By Ron Holmes
Fortunately or unfortunately, I was a commercial real estate attorney during the last, great real estate bust (1987-1994). I had many successful clients, and knew of many more, who had amassed enormous wealth by hard work, ingenuity and adept risk taking in the real estate, only to see those fortunes disappear almost overnight. The 1986 Tax Act and the rewriting of the FASB Rules turned the real estate world on its head, almost without warning.
Most of my clients were already employing sophisticated entity structures to insulate one asset from another; however, those pesky personal Guarantees exposed their personal wealth during that dramatic downturn, with the unfortunate result that some lost it all. However, some did not. What was the difference?
Inter Vivos Trusts
In many instances, but not all, the simple difference was the creation of inter vivos trusts (domestic and off shore) to shelter personal wealth. Yes, the federal government through the FDIC, FISLIC and FADA attempted to penetrate those trusts, but were unable to penetrate those trusts that were properly established (that is, established at a time of solvency and not with a view towards defrauding creditors). If you want to protect your personal assets, you must do so before you get into trouble.
Now is good. Later might be too late.
I encourage you to plan now, while things are good, to protect your personal wealth when (not if) the world turns upside down again. We can help you with that.