Sign Rhode Island Assignment of Partnership Interest Fast

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hi good morning it's Ken karate again and we're here Saturday May 23rd Memorial Day weekend so one exciting thing Memorial Day weekend we get Monday off which really I'm not sure what the difference will be for a lot of people for the ride working from home so that being said I hope you do have a happy and safe Memorial Day weekend take a minute to you know think about the reason that we have the holiday and acknowledge these individuals who do a great job for our country and provide a service as well as those that it actually paid the ultimate sacrifice for everything that we have so that being said what we're going to do today it's been half an hour talking about tenancy by the entireties so this is a form of ownership property ownership that can be between spouses assuming that certain elements are satisfied and the benefit of tenancy by the entireties is that if the creditor of one spouse is trying to satisfy a judgment so if we have a doctor and a stay-at-home spouse the doctor has a potential creditor claim coming down the road any assets that are owned is tendance by the entireties by the two spouses would not be subject to the potential creditor claim of the spouse that's different than an asset that's owned as tenants in common and that's different than an asset that the doctor would own individually so we'll talk about that in more detail but this is one of the simplest things that you can do to help provide protection for yourself and/or for your clients and it's also a very easy thing to make a mistake and then advertently not have tenancy by the entirety protections so again going forward I wanted to just let you know we've got a couple of webinars that are going to be playing next week both of which will be given by Anne Alan's what clients need to know about bankruptcy hopefully nothing but some clients may be in a situation where they need to know more and so what I will do for half an hour is give you some highlights on what to look for from a bankruptcy perspective it is something for of importance and then Saturday morning talent is in his wheelhouse creditor protection for physicians as many of you know Alan speaks regularly on this topic so having half an hour of insights on cam on keep going supposed to your personal planning and or for clients and their family and friends it's going to be well worth the time to do that we've also got a list of the upcoming presentations you get a break from me until Thursday June 25th and then we'll be sharing Thursdays together hopefully and go from there all right so a couple of items we've got the quotes here number four to start and I know I used it last week but considering we're talking about spouses I do really enjoy the Rodney Dangerfield my wife and I were happy for 20 years and then we met we've got a few other ones in here which you can read hopefully it'll give you a little letter came in that's our our version with the Saturday funnies all right so again it wasn't raining window of built the ark and the reason that we put this slide in here is to talk to you when we do about tenancy by the entireties recognize how important it is to make sure that the title is taken correctly from day one because that really is one of the key elements is that you own the asset as tenants by the entireties between spouses so going to and be introduction tenancy by the entireties frequently if you're reading legal material or if we talk about something and we say tbe that means tenancy by the entirety it's derived from English common law and the main presumption is that the well it used to be husband and wife now it's thousands under Florida law because this is available for anyone who is married under Florida law so the main presumption is that both spouses own a hundred percent of the property as individual unit now both spouses either of them have the right to sever the property but a creditor can't force that and so what that means is that if a creditor of one spouse is owed money they are not able to look to any assets that are owned is tenancy by the entireties to satisfy the judgment the only thing that would stop or that the protection is not afforded to you for tenancy by the entireties assets from a creditor standpoint would be a joint predator so if a husband and wife decide to take a loan out or two spouses decide to take a loan out and they signed a joint guarantee then because they are both on the guarantee that could subject their tenancy by the entirety assets to satisfy the judgment however comma it if only two if you want to think about it if only one spouse times the guarantee then that would not expose the tenancy by the entirety asset to the potential satisfaction of a debt that was owed by the one spouse if one spouse lives outside of Florida then you may be in a situation where you're dealing with the law that's applicable for the state and it's also important to realize that if you look some states recognize tenancy by the entireties like Florida does meaning that it gives you a great amount of protection and it's extremely beneficial to provide you you know with that protection from creditors etc it applies basically to all aspects if not all assets in Florida now if you go to some other states it only applies to real estate or it may only apply to tangible property or in a worst-case scenario they don't recognize it at all so when you're making investments in states outside of Florida or if you're talking to a client who is outside of Florida or has investments outside of Florida that's a discussion