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PDF DownloadHas the Warning Bell Sounded for Asset Protection Planners?
By David J. Slenn

Probate & Property Magazine: March/April, Volume 24, Number 2

Real Property|Trust & Estate

David J. Slenn is an associate in the Naples, Florida, office of Porter Wright Morris & Arthur and the vice-chair of the Trust & Estate Asset Protection Planning Committee.

A recent case out of the Sunshine State should give pause to the way some attorneys engage in asset protection planning. In
re Harwell, 414 B.R. 770 (M.D. Fla. 2009), involved a debtor who directed sums of money into his attorney"s trust account, despite the presence of a judgment. The debtor then instructed the attorney to make certain transfers from the trust account to various parties, excluding, of course, the creditor.

The bankruptcy trustee alleged that the attorney was the initial transferee and, without any defenses, was therefore liable for the transfers. In addition, the trustee claimed that the attorney was secondarily liable under both aiding and abetting and conspiracy theories. Although the court did not find the attorney liable for his involvement with the fraudulent transfers, the court closed its opinion by stating that "a warning bell has sounded for parties involved in 'asset preservation.""

Courts across the nation have encountered fact patterns similar to Harwell. Although much attention is given to an increasing number of cases involving "debt-birds" flocking to debtor-friendly states like the debtors in Republic Credit Corp. I v. Upshaw, 10 So. 3d 1103 (Fla. Dist. Ct. App. 2009), an increasing number of cases involve the attorney as a defendant for structuring such planning. Most practitioners would agree that Florida is not only debtor-friendly because of its plentiful exemptions but also advisor-friendly , with a relatively long line of cases absolving attorneys of any wrongdoing for their roles in asset protection planning.

Given the current and projected state of the economy, more and more clients should be seeking assistance from their estate planning attorney regarding their lifetime creditors, instead of the traditional focus on minimizing death taxes. Unfortunately for the inexperienced attorney, courts have been willing to extend liability to the attorney who assists in structuring a debtor"s assets in a fashion that injures a creditor"s rights.

Although the fraudulent transfer laws are fairly uniform, the secondary liability analysis for attorneys who assist in such planning varies among the states. Adding to the confusion is the self-settled asset protection trust (APT). The viability of APTs (whether onshore or offshore) still remains to be tested in the courts. States that have enacted onshore APT (otherwise referred to as domestic asset protection trust (DAPT)) statutes not only invite attorneys to implement asset protection trusts as part of the overall estate plan but, according to some, like Delaware attorney Dick Nenno, potentially obligate the attorney to do so. Richard W. Nenno, Planning with Domestic Asset Trusts , 16th Annual Real Property, Probate and Trust Spring Symposia, April 29, 2005, at 19. But whether the DAPT proves to be successful for a non-DAPT state resident remains to be seen. California attorney Jay D. Adkisson points out that there is no guarantee a non-DAPT state will respect the creditor protection aspects of a DAPT state in the first place . Jay Adkisson & Chris Riser, Asset Protection: Concepts and Strategies for Protecting Your Wealth (2004).

Although controversy still surrounds the viability of the APT, the estate planning attorney is the natural selection to draft such documents because the subject matter (drafting trusts) is exactly what an estate planning attorney does for a living. Whereas creating the traditional revocable trust would not raise creditor issues (because self-settled trusts historically have not provided creditor protection), creating an APT, or implementing any other asset protection plan, can (under certain circumstances) hinder, delay, or defraud a creditor—falling squarely within the ambits of complex fraudulent transfer laws in addition to common law torts of fraud and breach of fiduciary duty.

Thus, an estate planning attorney may feel pressured to engage in seemingly straightforward estate planning without having sufficient knowledge of the myriad unresolved legal issues, including the potential trap of underlying fraudulent transfers. In addition, many attorneys may feel pressured to use domestic asset protection measures with increased scrutiny from the IRS on offshore accounts. Unfortunately, traditional estate planners are not equipped with the level of expertise used by creditors" counsel in certain areas of law, such as bankruptcy, debtor-creditor rights, and fraudulent transfers. Ironically, the estate planning attorney who develops a thorough understanding of these areas of law acts to protect the client"s assets and the attorney"s assets.

