1. you give away all your assets to your wife
before any litigous event is known;
2. you, or a shell corporation, own the
plane only;
3.you or your wife do not support the plane
operation and maintenance costs from your personal incomes. Maybe you can
do so in terms of non-voting shares in the stock of the
plane.
4. You cannot have any voting rights or any
incidence of control of the plane.
so in a little more detail:
(1) give it all to your wife. this
only works in non-community property states, right?
ANSWER: Works in all states. This is a dangerous
proposition in a shakey marriage as your wife can divorce you and leave you
penniless. Really requires trust; but it is a way for some doctors to
protect their assets. They generally own the car they drive and that's
it. Keeps the liability of driving and practicing medicine all tied to
him. They also carry little liability insurance and do not own any of
the office equipment; etc. in their pratice. On paper they look rather
poor; but they have a large income that could be attached. I
proposed this option as a possibility but I was faceitous in making the
statement. I would not do it. This strategy also has problems with
estate taxes for high net worth individuals as estate taxes would be due when
the wife dies. Under a 50-50 arrangement with the proper trusts
established; you can pass on twice as much estate value to heirs before estate
taxes kick in.
(3) how do you get money into the
corporation except from your personal income, assuming such corporation
produces no income? e.g. suppose you are an employee of some other
corporation that is not interested in helping you with your airplane
habit. how else do you get money in?
ANSWER: Assume you own the plane
personally. Further assume you used your separate income say from a
rental house which was given to you through inheritance from your parents or
an inherited life insurance policy of your parents. This is separate
income and your wife did not have any right or previous control of the value
you received and has no legal right of control or attachment. Your job
income; however, may not be considered separate income and is assumed in
courts to be attachable to your spouse. Do you and your wife file income
taxes jointly or separately? This might have a bearing on the ownership
of your income. I assume that Social security may also be attached in certain
situations. Just ask some people that have gone through a divorce.
Sometimes SSI income is divided. In a marriage; I am under the opinion
that your income is considered shared income. I may be incorrect in this
matter but when you consider divorce case settlements, alimony etc. it starts
to make sense. Take for example divorced military persons required to
share their retirement income from spouses that were married to them for
several years during military service. Also consider the marriage partnership
is a shared experience; with shared respsonsibilities. The courts take
this into consideration. Law is based on prececidence and
history.
Here is the rub. You did everything right
in using your own separate income (as defined above) to purchase, build,
insure, maintain and fly. You did everything right. Make sure you
keep all documentation, receipts, cancelled checks and records to prove in
court that separate income was used. ALSO MOST IMPORTANT. Never
use any money from your wifes income. NEVER. This will, in the courts be
considered " a comingling of funds" which entitle here to a share in the
ownership. A share in the ownership in the courts also implies with it a
shared responsibility or liability and control. This is where the
protection starts to break down.
Example. You are single and own a home. You
have a girlfriend that moves in with you and shares in the costs of the home,
making payments on the mortgage etc. After a few years you
separate. Courts have determined that a common law marriage exists
and/or she has a right to a partial share in the home net worth even though
you did not sign any documents. The test here is the old saying; "If it
walks, talks and looks like a dog; it must be a dog" applies. You look
at the face value of the situation; not the legal construction.
(4) please elaborate. e.g. I formed
an LLC of which I am the only owner and only manager. this sounds
like a complete flunk. so who does have voting rights and
control the airplane?
ANSWER: The test for this question is: Who
makes the decisions? Who maintains the plane? Who flies the plane?
Who provides the funds? Smart and aggressive attorneys always look
beyond perceived ownership to find the real owners and controlling interests.
Enuf said.
Bottom line is you cannot escape liability for
your actions that cause harm or damage to other persons. We are
responsible for our actions and there are consequences. Sure we can make
it difficult for others to collect from us through LLC's, corporations etc.;
but a determined foe can persistently hound us and make it very difficult and
sometimes achieve sucess. There is always a price that must be paid. I
suppose that is why bankruptcy is a valid legal instrument. It provides
a means for mercy to be exercised in the legal system where justice
demands to be satisfied. The roots of this concept, justice and mercy as
typified in the symbol of the balancing scale held by the woman in long
robes is rooted in ancient Jewish law where we have obtained much of our
western legal system laws.
SO, have fun and enjoy safe flying and realize we
are all responsible for our actions.
Safe flying.
Bob Smiley
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