that you want to have to make sure that you're not just assuming that the tenancy by the entireties protection here in Florida would apply outside for instance and we touched on this last weekend is that if you as husband and wife bought a property in Georgia that property is not owned as tenants by the entireties its own descendants and common meaning that you own 50% your spouse owns 50% and if you have a creditor claim 50% of that property could be subject to the creditor claim now if you buy property here in Florida as husband and wife presumption is that you're going to have that owned as tenants by the entire and you might just have bought you know numerous pieces of property here in Florida and expect that you would have the property owned s tenancy by the entireties that's going to be a shock to you when you find out that its tenants in common and now you don't own it with the spouse but now the creditor is looking at getting a portion of the property so the workaround for that is to establish a Florida LLC the Florida LLC can be owned by the spouses S & S by the entireties and then the Florida LLC can purchase the Georgia property you know the benefit of that is twofold one if someone does slip and fall on the property and there's the creditor claim or creditor situation the liability is going to be limited to the assets of the LLC and none of the assets with other assets will be exposed but then to in the event that there's a creditor situation of one of the two spouses by owning the assets as tenancy by the entireties the assets not going to be subject to the individual creditor claims of beavers fat's that's again extremely important a couple of other items on tenancy by the entireties so this is the portion of the show where if you want to look and memorize this slide you're going to be able to bore your children which I'm running out of ways to do honestly after two months with three kids we're very lucky they're great kids twelve and the other twins are nine our oldest is 12 but after three months there's really only so much you can do to embarrass your children without the help of their friends because really that's one of the better things about being a parent so anyway so tenancy by the entireties like we talked about it goes back to English common time is kind of give you the reasoning behind it and again just highlights the point you need to be careful if you are dealing with states outside of Florida so for the definition of tenancy by the entireties and I apologize for anyone that went to law school that we're bringing you back to property class as a 1l those are memories that you've probably suppressed and don't really want to go back to too much but it is important to just talk about the definition of a tenancy by the entirety asset so number one is you to be a possession what this means is that both spouses have control and joint ownership of it it makes it difficult to do planning in some situations because of the fact that both spouses own the property and have control over the property specifically and we'll touch on it later if you're interested in trying to form a trust that would be owned as tenancy by the entireties it's a little bit of a gray area it's a very technical area it's something that we would recommend making sure that you have reviewed by Council to make sure that it is something they're comfortable with this does not blow the tenancy by the entireties protection because when you start talking about the control of assets on desk and how assets will pass on death that's what makes it more difficult the unity of interest that just means that each spouse has the same amount of an interest in the account so each spouse could withdraw 100 percent of the account the unity of interest does not refer to the assets going into the account so it's acceptable that one spouse contribute all the assets to the tenancy by the entireties account once that contribution may the account it's a tenancy by the entireties asset and either spouse has full access to all the funds it doesn't mean that the spouses have to put the assets in fifty-fifty unity of time this is the one that trips up a lot of people and it sounds like it's a little bit of legwork it is a little bit of legwork but if you can fix something before a potential predator situation is even on the horizon and be sure that you own it is tendency by the entirety as opposed to potentially having an issue I would rather give a little bit of light work and so what this is is that if one spouse has created an account and so let's say we open an account at the local investment bank and I have it in mind and I've decided after listening to this wonderful webinar that I would like to go and change the name to a tenancy by the entireties account because my wife Karen and I I feel better with that because of the chance you know she's a better driver she drives a lot more slowly than I do it's a lot less likely that she's going to have a claim than I will so let's put it in tenancy by the entireties asset let's get it out of mine if I go down to my local bank and I take the account that's in my name and I say I'd like to add my wife Karen to the account and I'd like to switch this to a tenancy by the entireties account if they just add Karen and they you know do some internal work to the bank a creditor could claim that it's not a tenancy by the entireties account because when the account was actually established I was the only one established which goes that air-defense established the account which is the unity of time issue it's much safer for me individually on the client or for you as a practitioner