Tax Guru-Ker$tetter Letter

Tuesday, March 09, 2004

Harrison Abstract Case
Because I know many of the people involved in all sorts of ways in this mess, I have been following this case closely. This article in the Harrison paper, claiming that Dian Brown gave up all ownership rights to the properties she bought with the stolen money, is a completely wrong interpretation of what it means to deed property into the name of a living trust.

I wrote a response to the paper's editor yesterday, and as of last night it hadn't been posted to their website. However, it is up there as of this morning. I don't like repeating myself, but such misunderstandings regarding living trusts and asset protection strategies are very common; so here is my letter regarding the Dian Brown case.

Your description of the new ownership of Dian Brown's property as a "trust fund" is misleading. A living (aka revocable) trust is an estate planning technique used to avoid probate on a person's assets after they pass away. While the individuals are alive, the tax and other ownership rights are exactly the same as if the properties were owned directly in the individual's name.

While many people believe they can hide assets from lawsuits and judgments by titling them in the name of a living trust, that isn't the case. Using a separate legal entity, such as a corporation, LLC or FLP (family limited partnership) is more effective at providing that level of protection.

In either case, Dian Brown's transfer of her ownership in property in an attempt to avoid repercussions from her alleged thefts could very easily be classified as a fraudulent conveyance and set aside if needed to make any restitution as may be ordered by the court.

I just wanted to clarify the misleading impression that your story gave; that Dian Brown has been able to hide her property from any action in this case.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/09/2004 10:45:00 AM Send this post: