Legal Note - The Drawback to Tenancy by the Entities

Spouses should avoid the principle disadvantage of TBE ownership – joint liability. Both husband and wife are liable for joint obligations arising from, for example, joint ownership of dangerous and/or active assets (such as automobiles and active businesses). Such joint liability (in turn) exposes other assets held TBE (if not otherwise statutorily exempt from creditors or sheltered in a protective entity). Assets which potentially create joint liability should therefore generally be held in an entity, to shield joint owners from any liability arising from the asset. The entity itself may often be held TBE (generally without any exposure to joint liability arising from the underlying property). Insulation of dangerous assets within a protective entity therefore helps avoid joint exposure to the liability derived from such assets.

Gary Forster is a Florida native practicing in all areas of business transactions, personal planning and tax matters, both domestic and international. Gary handles a variety of corporate, personal and tax planning matters, ranging from wealth protection and corporate structuring to complex business reorganizations. Mr. Forster has designed and drafted hundreds of asset protection plans involving domestic and foreign corporate and trust structures. Gary is a member of both the Florida Bar (admitted October 8, 1993) and District of Columbia Bars (admitted February 6, 1995), including bar sections for international and tax law. Gary is also a member of the U.S. Tax Court. Gary earned an undergraduate degree from Tufts University in 1990, graduating cum laude, with majors in Spanish Literature and Economics. Gary graduated from law school at the University of Florida in 1993 with honors. Gary earned the Masters in Taxation degree in 1994 from the University of Florida where he was a graduate fellow. Mr. Forster writes and lectures frequently on international tax, corporate law and asset protection issues. Gary speaks Spanish fluently. Circular 230 Disclosure: PURSUANT TO INTERNAL REVENUE SERVICE CIRCULAR 230, WE ARE NOT PERMITTED TO RENDER CERTAIN TAX OPINIONS UNLESS WE CONDUCT AN INDEPENDENT INVESTIGATION OF THE RELEVANT FACTS OF A TRANSACTION. AS THE ABOVE NOTE WAS PREPARED TO PROVIDE GENERAL INFORMATION TO OUR CLIENTS AND CONTACTS, WE HAVE NOT COMPLETED THIS INDEPENDENT INVESTIGATION. THIS ARTICLE MAY NOT THEREFORE BE RELIED UPON AS LEGAL ADVISE OR FOR THE PURPOSE OF AVOIDING FEDERAL TAX PENALTIES OR PROMOTING, MARKETING, OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED MATTERS ADDRESSED HEREIN. ANY TAX ADVICE CONTAINED HEREIN IS NOT INTENDED OR WRITTEN TO BE USED AND CANNOT BE USED BY A TAXPAYER FOR SUCH PURPOSES.