to recommend to clients that what they do is open up a new account it can be it's the same investment institution I know if they have check writing on it they're going to have to get to checked if they have all the deposits we're going to have to go through all that work it's not fun but if they open up a new account that's titled as tenants by the entirety then it's clear that that's what the account is and so what they can then do is transfer the funds that were in the one spouses name or in my example in my cons in my account into the tenancy by the entireties account and we should be good to go as far as having the protection going forward so I just want to point out that one of my three dogs made an interest in the room card that we're not on video but he's the old lady of house and she gets to go wherever she wants to so hopefully she'll be quiet and we won't carry barking in the background but that I can't guarantee I think I have the kids interested in us on tic-tock that they should still be good for probably the next 24 hours but definitely for the next 15 minutes the other three items for the definition of a tenancy by the entirety community of title only yourself under the same title survivorship when one spouse dies the other becomes sole owner of the properties you're not able to designate where the property would pass other beds should be surviving spouse in the unity of marriage of course that you have to be legally married under Florida law and again that is legally married if you're reading older books you'll see references to husbands and wives or tenants by the entireties just read that as spouses as tenants by the entirety one thing I'd like to point out is going back to the survivorship items of a tenancy by the entirety asset and we'll touch on this a little bit more detail going forward as well if a husband and wife owned and absalom tenancy by the entireties and the husband dies the assets past the wife the wife does have the ability to or the surviving spouse fish that does have the ability to execute a disclaimer whereby he or she would refuse to accept the 50% ownership interest that she would inherit as a surviving spouse and then that 50% ownership interest would pass through probate and funds the living trust of the first dying spouse in certain situations assuming basic planning so it's a situation where you can have the creditor protection during life time you can still get half of the value of the assets into a creditor protected trust assuming that the surviving spouse doesn't have a creditor situation at the time that the disclaimer needs to be executed when when the first passes away and you know further assuming that the documents are drafted appropriately for that so it's an option that we have we can talk about it a little bit more detail nature and type of assets with even if you're not going to be looking at tenancy by the entireties we're just talking about allocating assets between the husband and wife to spouses and again I'm not sure why you wouldn't put tenancy by the entirety that seems like the safest most reasonable easy thing to do for most of the assets but just be conscious of the fact that if you have one spouse who is much more likely to have a creditor claim that maybe you place more assets in the name of the spouse who doesn't have the potential liability you know it's very easy to do the protections not as good as tenancy by the entireties the protection certainly not as good as combining tenancy by the entireties with a limited liability company or liability partnership but if you're looking for a quick fix that might be the way to go and that just discuss a little bit more on this slide so again it's it's like most quick fixes in life it's not the best option it's just an option and if it's the only option you have it's better than nothing if that's the only thing that the client will do it's better than nothing but at the same time it's not as good as what you could have from a protection standpoint so again retitling in the logo spouse is something simple to do I did want to touch quickly on the LLC planning errors that we find if you're familiar with some of the literature that our firm is produced you know we've often had webinars on LLC's how to maintain LLC's mistakes that we find with respect to the maintenance of LLC's and/or forms of LLC's and how those impact the potential creditor protection that you have and how they often would impact the potential estate tax savings that you have if you're using it as a state tax savings vehicle for part of your planning and so this was an article 2 element written all the way back in May of so six we've updated it but I wanted to show you this slide because it shows that it's one of them one of the most common mistakes that we see for over 14 years something to be very much aware of is that if you think that you have a LLC interest its own is tenancy by the entireties you need to make sure that the operating agreement actually functions in a way that doesn't violate any of those six rules that we t lked about earlier so we lived it like provision be a provision under the operating agreement that restrict you transfer if one spouse doesn't automatically receive the interest on the death of the other spouse that could mean that we violated the rules that we talked about so if we go back survivorship number five definition of Tennessee by the entirety on the death of one spouse the other spouse has to become the sole owner of the property so if you have language and your operating agreement that prevents that then even if the operating agreement states that the husband and wife