|Posted: October 19, 2005, 4:20 am - IP Logged|
Your FIRST priority is to protect your windfall from LIABILITY. By establishing a trust you establish a separate entity in which to title the funds. There are practical reasons for this. Let's say one day you get into your car and with every intention to exercise due care you look first in all directions and seeing nothing you very slowly start to back out of your parking space. What you did not see was that little kid on his trike now squashed under your wheels....dead. No doubt his family will now sue you into oblivion. If you claim your winnings in your own name (bad idea) you now expose those funds to the consequences of your actions. However, if those funds are held in trust (good idea); it WILL be successfully argued that the trust was NOT behind the wheel when you were. The distinction is established on IRS Form SS4. Every trust is formed not just with a name but with what really counts is the FEIN issued by the IRS upon application. This number is the equivalent to your Social Security Number. It cements the IDENTITY to the ENTITY of the trust vehicle SEPARATE from you and ALL your future errors, acts and omissions.
Another example comes to mind. Let's say you are a bitter, jealous creep who can't stand the possibility that your ex-wife is getting on with her life. So, one night you go over to her house to pick ANOTHER fight with her only this time you get totally out of control. You start to stab her about a 1000x when, quite by accident a stranger happens to walk by and in your furry you stab him too. You are then tried for the double murder and for a variety of reasons I won't get into here; you are aquitted. Next, the families of both victims sue you in civil court. This time you are found to be FINANCIALLY LIABLE for the 2 deaths to the tune of $60m+ (sound familiar ?)
So how is it possible for OJ Simpson to lounge away his days on the golf course with this judgment going unpaid ? Because, before he slaughtered 2 people, he had the foresight to transfer many of his assets into separate trusts in anticipation of an uncertain future. But hey, s--t happens.
Preparation, it's not just for BoyScouts anymore !!!
Annuities are for Lovers...Lumps are for LOSERS !!!