Asset Protection

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With added uncertainty due to the COVID-19 pandemic, asset protection is a concern for many individuals.  Trusts can be used to protect assets from creditors in addition to helping individuals achieve their estate planning goals (such as avoiding probate, minimizing taxes, planning for incapacity, and maintaining control of assets after death).  Individuals, especially those in certain professions having a greater risk of being sued (for example, doctors, lawyers, and small business owners), should consider using trusts for asset protection.

More specifically, two types of Missouri trusts, a Missouri Asset Protection (“MAP”) trust and a Qualified Spousal Trust (“QST”), provide options for protecting assets.

It is also important to understand the asset protection provided to property owned as “Tenancy by the Entirety”.  In Missouri, Tenancy by the Entirety property (“TBE property”) is property owned by a married couple.  Property is presumed to be TBE property if it is owned jointly in the names of a married couple.  TBE property is owned by the marriage and not by either of the spouses individually, so neither spouse can sell TBE property without the consent of the other spouse.  TBE property is generally not subject to one spouse’s debts or liabilities.  However, TBE property is subject to debts or liabilities of both spouses.  When the first spouse dies or the spouses divorce, the property is no longer protected.  Additionally, when the surviving spouse dies or if both spouses die at the same time, the property may be subject to probate.

What is a MAP trust?

A MAP trust is an irrevocable trust that can be created by single and married individuals.  An irrevocable trust means the maker of the trust (commonly referred to as the “Grantor” or “Settlor”) cannot amend or otherwise change the trust once it has been created.  The Grantor may not be the sole beneficiary of either the income or principal of the trust.  The trust must include a spendthrift provision, which prevents the Grantor from assigning his or her interest in trust assets and creditors from attaching to those trust assets.  Any distribution of income or principal must be in the sole discretion of the trustee.  It is generally recommended that the trustee be someone other than the Grantor or a close family member to ensure that the trust assets are not considered “available” to the Grantor.

The Grantor does not retain any control over the assets held in a MAP trust.  Because the trust assets are not available to the Grantor, the assets are not available to the Grantor’s creditors, and thus, not subject to the Grantor’s debts or liabilities.  A MAP trust may be the only option for asset protection for single individuals and is the only option for full asset protection for married couples with debts or liabilities against both spouses.  However, once assets are transferred to a MAP trust, the assets are no longer available to the Grantor and the trustee determines if and when to make distributions from the trust.

What is a QST?

Prior to 2011, married couples were not sure if they could transfer TBE property to their joint revocable trust and get the same asset protection provided to TBE property had they continued to jointly own the property in their names, as mentioned above.  In 2011, Missouri created a new law allowing married couples to transfer TBE property to a QST without losing the asset protection provided to TBE property.  In 2015, the law was changed to allow either spouse to transfer separately owned property to a QST without first having to retitle the property as TBE property.  Any separately owned property transferred to a QST would then get the same asset protection provided to TBE property.

A QST is only an option for married couples.  A QST is revocable, meaning the married couple retains control over the trust assets, including the ability to revoke the trust and remove the assets.  A QST can be structured so that property is held in one share for the benefit of both spouses, or held in two separate shares (essentially two separate revocable trusts, one for each spouse) administered under a single joint trust umbrella.

The asset protection a QST provides applies whether the property is held in a single share or in two separate shares.  As with TBE property, the assets held in a QST are generally not subject to an individual spouse’s debts or liabilities but are subject to debts or liabilities against both spouses.  Additionally, when the first spouse dies or the spouses divorce, the property is no longer protected.  An exception to this is if, right before the first spouse dies, his or her interest in the QST was held in a separate share for his or her benefit, then the property held in that separate share may pass to an irrevocable trust (with a spendthrift provision) for the benefit of the surviving spouse.  This essentially protects one-half of the married couple’s assets when the first spouse dies rather than lose all protection had there only been a single share under the QST.

 

Author:  Alison Vaccaro, Estate Planning Attorney

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Combination with Sandberg, Phoenix & von Gontard P.C.

I am thrilled to announce Affinity Law Group, LLC has combined with Sandberg Phoenix & von Gontard P.C., effective Monday February 19, 2024.

 

Why Sandberg Phoenix?  In my months of discussions with Sandberg Phoenix, it became crystal clear the combination provided immediate demonstrable benefits for our clients. With multiple offices in Missouri, Illinois, and Florida, and attorneys licensed in additional states, we will provide Affinity clients unparalleled support and bench strength in the practice areas in which Affinity historically excels such as corporate law (including mergers & acquisitions), employment law, and wealth transfer planning. As a result, Affinity clients will receive more proactive communication, improved responsiveness, and faster turnaround times on legal projects.  In addition, because Sanberg Phoenix is a full-service law firm, Affinity clients will gain access to additional practice areas including intellectual property, tax advice and controversy, as well as fiduciary/trust, employment, and commercial litigation.  Affinity clients will enjoy the opportunity to have one firm to address their needs across all practice areas and across the country.

 

In addition, the values of Sandberg Phoenix and Affinity align.  For example, “We Put People First”. The Affinity team will be joining Sandberg Phoenix – my colleague, Jason Kinser, my Executive Assistant, Angie Brandt, and my Trusts and Estates Paralegal, Sienna Johnson, will all join Sandberg Phoenix, ensuring that Affinity clients experience a smooth transition and consistent staffing on their matters.  Janet Arrow, our Accounts Manager, will remain with Affinity during the transition period before exploring opportunities with Sandberg Phoenix.

 

For me personally, the combination with Sandberg Phoenix means I will have a full administrative team to support me, allowing me to forego many administrative responsibilities and spend my professional time doing what I love – partnering with my clients to navigate life’s transitions; developing innovative approaches to the issues, opportunities, and challenges that impact clients daily; mentoring and coaching attorneys and staff; and delving into the emerging technologies which will allow us to provide more efficient legal services to our clients now and in the future.

 

What do you, an Affinity client, need to do in the Affinity/Sandberg Phoenix combination?  Nothing!  Because of the transaction structure, all Affinity clients and matters automatically transfer to Sandberg Phoenix effective February 19, 2024. If you have active matters with money deposited in Affinity’s trust account, the deposits will automatically move to Sandberg Phoenix’s trust account during the transition. Your billing rates will not change because of the combination.  I will be personally overseeing the transition and your matters going forward.  If you have questions or need additional information, please contact me on my mobile phone at 314-608-9165.

 

My new contact information effective February 19th is:

 

E-mail: kbilderback@sandbergphoenix.com
Direct Dial: 314-425-6933
Mailing Address: 120 South Central Avenue, Suite 1600, Clayton, Missouri 63105

 

We will maintain our Des Peres office during the transition. Previously scheduled meetings will take place at the Des Peres location unless you prefer to meet in Clayton.

 

Please note: if you have active matters, you will receive a final invoice from Affinity for work performed on or before February 18, 2024, payable to Affinity Law Group, LLC under our customary terms and conditions.  Legal work performed on or after February 19, 2024, will be billed by and owed to Sandberg Phoenix. To learn more about Sandberg Phoenix, visit www.sandbergphoenix.com.

 

One of Sandberg Phoenix’s values is “We Wow Our Clients Everyday”. With the best wishes of Affinity’s Emeritus Members Bob Guest and Ira Potter, Jason, Angie, Sienna, and I, along with the Sandberg Phoenix team, anticipate the opportunity to “Wow” you in the weeks, months, and years to come. 

 

Thank you for your business, friendship, and support over the years. I look forward to serving you at Sandberg Phoenix for many years to come.

 

Sincerely,

Kathleen Bilderback, JD, LLM