Planning That Triggers Liability

It is important to note that asset protection planning has a long history in the United States and does not always involve fraudulent conduct. As the Supreme Court noted in Grupo Mexicano de Desarrollo v. Alliance Bond Fund, Inc ., 527 U.S. 308 (1999), "we suspect there is absolutely nothing new about debtors" trying to avoid paying their debts, or seeking to favor some creditors over others—or even about their seeking to achieve these ends through 'sophisticated . . . strategies."" (The Grupo Mexicano decision is fairly popular, having been cited over 2,000 times since 1999.)

Planning techniques that serve a legitimate purpose other than hindering the claims of current or foreseeable creditors have traditionally been accepted as safe. For instance, leaving the family inheritance in spendthrift trusts (as opposed to outright) typically does not raise any liability concerns for the attorney. Likewise, popular estate planning techniques such as an annual gifting program, sales to defective grantor trusts, and forming preferred partnerships serve the perfectly legitimate goal of minimizing death taxes due on a donor"s estate while passing assets and control to the next generation.

Adkisson has stated, however, "there is no estate planning exception to fraudulent transfers." "Ethical Issues in Asset Protection Planning," program at the ABA RPTE/Taxation 2009 Joint Fall CLE Meeting, Chicago, Illinois, Sept. 25, 2009. Indeed, perfectly legitimate estate planning transactions may later turn out fraudulent based on the client"s current financial position. If the attorney does not conduct a thorough solvency analysis and "get to know the client," as New York attorney Gideon Rothschild strongly recommends, the planning could have disastrous effects for both the client and the attorney. Gideon Rothschild & Daniel S. Rubin, Asset Protection Planning, Ethical? Legal? Obligatory? , Tr. & Est. 42 (Sept. 2003).

Common Forms of Attorney Liability

A review of asset protection planning case law reveals a recurring theme in the situations that trigger attorney liability. These are planning transactions in which a client desires to move assets in light of current or foreseeable creditor issues involving one or more of the following: the commission of a recent tort, loans, personal guarantees, divorce, and bankruptcy. If the attorney is a party to the transaction, either as a transferor or a transferee, then the attorney faces primary liability under the terms of the applicable fraudulent transfer statute.

Most attorneys, however, are neither transferors nor transferees in an asset protection transaction, with one growing exception involving disputes over fee retainers. See In re Harwell , 414 B.R. 770 (M.D. Fla. 2009); Credit Suisse First Boston Mortg. Capital v. Danning, Gill, Diamond & Kollitz , 101 Cal. Rptr. 3d 192 (Ct. App. 2009). Instead, attorneys face potential liability under one or more of three main categories: (1) secondary liability to a fraudulent transfer and/or an underlying independent tort (such as fraud or breach of fiduciary duty), (2) professional malpractice, and (3) violation of the state bar ethical rules.

Fraudulent Transfers

Each state prohibits the transfer of a debtor"s assets with the intent of hindering, delaying, or defrauding a creditor in collecting on a claim. Under the terms of the Uniform Fraudulent Transfer Act (UFTA), a creditor can seek to have the transfer avoided by showing a court that the debtor made the transfer with the actual intent to "hinder, delay or defraud" a creditor. Other states (such as New York) adhere to the predecessor of the UFTA, the Uniform Fraudulent Conveyance Act (UFCA). The UFCA is very similar to the UFTA; however, several distinctions should be reviewed but are beyond the scope of this article.

Because it is very difficult to show direct evidence of an actual intent to defraud, the UFTA allows a creditor to present indirect evidence of actual intent, sometimes referred to as "badges" of fraud. The badges of fraud commonly include the following situations: transfers to family members, transfers made without receiving reasonably equivalent value (that is, "gifts"), transfers to insiders, and transfers that leave the debtor insolvent. The list is not exhaustive and there is no mathematical formula to find the requisite amount of indirect evidence to establish actual intent.

UFTA also allows a creditor to demonstrate the existence of a fraudulent transfer by reference to the debtor"s solvency before and after the transfer. In general, if the debtor made the transfer and was unable to pay debts as they came due, the transfer amounts to "constructive fraud" and affords the creditor the same equitable relief as actual fraud.

Secondary Liability Categories for the Asset Protection Attorney

The most common forms of secondary liability are conspiracy and aiding and abetting. Generally, these forms of liability are dependent on an underlying independent tort such as fraud or breach of fiduciary duty. Courts also have imposed liability on attorneys through UFTA"s "catch-all" provision, which, in addition to the traditional remedies afforded under UFTA, allow a court to award "any other relief the circumstances may require."

