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Probably a dumb question about taxable account (asset protection)

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  • Probably a dumb question about taxable account (asset protection)

    So we have a small taxable account right now, joint. Will be putting in a larger amount in a few days from my husband's stock vesting. Before we throw it into the joint account, would it be safer to open one just in his name and put the money there? Or would it not matter in a lawsuit situation, it would be seen as a joint asset no matter whose name it was in?

  • #2
    You do not live in a community property state, nor is tenants by entirety available in Utah.

    I believe that means if it’s opened in his name it would be protected in the event of a malpractice lawsuit.

    With that being said, you’re in a specialty with very low litigation risk, in a state that has favorable malpractice laws. I wouldn’t stress too much about a malpractice suit.
    “Work” is a four letter word for good reason.

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    • #3
      Originally posted by Lithium View Post
      You do not live in a community property state, nor is tenants by entirety available in Utah.

      I believe that means if it’s opened in his name it would be protected in the event of a malpractice lawsuit.

      With that being said, you’re in a specialty with very low litigation risk, in a state that has favorable malpractice laws. I wouldn’t stress too much about a malpractice suit.
      Well I currently have an ongoing lawsuit:-/ I was initially named along with several other folks and was then taken off with the university being the named party alone. So I don't expect any financial consequences whenever the lawsuit ends but I'm obviously more paranoid about this than someone who hasn't been sued. So I think we'll go ahead and open one in just his name and contribute there from now on. Thanks for the info!

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      • #4
        Originally posted by wideopenspaces View Post

        Well I currently have an ongoing lawsuit:-/ I was initially named along with several other folks and was then taken off with the university being the named party alone. So I don't expect any financial consequences whenever the lawsuit ends but I'm obviously more paranoid about this than someone who hasn't been sued. So I think we'll go ahead and open one in just his name and contribute there from now on. Thanks for the info!
        Yeah that puts things in a completely different context! Sorry you’ve had to deal with that.

        There was a thread recently about the Utah Asset Protection Trust, which may be worth consideration in the future.
        “Work” is a four letter word for good reason.

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        • #5
          Originally posted by Lithium View Post

          Yeah that puts things in a completely different context! Sorry you’ve had to deal with that.

          There was a thread recently about the Utah Asset Protection Trust, which may be worth consideration in the future.
          Yeah, I saw that. . . Seems so complicated and I'm so lazy. And now I'm at the VA where it's supposedly impossible to get sued. I think if I ever leave and pursue pp, I'd have to do the trust thing first though. The idea of going through a lawsuit without a big organization behind me, is terrifying, so I don't know how likely that is.

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          • #6
            isnt divorce still more likely....?

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            • #7
              Originally posted by Peds View Post
              isnt divorce still more likely....?
              Meaning in a divorce he doesn't have to split his taxable account with me? I won't go into specifics but I'm ok with taking that risk.

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              • #8
                It sounds like you are asking about a single transfer of assets from one account your husband has into a new account. I haven't looked into the effectiveness of Tenancy by the Entirety before because in both states I'm licensed in, this isn't an option, and none of the other attorneys in our firm have ever asked me to work with their clients in other states. That said, I wouldn't be surprised if in many states that have laws allowing these accounts, there are inroads for creditors to crack these accounts anyway. That's a state-by-state question. It sounds like you're perhaps in Utah? Utah doesn't have Tenancy by the Entirety accounts. While putting money into retirement accounts like IRAs usually provides some asset protection, I don't know enough about your situation to know if this would be a good idea for you.

                Regardless, whenever discussing asset protection, it's hard to do so effectively without looking at the whole picture for each client, and based on what I know from your posts above, all I can say is retirement accounts like IRAs usually provide some asset protection. To discuss the topic generally, AP is foremost about two major issues. First, we deal with big picture planning regarding protecting a person's total net worth against future sources of likely creditor risks. Second, we look at how to protect specific streams of income (ideally in advance of developing those streams of income). Individual transfers of assets you already have that are just moving from one place to another are not big candidates for asset protection because for one thing, the liability that can attach to those assets already exists and it can be traced back to them, even if you transfer them. Also, if we're going to do effective planning for those assets, it's much better to look at your entire overall risk picture than to just spend time on one transfer. Until you have an asset protection attorney helping with your whole picture, dealing with individual transfers or small amounts of assets is not an approach that should provide a person assurance that all is well. After the major issues are in order, having a side conversation about an individual transfer could lead to a good idea and strategy, but for you, quite possibly not for the reasons mentioned already regarding your transaction.
                Last edited by Gavin West; 12-14-2020, 09:44 AM.

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