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S itself ) as opposed to the LLC (or FLP) which can have the entity itself get the loan and benefit from that increase in basis adjustment.

12. The Business or Land Trust. The business trust is often used as an alternative to the other business devices to operate a business and add a level of privacy and potential creditor protection; or used to hold rental real estate. The trustee may be a person not owning the beneficial interests therein. Often family members may be effective holders of the generally "private" beneficial interests of the business trust. Warning - the beneficial interests may be attachable by creditors.

13A. Other Devices or Secrets. Other devices used include the Grantor Retained Annuity Trust (GRAT, GRUT, GRIT), Qualified Personal Residence Trust (QPRT), Self Canceling Installment Note (SCIN), Private Retirement Trust (PRT), selling to a Intentionally Defective Irrevocable Trust (IDIT), SOs, Pools, 1031 exchanges, 1031- TICs, Cost Segregation Depreciation on Real Estate, etc.

13B. Converting Non-Exempt Assets to Exempt Assets. In addition to homestead exemptions which have limited but effective value, one of the most powerful asset protection methods is converting the non-exempt assets to exempt status. This can be done is various ways including by trusts, pensions and (marital or separate) property or transmutation agreements. For example:

  • a.

    Private Retirement Trust (PRT). The PRT is one of the most powerful devices used to enhance an estate and business plan which protects the wealth, equity or assets transferred into this irrevocable trust for purposes of retirement. The authority of such a trust is a create of local state statute, which varies state to state. For example, in California, under its Code of Civil Procedure Section 704.115(b), all amounts held, controlled, or even distributed by a private retirement plan are exempt. This means that you could even transfer certain assets to a PRT during litigation or after a judgment. The term private retirement plan is not defined in the state code however, typically, the retirement plan would be sponsored by an employer (LLC), in writing pursuant to an actuarial calculation based upon numerous retirement factors including age. The California code states in part as follows:

    • 704.115.

      (a) As used in this section, "private retirement plan" means:

    • (1)

      Private retirement plans, including, but not limited to, union

retirement plans.

(2) Profit-sharing plans designed and used for retirement purposes.

(3) Self-employed retirement plans and individual retirement annuities or accounts provided for in the Internal Revenue Code of 1986, as amended, including individual retirement accounts qualified under Section 408 or 408A of that code, to the extent the amounts held in the plans, annuities, or accounts do not exceed the maximum amounts exempt from federal income taxation under that code.

(b) All amounts held, controlled, or in process of distribution by a private retirement plan, for the payment of benefits as an

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