or two star the spouses are owning the property as tenancy by the entire tenants by the entirety they're not are they potentially or not because of the fact that they can't satisfy the six elements that we talked about earlier so it's one thing to make sure of is that if you're relying on tenants by the entireties ownership of a membership interest in an LLC whether it's voting or non voting for if you're relying on the tents by the entireties ownership interests for a membership era partnership interest in a limited partnership or limited liability limited partnership again it doesn't matter we're talking limited partner general partner if you're looking for that tenancy by the entirety ownership interest you need to carefully read the operating agreement to be certain that there are no restrictions in there that inherently cause the potential issue you know and we have language in our operating agreements we'll be happy to share with you one of the things that are in there is we do have a boilerplate clause at the back that you know notwithstanding anything here in to the contrary with respect to any interest its own this husband and wife or by spouses as tenants by the entireties that the following so apply you know and we also have modified our operating agreements that when we do have by the entirety ownership centers some of your language that we would have in there that we're concerned would violate the elements of a tenants by the entirety interest and we've removed that language as well so it encourage you if you would like to be anything more either about the eight steps or if you'd like some of the language that we're talking about here or any language that we'll talk about or any other slides that you're interested in just go ahead and send me an email we'll be happy to go ahead and send that information off to you a couple other items stock certificates it's a presumption of tenancy by the entireties unless it's specified as something else and then that's one thing that's important to think about now before we get to tax reporting systems I would like to point out there's not material in here but if we go back to the idea of the presumption that if I check the box of tenancy by the entireties tenets by the entireties asset if I have the option of checking sentence by the entireties or checking joint with right of survivorship if I checked you're a good writer survivorship I now own that with my spouse jointly writer survivorship what that means is that I don't have the protection that I would otherwise have other Tempe by the entireties same idea isn't by jet the boxer can it's in common I no longer own that assets as tenants by the entireties with my wife and therefore because I don't own it as tenancy by the entireties half of that asset would be potentially exposed to a potential creditor that I would have for potential creditor that my wife would have whereas if I had selected the tenancy by the entireties box then that would be a problem solved so again to focus on what we talked about earlier if I have opened up an account at a brokerage account and I did not open to this tenancy by the entireties and I had the option to I am going to open a new account with my spouse as tenants by the entireties transfer the old funds in there now I've got attempts by the entireties account nice and clean going forward if you take away one thing from this webinar today that's what you need to take away all right now if you are opening a bank account a lot of banks you not offered tendency by the entireties because technically we require the signature of both spouses on every withdrawal you know every check etc so if the bank does not offer tenants by the entireties on the account and you therefore owner there's tenants in common or you know joint tenants the court will assume that you intended to own it as tenants by the entirety so it's deal Bank versus it's a case that we have the citation to it a little bit so there is that presumption there that if you don't have the option they'll presume you would prefer to have the protection of tenants by the entireties but if you did have the option and you picked one the court is going to honor what you picked so again it's something that's extremely important when you're looking at it from a creditor protection standpoint you know it's the same idea with the life insurance if you don't have the beneficiary designation made payable to the correct trust or if it's just table outright to a beneficiary instead and it was a mistake it's something that be you know the Devils in the details it's something that's very very very important to make sure it's done correctly because the downside could be catastrophic it's a little bit of legwork it's a little bit of detail but if you make sure it's done correctly you're going to have a huge benefit for families for the above family whether it's yours or your clients tax reporting it's kind of a little bit of a gray area according to the IRS instructions tbe owners you know should receive two separate k1 forms the problem with that is that it's a bad fact if I own a penance by the entireties interest in an LLC with my life we own 100% my CPA gives me a k1 for 50% and a CPA to Karin for 50% it doesn't look like TDE because again TD is 100% ownership by both of us from our standpoint it normally be better to just mark you know that it's going to both spouses as tenants by the entireties have it be one k1 assuming that the husband wife or filing or spouses are filing a joint return have it is one k12 both of them 100% attendance by the entireties using one of their social with a joint returns not going