Our Derivative Financial Instrument®
Asset Protection: Part 4 of 4, by Rocco Beatrice, Sr.
Our Derivative Financial Instrument® is the most decisive critical part of your estate planning:
Derivative Financial Instrument®
Our Derivative Financial Instrument® is a financial intermediation of a contractual method of [E]xchange in money or money’s worth, designed and implemented, to avoid fraudulent conveyance claims by a [P]ast; [P]resent; and a [F]uture (not yet born) creditor.
Our Derivative Financial Instrument® is engineered for estate planning to avoid the [T]trigger for: – IRS income taxes, gift taxes, estate taxes, and probate.
When timely and properly implemented, our Derivative Financial Instrument® will set the legal defense for potential civil conspiracy issues that may be advanced by the [P]ast; [P]resent; and [F]uture (not yet born) creditor.
Our Derivative Financial Instrument® is a restricted> long-term cash – asset class derivative contract executed at “fair market value,” non-marketable, non-amendable, non-assignable, non-transferable, non-anticipated, non-encumberable, whose market value is derived from the underlying asset, indexed to an IRS supported interest rate, terminating at death.
Our Derivative Financial Instrument® is the most critical decisive component to our Ultra Trust©
Our Ultra Trust© is an Irrevocable Grantor-Type Trust under Internal Revenue Code (IRC) 671-679 and IRS Regulation 7701-7. When implemented with an Independent Trustee, and an Independent Trust Protector, secured to our Derivative Financial Instrument®; our Ultra Trust© is financially engineered to avoid Fraudulent Conveyance claims, defend a claim of Civil Conspiracy, eliminate the Probate process, eliminate Estate Taxes, mitigate and eliminate the Medicaid and/or Medicaid state recovery under the Federal Medicaid Act 42 USC 1396 et. Seq., providing you with a secured unchallengeable estate plan.
Unchallengeable Estate Plan: Our Ultra Trust© locked to our Derivative Financial Instrument®DESCRIPTIONS
Derivative:
In finance, a “derivative” is a contract that derives its value from the performance of an underlying entity. The underlying entity can be a class of assets, i.e. cash or near cash, a futures contract, an option, collateralized debt obligation, insurance contract, a credit default swap, a stock, a time deposit, a general debt obligation , bonds, mortgages, or any underlying asset used as “the medium of [E]xchange.”
Intermediation:
Intermediation is the process of matching positives with negatives to develop a desired outcome in a new contractual obligation method of [E]xchange between third parties.
The underlying entity(ies) considered in our Derivative Financial Instrument®:
- Estate Planning
- Gift Taxes
- Intentionally Defective Grantor Trust (IDGT)
- Grantor Retained Annuity Trust (GRAT)
- Grantor Retained Unitrust (GRUT)
- Commercial Annuity
- Private Annuity
- Installment Sale
- Self Canceling Installment Note (SCIN)
- Treasury General Counsel’s Memorandum (GCM) 3953, May 7, 1986
- Estate of Moss v. Commissioner, T.C. 1239 (1980) acq. in result, 1981-2 C.B.1
- Estate of Costanza v. Commissioner, T.C. Memo 2001-128; reversed and remanded
- 6th Circuit, No. 01-2207, February 18, 2003
- Estate of Frane v. Commissioner, 998 F. 2nd ( 8th Circuit 1993)
- Lazarus v. Commissioner, 58 TC 854, August 17. 1972
- Estate of Musgrove, 33 Fed Cl. 657 (1995)
- Estate of Kite, T.C. Memo. 2013-43
- Estate of William M. Davidson, U.S. Tax Court Docket No. 013748-13
- United States v. Davis, 370 U.S. 65 (1962)
- International Freighting Corp. v. Commissioner, 135 F.2d310 (2nd Cir. 1943),
- United States v. General Shoe Corp., 282 F.2d 9 (6th Cir. 1960);
- Wood v. Commissioner, 39 T.C. 1 (1962)
- CCA 201330033; Treas. Reg. § 25.2512-8
- Revenue Ruling 80-80, 1980 1 C.B. 194
- Revenue Ruling 55-119, 1955 – 1 C. B. 352
- Revenue Ruling 86-72, 1 C.B. 253
- Revenue Ruling 68-392, 1968 -2 C. B. 284; and 69-74, 1969-1 C. B. 43
- Treasury Regulation 1.1275 4(c); (j); and § 25.7520-3
- Treasury Regulations § 1.72-6(e); and 1.1001-1(j), October 2006
- Life expectancy (determined under Reg. 1.72-9, Table V)
- Federal Medicaid Act 42 USC 1396 et. Seq.
