Planning Administration Litigation. Articles State Variations 2. The Duty of Loyalty 5. Preserving the Assets 2. The Estate Planning Implications 4. Proceedings in Multiple Courts 5. The Stripping Out of Fiduciary Duty 2. Bankruptcy Reform 2. Introduction 2. Background 2.
Issues 7. The Pugachev decision is interesting as it comes soon after the Panama Papers and Paradise Papers and the considerable publicity given recently to tax avoidance involving hiding assets offshore. It is also interesting because the claimants based their case on three separate arguments so as to cover all the angles. In the event they won on all three counts. Following the financial crisis the bank suffered losses and was ultimately declared insolvent in The trusts held assets largely for the benefit of Mr Pugachev, his partner and their minor children.
The trusts were governed by New Zealand law and were set up with the assistance of a New Zealand solicitor. The solicitor and his wife were directors of the companies that acted as trustees. There was in fact an earlier case involving these trusts brought in the New Zealand Court where the original trustees had been removed with the agreement of the Court.
Although the New Zealand court suggested that it considered the trusts to be neither illusory nor shams, this was apparently based on deficient and incorrect information given to the New Zealand Court. Mr Pugachev was the protector of each of the trusts, with Viktor named as successor protector. Mr Pugachev fled Russia and moved to England. Hence the case was heard in the English Court.
He was also sentenced to two years' imprisonment for contempt of Court which he has not served as he fled to France. Mezhprom Bank and the DIA the claimants , sought to "bust the trusts" and enforce the judgement against the assets of the trusts on three separate bases:.
The Court concluded that these were bare "illusory" trusts. Mr Pugachev was the settlor, discretionary beneficiary and protector of the trusts. He retained extensive control because he could dismiss the trustees and veto how they exercised their powers, and consequently retained beneficial ownership of the assets he put into the trust. The Court decided that it was a sophisticated and subtle form of sham. Therefore, a creditor could force the owner of a revocable living trust to terminate the trust and surrender the assets.
October 20, An important estate planning goal of yours may be to ensure that your money and other property ultimately pass to your heirs rather than to your creditors. One common estate planning tool used for this purpose is a trust. Essentially, a trust is a legal arrangement under which the creator often called a grantor or settlor transfers ownership of assets into the care of another person the trustee to be administered for the benefit of another person or group of people the beneficiaries.
The document that establishes the responsibilities of the trustee and the rights of the beneficiaries is called the trust instrument, trust agreement, or simply the trust. A will is an important component of estate planning, and a number of online will makers offer tools for generating legal forms and documents. Experts suggest seeking legal counsel from an attorney that can take into account your individual estate-planning needs.
Other less frequently used types of wills include holographic wills, oral wills , and pour-over wills. This is what you can find in a will: a list of assets and debts, including any family heirlooms, the contents of safe deposit boxes, property, and vehicles. You can leave your possessions to heirs, friends, or charities. A will can be effective in an estate transfer and other legal proceedings after death, but there are drawbacks that you should be aware of.
Your estate will become part of the public record, for example, and anything left by a will must go through probate court. Also, probate attorneys can be expensive and cannot be avoided except in California and other specific states. If you die intestate without a will , what happens to your property, bank accounts, securities, assets, and even the guardianship of your minor children will be determined based on the intestacy laws in your state. It can lead to long court battles and financial hardship for your loved ones.
If you have minor-aged children at home, it's important to have a will that appoints guardianship of your children. If a guardian is not appointed at the time of death, your surviving family will have to seek help in a probate court to have a guardian appointed for your children.
The person appointed may not be one whom you would have wanted to be entrusted with your kids. It would be best to consider how you will pass a portion of your estate to a minor child through a will. A will places your decisions in the hands of the judge presiding over your estate transfer.
Your testamentary will carries out your wishes from beyond the grave. A will also allow you to give insight and direction over the handling of assets your beneficiaries will receive.
Within reason, you can address how you would like them to use what you have left them. While children natural or adopted have a statutory right to inherit, a will allows you to disinherit a child if you choose to do so check your state laws for the specific details about this.
A person can disinherit a spouse as well, under certain circumstances. However, you will need to be aware of the laws governing your state—whether it is a common-law state, a community property state, or an equitable distribution state; a person may only disinherit a spouse in a community property state. Each has a different set of stipulations on what and how much can be disinherited. Note, too, that a person can only disinherit a spouse or child through a will.
If you die without a will, called intestate, the state gets involved, and it will oversee the distribution of your assets. If you have minor children and die intestate, the court will appoint a guardian. Besides, the courts follow a set formula of how to divide assets, and it could result in actions that could negatively impact a surviving spouse or child.
A will protects survivors against estate tax liability as well. As of , U. A trust is another method of estate transfer—a fiduciary relationship in which you give another party authority to handle your assets for the benefit of a third party, your beneficiaries. A trust can be created for a variety of functions, and there are many types of trusts. Overall, however, there are two categories: living and testamentary.
A will can be used to create a testamentary trust. You can also create a trust for the primary purpose of avoiding probate court, called a revocable living trust. Let's focus on a revocable living trust for estate transfer. Like a will, a trust will require you to transfer property after death to loved ones. It is called a living trust because it is created while the property owner, or trustor, is alive. It is revocable, as it may be changed during the life of the trustor. The trustor maintains ownership of the property held by the trust while the trustor is alive.
Unlike a will, a living trust passes property outside of probate court.
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