Wife was worried about the debt incurred by husband and by the financial risks involved in husband’s business. Husband and wife entered into a post-nuptial agreement in 1991. At the same time, clients created separate revocable trusts and divided their assets between the trusts in accordance with the post-nuptial agreement. Wife was a full-time homemaker with no income. Husband paid the mortgage and expenses on the home owned by the wife’s trust. Husband continually added to the savings account owned by the wife’s trust. In 2001, husband encountered financial difficulties that resulted in a personal bankruptcy and a non-dischargeable debt to the IRS. The assets owned by the wife’s trust were not included or jeopardized by the husband’s bankruptcy, by the IRS, or by the creditors of the husband.

Client entered into a partnership with two partners who agreed to perform management services. Client was a passive investor who contributed money, but was not involved in day-to-day operations. The partners embezzled funds and mismanaged the partnership resulting in significant liabilities. The partners had no assets, and the creditors pursued the client for the entire amount of the losses. After the mismanagement became apparent to the client, but before any claims arose from third parties, the client sought advice for protecting his own assets. The client invested his assets into a real estate partnership that was unrelated to the first partnership. The real estate partnership had a legitimate business purpose, legitimate business activities, and legitimate unrelated partners. The real estate partnership was filed as a Delaware LLC, where a charging order is the exclusive remedy for a creditor of a member. In addition, Delaware law prohibits any equitable remedies such as an order for an accounting or for managerial participation or control. The creditors realized that the client had no liquidity and that the likelihood of collecting from the client was remote. The creditors settled for a nominal amount which the client was able to borrow from the Delaware LLC.