A properly drafted, implemented, and funded irrevocable trust is a great way to hold and protect assets. First, the assets and the problems are separated from the person.
Boston, MA (PRWEB) November 20, 2013
UltraTrust.com recently released an investigative financial report due to the lawsuit [Sanchez v. Quezada, Docket # c-000109-13, Superior Court of New Jersey] filed against Pedro Quezada, the 44-year old man who won $338 million in Powerball winnings or approximately $152 million after federal and NJ state taxes. According to the Trentonian, Ines Sanchez, Quezada's former live-in girlfriend of 10 years and mother of their daughter, is claiming a portion of the earnings. (1)
UltraTrust.com claims Quezada could lose up to half of his lottery winnings - more than what is currently left from his spending spree since winning.
“With a lot of money, comes a lot of problems,” exclaims Rocco Beatrice, Managing Director of Estate Street Partners, parent company of UltraTrust.com, a site dedicated to advice on estate planning and irrevocable trust planning.
According to the Trentonian, Quezada has already given away much of his $152 million winnings. He sent $57 million to the Dominican Republic, $5 million was given to others and another $300,000 was used to purchase a house in Clifton, NJ. However, The Record reported $20 million is not unaccounted for. (1, 5)
Sanchez's lawyers are contending that Quezada bought the lottery tickets on their shared earnings since they jointly owned a grocery store in Passaic, New Jersey. However, attorney's for Quezada argue that Sanchez has no case since they were never married. (1)
On Friday, November 8, New Jersey Superior Court Chancery Judge Margaret Mary McVeigh ruled Pedro Quezada's after-tax $152 million lotto winnings will not be frozen during the trial of the lawsuit but she did not discharge the lawsuit in which Sanchez is fighting for a share of the lotto windfall. (1)
“This [lawsuit] is exactly why one should not own significant assets in their own name,” advises Mr. Beatrice. “When you own assets directly in your own name, you run the risk of lawsuits because attorneys see these assets as easy to get and they tend to be open to taking cases on contingency if they think they can easily collect.”
In the report, UltraTrust.com suggests an easy solution that may avoid lengthy and costly court litigation. UltraTrust.com advises others that as with any asset that may greatly appreciate, to properly draft, execute, and fund an irrevocable trust such as their own estate planning tool, the UltraTrust, a premium irrevocable trust agreement. There is nothing stronger. The irrevocable trust owns the asset before it appreciates significantly.
The UltraTrust.com financial report points out that Quezada could have avoided problems by having an irrevocable trust take possession of the ticket before cashing it in.
“An irrevocable trust is a great way to hold and protect assets. First, the assets and the problems are separated from the person. Second, the assets can grow and be passed on to the next person with no gift or estate tax,” explains Mr. Beatrice.
"Let's say that Quezada funded an irrevocable trust with $2000 with which to purchase lottery tickets. That $2000 is well below the federal exemption for gift tax. That $2000 is also not owned by Quezada anymore. The trust then purchases a $1 lottery ticket every week for 2,000 weeks."
In this case, if the trust won the lottery, then the trust would have received the millions. The trust then could have purchased whatever it desired and Quezada could have used it.
In this scenario, if someone claims a lawsuit for some of the money, they have to go after the trust and, in probability, they will have no ties to the trust on which to base their lawsuit.
With an irrevocable trust vs a revocable trust, Sanchez would not have been able to use her relationship as a live-in girlfriend with Quezada to claim the assets because Quezada would not, technically, have owned them and because assets in the trust are not a marital asset, they are protected - even if they were married.
“This also works for a growing business such as an LLC. The assets or value of the business can grow in the trust and be insulated from personal assets,” asserts Mr. Beatrice.
Quezada’s problems seem to be far from over. Though Quezada may have given much of his money away, he may still encounter problems in Sanchez’s litigation.
If Sanchez wins the case against Quezada then he may believe the money he sent overseas to the Dominican Republic is safe and out of reach from Sanchez. Notwithstanding, UltraTrust.com notes that this is not necessarily the case.
“Many people think that their assets are safe overseas. In fact, a whole business involving foreign trust accounts exists. The problem is that courts have started holding people in contempt to try to force them to give up their offshore trust assets [FTC v. Affordable Media, LLC, 179 F. 3d 1228 - Court of Appeals, 9th Circuit 1999],” warns Mr. Beatrice.
If the court sees Mr. Quezada as fraudulent he may lose more than his assets; he may lose his freedom.
To learn how to protect assets save on estate taxes and probate costs visit UltraTrust.com, the irrevocable trust experts. Visit MyUltraTrust.com for cost-effective do-it-yourself irrevocable trust plans online.
About Estate Street Partners (UltraTrust.com):
Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call today at (888) 938-5872.
1. trentonian.com/general-news/20131109/judge-no-asset-freeze-for-nj-powerball-winner 11/8/13
2. latino.foxnews.com/latino/news/2013/03/26/arrest-warrant-out-for-powerball-winner-pedro-quezada-who-owes-2k-in-child/?intcmp=related 3/26/13
3. latino.foxnews.com/latino/news/2013/04/01/powerball-winner-pedro-quezada-settles-30k-child-support-debt/?intcmp=related 4/1/13
4. judiciary.state.nj.us SANCHEZ VS QUEZADA, Docket #C -000109-13 11/9/13
5. northjersey.com/clifton/Former_girlfriend_of_Clifton_Powerball_jackpot_winner_asks_judge_to_freeze_assets.html 11/8/13