Based on a national review of case law, attorneys typically face secondary liability for a fraudulent transfer in one or more of the following categories:

  1. the fraudulent transfer constitutes an independent tort;
  2. the fraudulent transfer is merged with an independent tort (usually fraud); and
  3. the court adopts a broad interpretation of the UFTA "catch-all" provision.

Category 1

Category 1 is fairly straightforward. A fraudulent transfer fact pattern may constitute a separate tort—with the two most popular torts being fraud and/or breach of fiduciary duty. If the underlying transfer constitutes an independent tort, a court will have a much easier time finding the attorney liable. Many courts adopt the view embodied in Restatement § 876(b) that a person who aids and abets a tortfeasor is himself liable for the resulting harm to a third person. According to Black"s Law Dictionary (5th ed.), a tortfeasor is "a wrong-doer; one who commits or is guilty of a tort."

A fraudulent transfer that involves a breach of fiduciary duty commonly arises in corporate transactions (such as a leveraged buyout). The existence of an independent tort is crucial for various reasons, including an increased likelihood of secondary liability for the attorney, the establishment of personal jurisdiction over the debtor, and the determination of proper law under a choice of law analysis.

Some courts have also carved out an exception for attorney liability in the case of aiding and abetting a breach of fiduciary duty. See Reynolds v. Schrock, 142 P.3d 1062 (Or. 2006), in which the court held that an attorney is generally not liable for aiding and abetting a breach of fiduciary duty unless the attorney acted outside the scope of the lawyer-client relationship. Indeed, the intent element necessary for aiding and abetting has varied across the United States, with courts adhering to various intent requirements such as "constructive knowledge," "general awareness," or "actual knowledge."

Category 2

Category 2 features courts that view a fraudulent transfer as enough of a "wrong" to support a conspiracy or aiding and abetting theory of attorney liability. For example, in Kekona v. Abastillas, 140 P.3d 436 (Haw. Ct. App. 2006) (Table) (unpublished opinion), the court stated: "Clearly, the enactment of the UFTA by the Hawai"i legislature made fraudulent transfers a 'legal wrong." We can think of no valid reason why those who conspire to make a fraudulent transfer . . . should escape civil liability for damages caused by the conspiracy." Perhaps these courts feel a tortfeasor is synonymous with wrongdoer—and no actual tort need be present.

A recent case from the Southern District of Texas held that an attorney can be liable for damages for a conspiracy to commit a fraudulent transfer in the event traditional remedies are inadequate:

Put another way, if one prevails on a conspiracy to commit a fraudulent transfer claim, money damages are only available (as opposed to return of the property and the like) if the remedies available under the UFCA—e.g., return of the property—are either unavailable (i.e., the property no longer exists or it has been transferred to a good-faith purchaser) or the property has so diminished in value that its return would not make the plaintiff whole.

Asarco LLC v. Americas Min. Corp., No. 1:07-CV-00018, 2009 WL 2168778 (S.D. Tex. July 20, 2009).

This conclusion assumes, however, that one has established a viable claim of conspiracy to commit a fraudulent transfer ab initio. Whether a fraudulent transfer itself is enough of a "legal wrong" to support conspiracy or aiding and abetting causes of action is a totally different issue.

Fraudulent Transfers and Common Law Fraud

In Bankfirst v. UBS Paine Webber, Inc. , 842 So. 2d 155 (Fla. Dist. Ct. App. 2003), the court affirmed the lower court ruling that the Florida Fraudulent Transfer Act (sometimes affectionately referred to as "FUFTA") did not create a cause of action against a party who assists a debtor in a fraudulent conversion or transfer of property when the person does not come into possession of the property.

The dissenting justice, however, commented: "If it is fraud for a debtor to convey assets to avoid creditors, what possible policy reason is there to immunize a lawyer who knowingly and willingly makes it possible for his client to commit this fraud?" Id. at 156. The dissenting justice did not draw the distinction between common law fraud on the one hand and a fraudulent transfer on the other.

Traditionally, fraudulent transfer laws have provided a remedy in equity—and have not been considered separate independent torts. This distinction is crucial and requires an understanding of how the elements of fraudulent transfer compare and contrast with an intentional tort such as fraud. If a court equates a fraudulent transfer with fraud, the transfer can support secondary causes of action. Specifically, some courts may see the term "defraud" in the phrase "hinder, delay or defraud" and equate this with common law fraud as the court did in McElhanon v. Hing, 728 P.2d 256, 263–64 (Ariz. Ct. App.1985).

