by the same instrument or deed, or action. 3. Each Tenant owns an equal and undivided interest. 4. Each Tenant has the right to possess the “whole” property (dangerous in cases of frivolous litigation). 5. Each Tenant has the right to survivorship. 6. Interest may not be transferred by will.

TENANCY IN COMMON

Tenancy in Common has the following characteristics:

1. Separate but undivided interest in the property. (Each Tenant has his own deed/title to his share). 2. Ownership interest in the property may be varying in proportions (Fractional shares i.e. 1/3, 1/2). 3. Interest in the property may be transferred by will. 4. All tenants have equal right to possession. The risk of separate ownership is the risk. In cases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Communi

ity was $250,000 or you transfer title to your car to your brother for $10.00.

The most common methods of holding assets by INDIVIDUALS:

- Joint Tenancy - Joint Tenancy with right of survivorship - Tenants in Common - Tenancy by the Entirety - Community Property

LEGAL ENTITIES (Artificial person created by application of law):

- General Partnership - Limited Partnership - Limited Liability Company - Corporation under Chapter “C” - Corporation under Sub Chapter “S” - Revocable Trust (There are many Revocable Trust variations, since a Trust is nothing more than a Contract) - Irrevocable Trust (There are many Irrevocable Trust variations, since a Trust is nothing more than a Contract) (Read part 2 "Asset Protection: General/Limited Partnership, Corp Chapter "C"/Chapter "S", LLC, Trusts")

JOINT TENANCY

In the United States Joint Tenancy is common for real estate, bank accounts, brokerage accounts, and other assets. Husband and wife are both named on the deed to their home. This is a very bad idea. In my opinion, anyone recommending Joint Tenancy is uninformed and is perhaps guilty of malpractice.

Disadvantages of holding title in Joint Tenancy:

1. Loss of step-up in basis upon the death of the first Tenant. You bought the house for $100,000 some years later the cost basis is still $100,000 there’s no step-up in basis at the time of death. 2. Loss of estate tax protection. 3. Possible exposure of the assets to the creditor or the other Tenants. This is extremely and dangerously significant because any Tenant can transfer the asset to someone other than the other Joint Tenants WITHOUT PERMISSION from any of the Joint Tenants. 4. Joint Tenancy disinherits all other heirs, except the remaining Joint Tenant. 5. Possibility of a gift tax consequence may result from the transfer of property into Joint Tenancy. 6. Title in Joint Tenancy supercedes any provisions of a will. 7. Joint Tenancy supercedes any trust with the loss of all trust benefits.

Advantage of Joint Tenancy:

In small estates title of Joint Tenancy does avoid unnecessary delay and unnecessary cost of the probate process.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP

Joint Tenants automatically inherit the property. There are six characteristics: 1. Each Tenant acquired or was vested with the title at the same time. 2. Each Tenant acquired title by the same instrument or deed, or action. 3. Each Tenant owns an equal and undivided interest. 4. Each Tenant has the right to possess the “whole” property (dangerous in cases of frivolous litigation). 5. Each Tenant has the right to survivorship. 6. Interest may not be transferred by will.

TENANCY IN COMMON

Tenancy in Common has the following characteristics:

1. Separate but undivided interest in the property. (Each Tenant has his own deed/title to his share). 2. Ownership interest in the property may be varying in proportions (Fractional shares i.e. 1/3, 1/2). 3. Interest in the property may be transferred by will. 4. All tenants have equal right to possession. The risk of separate ownership is the risk. In cases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Commun

my opinion, anyone recommending Joint Tenancy is uninformed and is perhaps guilty of malpractice.