- Internal Revenue Code (IRC) 72; and (IRC) 7520
Fair Market Value:
Fair market value is defined as “the price at which the property would change hands (the [E]xchange) between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts to the transaction.” The fair market value of our Derivative Financial Instrument® is generally determined under the annuity tables prescribed by the IRS. See 26 U.S.C. 7520(a); Treas. Reg. 20.7520-1. These tables provide a factor composed of an interest rate component and a mortality component that is used to determine the present value of an annuity. Treas. Reg. 20.7520-1.
Fraudulent Conveyance:
A fraudulent conveyance, or fraudulent transfer, is an attempt to avoid debt by transferring money to another person or company. In civil litigation the creditor attempts to void the transfer and make the asset available to him in satisfaction of his claim.
A transfer will be fraudulent if made with actual intent to hinder, delay or defraud any creditor. Thus, if a transfer is made with the specific intent to avoid satisfying a specific liability, then actual intent is present. However, when a debtor prefers to pay one creditor instead of another that is not a fraudulent transfer.
Under the Uniform Fraudulent Transfer Act you would be committing a crime, see Section 19.40.041
…. (a) a transfer made or obligation incurred by a debtor is fraudulent as to a creditor whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with actual intent to hinder, delay, or defraud any creditor of the debtor.”…
Fraudulent conveyance has to do with transferring assets at “less than the fair cash value” thereby defrauding a potential creditor or the “intentional divesting of assets” which would have been available for satisfaction of his creditor claim. This intentional disregard, can become a sticky-wicky, for a judge who does not like to be undermined in “his” court-room.
Civil Conspiracy:
The “civil conspiracy theory” has been defined by the courts as: (1) an agreement (2) by two or more persons (3) to perform overt act(s) (4) in furtherance of the agreement or conspiracy (5) to accomplish an unlawful purpose /or/ a lawful purpose by unlawful means (6) causing injury to another.
To be convincing, the creditor must allege not only the conspirators committed the act but also the act was tortious in nature. The conspiracy alone is not enough to trigger a claim for civil conspiracy without the underlying tort.
Avoiding the “Trigger:”
Gifting, by definition, is a Fraudulent Conveyance or Fraudulent Transfer because there is NO Exchange at the fair market value. Our Derivative Financial Instrument® solves this problem because the [E]xchange is at the fair market value.
REMARKABLE: Our Derivative Financial Instrument® is contract for which, NOT EVEN BANKRUPTCY COURT CAN UNWIND because it’s at Fair Cash Value and not to the detriment of the Creditor. The Derivative Financial Instrument® protects the assets even after the owner loses a lawsuit. This is because the courts cannot set aside the purchase . . . it’s not voidable by a creditor as a fraudulent transfer, nor by a bankruptcy court as an “executory contract.”
The “Trigger” for Estate Taxes is the value of ALL assets owned by the individual at the DATE OF DEATH, “the Gross Estate.” Our Ultra Trust©</> eliminates the “Trigger” because on the date of death, ALL assets are owned by your Ultra Trust© with an independent Trustee, and Independent Trust Protector. You cannot file an estate tax return.
You cannot Trigger the estate tax return, you own nothing on the date of your death. Your Gross Estate is below the taxable threshold.
Read part 1 of 4: Asset Protection Strategy
Read part 2 of 4: Asset Protection Strategy Consideration
Read part 3 of 4: Irrevocable Trust Structure
We look forward to our visit with you and your professional representatives to assist you with the advancement of your estate planning.
Cordially,
Rocco Beatrice, CPA (Certified Public Accountant), MST (Master of Science in Taxation), MBA (Master of Business Administration), CWPP (Certified Wealth Protection Planner), CAPP (Certified Asset Protection Planner), CMP (Certified Medicaid Planner), MMB (Master Mortgage Broker)
Managing Director, Estate Street Partners, LLC
Riverside Center Building II, Suite 400, Newton, MA 02466
tel: 1+888-938-5872 +1.508.429.0011 fax: +1.508.429.3034
email:
“Helping our clients resolve their problems quickly, effectively, and decisively.”
The Ultra Trust® “Precise Wealth Repositioning System”
This statement is required by IRS regulations (31 CFR Part 10, 10.35): Circular 230 disclaimer: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Helpful resources: Helpful next steps often include Revocable vs Irrevocable Trust, Case Studies, and official CFPB guidance for heirs when comparing planning options.
Where the next decision becomes clearer
Once Avoiding Fraudulent Conveyance: Derivative Financial Instrument® is on the table, the next questions usually center on risk, flexibility, and which planning step deserves attention first.
Points readers weigh before moving forward
- Timing matters because asset protection works best before a claim becomes immediate.
- Control matters because keeping too much direct control can weaken the protection people hoped to create.
- Funding matters because creditors usually look at what was transferred, when it moved, and how the structure operates.
Practical reading path
To keep the next step practical rather than abstract, readers often move to Asset Protection From Lawsuit, Asset Protection Trust, and Irrevocable Trust. When the question turns from reading to implementation, many readers move from these guides to a direct planning conversation.