In McElhanon, the attorney argued, unsuccessfully, that the trial court erred in its jury instructions for the attorney"s alleged conspiracy to commit a fraudulent transfer—which did not include the traditional elements of common law fraud. Instead, the jury was instructed to find the attorney liable for conspiracy to commit a fraudulent transfer if it found the attorney entered into an unlawful agreement with the intent to "hinder, delay and defraud" a judgment creditor.

This result, the attorney argued, would have the effect of holding an attorney liable any time the attorney advises "a debtor as to a conveyance which may somehow hinder a creditor from collecting a debt." Id. at 266. In other words, what if the fraudulent transfer was established through constructive (and not actual) fraud? The court found this argument without merit, because the jury was properly instructed that fraud is an action "of an affirmative evil nature, such as proceeding or acting dishonestly, intentionally, maliciously, and deliberately, with a wicked motive, to cheat or deceive one party, which results in that party"s damage or loss." Id.

To understand the difference between common law fraud and a fraudulent transfer, it is important to review the requirements of fraud, which generally consist of

  • a false representation by the debtor concerning a material fact,
  • the debtor"s knowledge of the falsity of the representation,
  • the debtor"s intention that the representation induce the creditor to act on it, and
  • a consequent injury to the creditor who acted in reliance on the representation.

As Rothschild recently stated in a panel discussion, a fraudulent transfer does not operate on the basis of any representation or omission—it merely operates on the existence of a claim and the client"s conduct in relation to the claim. "Ethical Issues in Asset Protection Planning," supra. Courts, however, have been willing to "blur the line" between an intentional tort (such as fraud) and an equitable remedy (provided by the fraudulent transfer laws). Adding to this confusion is the rule that, like allegations of common law fraud, claims under UFTA must comport with the procedural rules requiring that, in all averments of fraud or mistake, the circumstances constituting fraud or mistake be stated with particularity.

In Arena Dev. Group, LLC v. Naegele Communications, Inc. , No. 06-2806 ADM/AJB, 2007 WL 2506431 (D. Minn. Aug. 30, 2007), the U.S. District Court for Minnesota acknowledged the confusion between fraud and a fraudulent transfer after reviewing cases cited by both the plaintiffs and the defendant. The court found that a review of cases from other jurisdictions cited by both plaintiff and the defendants revealed considerable debate about whether a fraudulent transfer is a tort at all. The court declined to treat a fraudulent transfer as a tort.

The plaintiffs next argued that a fraudulent transfer could support secondary liability to nontransferees. The court disagreed and stated: "In general, courts have declined to impose liability on non-transferees based on conspiracy and aiding and abetting theories." Id. at *5. The court looked to Chepstow Ltd. v. Hunt, 381 F.3d 1077 (11th Cir. 2004), and Baker O"Neal Holdings, Inc. v. Ernst & Young LLP , No. 1:03-CV-0132-DFH, 2004 WL 771230 (S.D. Ind. Mar. 24, 2004) (in which the court held that "there is no accessory liability for fraudulent transfers under the Uniform Fraudulent Transfer Act").

In sum, most courts are reluctant to extend the reach of fraudulent transfer actions to include parties that are only participants in a fraudulent transfer. Of course, in blatant fraudulent transfer situations, which typically involve actual fraud, the circumstances leading to the transfer will typically support the finding of common law fraud.

Category 3

Under Category 3, some courts will use the "catch-all" provision to hold an attorney liable for a fraudulent transfer. But most courts have rejected the use of the "catch-all" provision to impose liability on attorneys and, in doing so, cite Freeman v. First Union Nat"l Bank, 865 So. 2d 1272 (Fla. 2004).

In Freeman, the Florida Supreme Court was asked to decide whether FUFTA encompasses a separate tort for aiding and abetting a fraudulent transfer. The court concluded that it does not and stated: "There simply is no language in FUFTA that suggests the creation of a distinct cause of action for aiding-abetting claims against non-transferees." Id. at 1276.