to make a difference from an income tax standpoint if they are in a creditor situation and you've got an aggressive attorney on the other side I'd rather be able to show them that the operating agreements show the ownership is tended by the entireties and the k1 clearly shows 100% tenants by the entireties rather than 50% the spouse 150 percent the spouse to again it would not necessarily be controlling but if you can avoid a bad chat why not avoid a bad fact it contracts to purchase real estate just make sure that it's as kind of by the entirety so when you make that deposit you know the deposit it might not be a hundred percent clear but it's tenants by the entirety kind of in common just clarify with the addendum if it's not clear but it is tennis by the entirety something simple that you don't think about but if you put down a significant cons on a home and it's not your homestead and then the creditor situation happens you know again if something that easily can be addressed why not take it off the table that's something that would be a concern either whether it make you lose a little bit of sleep later or from a creditor protection standpoint could be potentially an issue one items note US Treasury bonds cannot be owned as tended by the entireties so that's there are certain assets that cannot be owned that way this is one of the more prevalent ones that we run into tax refunds it's presumption basically under Florida law that if it's from TV you know that it would be TV property but you need to make sure that the refunds does get deposited into a TV account for that to be result to happen a tangible personal property physical non real estate assets so basically if a tangible personal item is located out of the state of Florida it may not be recognized as attendance by the entireties outset because the situs of the tangible personal property may control so if you're concerned about that you can do a confirmation listing assets that they are owned as tenants by the entireties another option would be to have maybe be if your have personal items that are inside home maybe you have those assets owned by an LLC you have the ownership interest proving LLC again as tenants by the entirety there's things that you can do to help clarify for a lot of people this isn't a significant risk obviously but if you do have valuable personal assets that are outside of the state of Florida that's something you may want to be aware of and/or consider is that the situs of the local law could apply with respect to the personal property that you have there automobiles and vehicles we normally recommend you do not want to have in hand so don't be husband and wife is headed by photography you know that's an example of where if you have assets interims tennis by the entireties who could a joint creditor be a joint creditor could be someone who just got hit when one spouse owns an automobile but varies driving the automobile but they own the automobile eyes and husband and wife as opposed to just husband or just wife it might be a little bit work more work if the spouse passes typically you don't need to have a probate to get title to the vehicle you're disabled go to the DMV with a copy of the will and the copy of the death certificate and get the title taken care of but for the amount of protection that it affords even if you had to have a little bit of hassle to get the title buscar' after the first time spouse dies it's still worthwhile to take care of it real estate outside of Florida we talked about that owning it through an LLC and again talked about the idea that it needs to be in the operating agreement that respects what terms by the entireties is couple of eggs points on pens by the entireties because just between husband and wife and we live here in Florida or between spouses rather and live here in Florida it's just a two-person account we don't recognize multiple marriage therefore that's not going to happen a couple other things to talk about are that the IRS can invade TB gasps that's where only one spouse goes of taxes because they are super creditor so if you're in that situation realize that the ability to have the protection does not extend to that level if you're investing other real estate consider the ideas for bankruptcy etc what we talked about on this slide is the idea of trying to make it so that you're not both on the guarantee and or using your corporate structure to help limit additional liability joint revocable trusts it's again it's a gray area it's something that if you are trying to make a joint revocable trust and draft it correctly and still have it oh that's attempt by the entirety something that's extremely technical and I would recommend making sure that you either personally are very comfortable with it or have someone review it with you or go over the document to help make sure that it's dears that it would comply with the TENS by the entireties protection if you have a typical joint trust that you've drafted just because the estate tax exemptions no longer a concern and you'd rather try and get a step-up in basis on desk of the first nine spouse of all the assets and you want the simplicity of a joint trust that joint trusts typically is not going to allow for tennis by the entireties assets to be able to so just be aware of it make sure that you go into the situation understanding that you're letting go of a little bit of the degree of asset protection with a typical joint trust funding the bypass trust with genii property this is what we talked about the surviving spouse can execute a disclaimer within time period after day to death seeing that they haven't