Disadvantages of holding title in Joint Tenancy:

1. Loss of step-up in basis upon the death of the first Tenant. You bought the house for $100,000 some years later the cost basis is still $100,000 there’s no step-up in basis at the time of death. 2. Loss of estate tax protection. 3. Possible exposure of the assets to the creditor or the other Tenants. This is extremely and dangerously significant because any Tenant can transfer the asset to someone other than the other Joint Tenants WITHOUT PERMISSION from any of the Joint Tenants. 4. Joint Tenancy disinherits all other heirs, except the remaining Joint Tenant. 5. Possibility of a gift tax consequence may result from the transfer of property into Joint Tenancy. 6. Title in Joint Tenancy supercedes any provisions of a will. 7. Joint Tenancy supercedes any trust with the loss of all trust benefits.

Advantage of Joint Tenancy:

In small estates title of Joint Tenancy does avoid unnecessary delay and unnecessary cost of the probate process.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP

Joint Tenants automatically inherit the property. There are six characteristics: 1. Each Tenant acquired or was vested with the title at the same time. 2. Each Tenant acquired title by the same instrument or deed, or action. 3. Each Tenant owns an equal and undivided interest. 4. Each Tenant has the right to possess the “whole” property (dangerous in cases of frivolous litigation). 5. Each Tenant has the right to survivorship. 6. Interest may not be transferred by will.

TENANCY IN COMMON

Tenancy in Common has the following characteristics:

1. Separate but undivided interest in the property. (Each Tenant has his own deed/title to his share). 2. Ownership interest in the property may be varying in proportions (Fractional shares i.e. 1/3, 1/2). 3. Interest in the property may be transferred by will. 4. All tenants have equal right to possession. The risk of separate ownership is the risk. In cases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Commun

does avoid unnecessary delay and unnecessary cost of the probate process.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP

Joint Tenants automatically inherit the property. There are six characteristics: 1. Each Tenant acquired or was vested with the title at the same time. 2. Each Tenant acquired title by the same instrument or deed, or action. 3. Each Tenant owns an equal and undivided interest. 4. Each Tenant has the right to possess the “whole” property (dangerous in cases of frivolous litigation). 5. Each Tenant has the right to survivorship. 6. Interest may not be transferred by will.

TENANCY IN COMMON

Tenancy in Common has the following characteristics:

1. Separate but undivided interest in the property. (Each Tenant has his own deed/title to his share). 2. Ownership interest in the property may be varying in proportions (Fractional shares i.e. 1/3, 1/2). 3. Interest in the property may be transferred by will. 4. All tenants have equal right to possession. The risk of separate ownership is the risk. In cases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Commun

ases where there are multiple owners, it’s difficult to have a consensus opinion acting as one without the risk of diverse opinions. Section 1031 like exchange of real estate as a Tenant In Common is widely used to transfer property Tax-free.

TENANCY BY THE ENTIRETY

A special kind of title between married couples, meaning that each spouse has the right to enjoy the underlying property by the entirety and when one of the spouses dies, the other inherits the property by the entirety. Tenancy by the Entirety has the following characteristics: 1. Tenancy by the Entirety may only be created by Husband and Wife. 2. Tenancy by the Entirety offers the right of survivorship. 3. Neither spouse may transfer or convey title to a third person without consent of the spouse. 4. Title converts to Tenancy in Common upon divorce.

COMMUNITY PROPERTY

Title to property deemed to be owned together by both spouses regardless of who purchased the asset until separation or divorce. The major characteristics of holding title by Community Property are basically governed by Community Property states in which the spouses are domiciled during the marriage. As a general rule, most property acquired by either spouse during the marriage and while domiciled in the community property state is deemed to be community property and owned jointly by each spouse.

Generally there are a few exceptions, but you need to consult with each Community State:

1. Property received by one spouse through gift or inheritance. 2. Property received through separate property owned by the spouse outside the community property rules, i.e. rents on separate investment real estate. 3. Through ownership by some other legal entity:

- Partnership - Trust - Corporation - Limited Liability Company

Community states are:

- Arizona - California - Idaho - Louisiana - Nevada - New Mexico - Texas - Washington State - Wisconsin