Similarly, in Chepstow, the Eleventh Circuit Court of Appeals adopted a textualist approach and held that the fraudulent transfer statute

makes no mention of parties other than debtors and "taking parties" (transferees) being liable, and there is no Georgia decision that construes it to provide a claim against aiders and abettors who do not themselves receive the transferred assets. We will not put into [the Georgia fraudulent transfer statute] a provision that the Georgia General Assembly left out of it and the Georgia courts have not read into it.

381 F.3d at 1089.
Since Freeman, the analysis for determining nontransferee secondary liability in either of the aforementioned categories has varied greatly among the states—and even within the states. Of course, the primary goal of the UFTA was to provide uniformity in the area of fraudulent transfers. So what can the attorney take from these cases when equitable remedies are merged with torts and the catch-all provision is interpreted broadly? Generally, the attorney increases liability risk for fraudulent transfers when a reasonably foreseeable creditor"s rights are injured through the attorney"s planning. Thus, for the careful asset protection attorney, the merger issue and the "catch-all" provision should not be a problem.

Secondary Liability in Bankruptcy Court

The good news for the attorney whose client winds up in bankruptcy is that the bankruptcy courts have been especially lenient in denying secondary liability claims against attorneys who were not transferors or transferees of the transferred property. As the often-cited court in Mack v. Newton, 737 F.2d 1343 (5th Cir. 1984), stated: "[T]he general rule under the Bankruptcy Act is that one who did not actually receive any of the property fraudulently transferred (or any part of a 'preference") will not be liable for its value, even though he may have participated or conspired in the making of the fraudulent transfer (or preference)." Id. at 1357.

The bad news? If the bankruptcy court finds the debtor engaged in bad faith by engaging in a fraudulent transfer, the court becomes the Overlook Hotel from Stephen King"s The Shining. In such a case, the court will, as ex-hotel caretaker Delbert Grady described in the movie adaptation, "correct" the debtor by handing out a denial of discharge, which is the equivalent of death in bankruptcy.

Fraudulent Transfers— Personal Jurisdiction and Choice of Law Issues

If the court finds the debtor"s fraudulent transfer rises to the level of a tort such as fraud, the debtor may be subject to personal jurisdiction in the state where the tort occurred under the applicable long-arm statute. In addition to winding up in another state"s court, the debtor may also be subject to the other state"s laws under a choice-of-law analysis.

The application of another state"s laws may have negative consequences (for example, longer statute of limitations for creditor claims). In ASARCO LLC v. Americas Min. Corp. , 382 B.R. 49 (S.D .Tex. 2007), the court addressed the choice-of-law issue in two contexts—fraudulent transfer claims and alter ego or veil piercing claims. For alter ego claims, the courts generally apply to the law of the state of incorporation for each corporation to determine whether its corporate entity should be disregarded. For fraudulent transfer claims, however, the ASARCO court applied Texas law—which looks to the law of the state with the "most significant relationship." The ASARCO court cited Warfield v. Carnie , No. 3:04-cv-633-R, 2007 WL 1112591 (N.D. Tex. Apr. 13, 2007), as authority on this point. Warfield, in turn, cited Terry v. June, 420 F. Supp. 2d 493, 503 (W.D. Va. 2006).

In Terry, the court held that a receiver"s fraudulent conveyance claim sounded in tort and, therefore, would be governed by the test embodying the Restatement (Second) Conflict of Laws (the "Restatement") general approach to tort claims. It is important to note that the courts do not appear to be holding that a fraudulent transfer is synonymous with a tort for purposes of determining secondary liability. Instead, the courts are equating the two solely for purposes of applying the choice-of-law analysis.

Under the "most significant relationship" test, a court will consider the following factors:

  • the place where the injury occurred;
  • the place where the conduct causing the injury occurred;
  • the domicile, residence, nationality, place of incorporation, and place of business of the parties; and
  • the place where the relationship between the parties is centered.

After considering the relationship of the parties with various jurisdictions, including Delaware, New Jersey, Arizona, New York, Peru, and even Mexico, the ASARCO court found the most significant relationship among the parties to be with Delaware.

Professional Malpractice and Violation of State Ethical Rules

A lawyer also can face liability for professional malpractice by engaging in asset protection planning if such planning amounts to a breach of duty to the client that results in damages. Similarly, a lawyer can face disciplinary action through violation of a state"s rules governing the practice of law. It should be noted, however, that violation of an ethical rule does not necessarily mean a lawyer also has committed professional malpractice.