accepted the assets and one-half of the assets that would otherwise be owned by the spouse so if my wife and I own $500,000 accounts as tenants by the entireties I passed away she would own $250,000 and she would have the ability to disclaim the additional $250,000 to the bypass trust the other option is she would just have $500,000 individually now if she does disclaim the assets to the bypass trust you need to recognize she's not going to have a power of appointment over those trust assets meaning that on her death she won't be able to direct how they pass they would just pass pursuant to the terms of the trust instrument which typically would mean that they would pass to my three children in equal shares but it is a way of getting assets into the protected trust structure for the benefit of the surviving spouse and descendants only half the value can go in but what you need to be aware of is that like we have in number two if the non better spouse dies while the debtor spouse in a situation that spouse will not be able to have and will not be able executed disclaimer on the trust and more importantly now that spouse no longer can rely on the temps by the entireties protection and the creditor now has access to an assets that's owned 100% by the one spouse is tenants by the entirety that's why frequently what we would recommend is looking at forming an LLC the LLC can be owned mostly you know 95 97 98 percent by the spouses attendance by the entireties and can be owned the balance by an irrevocable gifting trust for the benefit of the children while both spouses are alive the trust would be ignored the whole structure could be ignored for income tax purposes so we wouldn't be generating additional tax returns and if one spouse died in our situation the surviving spouse who has the creditor claim now would have a membership interest in an LLC but the LLC would have multiple members so the creditor would only be limited to a charging order for protection purposes meaning that they would only be able to receive any distributions that came out from the LLC they wouldn't be able to force distributions from the LLC and then at that point then you remind on the LLC law to help provide that additional creditor protection that's no longer available because the thirst is best so again the simplest route always easiest but it's not always the best some there have been some concern that if I transferred assets from myself to an account for my wife in myself that we needed to go through a straw man third party that's no longer a concern so it should be acceptable to have the assets move directly from my spouse whose account to the two of us attendants by the entirety or vice versa a couple of special items we touched on all of these but again if you wanted just one side to remember here are some little things that just file away and trigger so we're talking about tenancy by the entireties and we're talking about real estate outside world Florida I need to remember there's something here we've got a kind of a one-page list that you can have on your desk or on your desktop showing the far left creditor exempt assets these are the assets that are exempt from vendor claims you'll see in there we have in the middle temps we by the entireties in the middle column are assets that are difficult and creditors to obtain so the top one would be the limited liability company interest like we just talked about having a charging order but not having access to the value of the assets and then the far right are the assets that would be exposed to a creditor so in our talk today the far right would be the tenancy by the entireties account after one spouse is passed away and unfortunately the spouse that passed away is the one that did not have the creditor claims so now I've got a surviving spouse with a creditor claim who knows 100% of an account and that's individual money on the far right that's now exposed so again looking forward that's what we would talk about we're not have time to go over today but I did want to provide you with some slides just showing how we would commonly structure assets between two spouses you know using the Florida tense by the entireties protection in the middle also using lifetime irrevocable gifting trust for the benefit of one spouse and/or for the benefit of the children and then adding the layer of the firewall lanning with the LLC's again if you are interested in this we'll be happy to go ahead and send you any of the slides as far as what we have here if you want to have the material so I just wanted to give those to you and I do not have enough time to get through them but I think they're pretty self-explanatory and the last item that we'd like to talk about that for any of the people attending the webinar today if you'd like to talk about any of the topics that we talked about today for 20 minutes we are making ourselves available you know to clients and their practitioners to help with questions that they have and we'll be happy to give you a you know free 20 minute call to discuss any of these items so if that's of interest feel free to send me an email and and when I receive that we can go ahead and schedule a time to talk so I hope you enjoy the rest of the day impressed that I got through two webinars without any dogs parking and without any children screaming so the children of either all killed themselves or are actually behaving so I'm going to go with behaving because I don't want to have to explain that one to my wife and I'm going to sign off again with Allen's favorite line if you're working practitioner may the rest of your day be billable thanks very much