As one Connecticut court has held:

The Rules of Professional Conduct caution those who seek to rely on their provisions. They provide a framework for the ethical practice of law. Violation of a Rule should not give rise to a cause of action nor should it create any presumption that a legal duty has been breached. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. . . . Accordingly, nothing in the Rules should be deemed to augment any substantive legal duty of lawyers or the extra-disciplinary consequences of violating such a duty.

Dunn v. Peter L. Leepson, P.C., 830 A.2d 325 (Conn. Ct. App. 2003).

The two most cited ethical rules are found in ABA Model Rule 1.2(d) and 1.3 (currently, only California has not adopted the Model Rules). Model Rule 1.2(d) provides:

A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

In South Carolina Bar Ethics Adv. Op. 84-02, the lawyer requested an opinion from the Advisory Committee regarding whether the lawyer could transfer assets from a spouse with likely creditor problems to the spouse without the creditor problems. Essentially, the lawyer asked if he could assist his client with a fraudulent transfer as to a reasonably foreseeable creditor.

The Advisory Committee cited DR 7-102(A)(7), which states that a lawyer "shall not counsel or assist his client in conduct that the lawyer knows to be illegal or fraudulent." The Advisory Committee concluded that if there was an "immediate reasonable prospect" of a judgment being entered against the client, then assisting with the proposed transfer would "probably" violate DR 7-102(A)(7).

But an attorney should probably not completely disregard engaging in some form of asset protection planning. Model Rule 1.3 is often cited because it requires attorneys to represent clients with zealous advocacy. As Rothschild has noted: "[P]rofessionals should not shrink from asset protection. Handled responsibly, it should be [as] ethically and legally innocuous as any other type of planning." Rothschild & Rubin, supra, at 42.

Additional Ethical Concerns—Onshore and Offshore and Asset Protection "Specialists"

Much has been written about the efficacy of offshore APTs. No matter which view the attorney takes in the heated debate, several issues should be considered. In several cases, debtors who were unable to repatriate funds back into the United States under a court order have been tossed in prison for civil contempt. Adkisson seriously questions whether using offshore APTs is even necessary with so many effective domestic solutions. With the rise in the popularity of planning across state lines, Adkisson cautions that the attorney should be aware of the foreign state"s rules governing the unlicensed practice of law. Interview dated April 20, 2009.

In response to the risks associated with "going offshore," Nenno recommends the DAPT over the offshore APT. "The risk of fine or incarceration should be lower in the case of a [domestic] APT because the controversy will be played out within the country"s legal system," adds Nenno. Nenno, supra, at 108.

In addition, the surge in asset protection planning has created a niche for financial planners, accountants, and insurance salesmen to offer advice that typically results in consulting fees and commissions. Unlike the attorney, however, these "specialists" are not licensed to practice law and raise other important ethical issues. For example, communications between the parties are not protected by the attorney-client privilege. Whereas, in the past, there has been much debate over the practice of tax and accounting versus the practice of law, more and more complaints appear to be filed with state bars involving financial planners and other non-attorneys who engage in the practice of law through services labeled as "asset protection," "wealth protection," or "asset preservation" planning.

Summary

Based on the foregoing, what differentiates legitimate asset protection planning from that which sounds the warning bell? The answer just might be the difference between a pig and a hog. As the Bankruptcy Court for the District of New Mexico once stated:

The difference, which seems initially to be one merely of degree, at some point as yet unspecified becomes a difference in kind which requires a different result. This same principle was succinctly stated by Judge Logan in Dolese v. United States of America, 605 F.2d 1146, 1154 (10th Cir. 1979), "There is a principle of too much; phrased colloquially, when a pig becomes a hog it is slaughtered." That principle fully applies here. While a bankrupt is entitled to adjust his affairs so that some planning of one"s exemptions under bankruptcy is permitted, a wholesale sheltering of assets which otherwise would go to creditors is not permissible.

In re Zouhar, 10 B.R. 154, 157 (Bankr. D.N.M. 1981).

Perhaps the line between legitimate planning and planning that triggers liability is not as much a science as it is a dose of common sense. As Adkisson observed, "Asset protection is not about harming people or about stiffing legitimate creditors. If you don"t do something that harms somebody, you"ll probably never get into hot water. So, always just try to do the right thing and that will help keep you out of trouble." Interview dated April 20, 2009.

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