Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Archive for February, 2012

Democrats Call Debt Limit Unconstitutional

Posted by William Byrnes on February 21, 2012


The August 2 debt ceiling drop-dead date is less than a month away, and some Democrats are proposing a radical solution to the problem: Ignore it. They argue that the U.S. Constitution allows the President to simply ignore the debt ceiling and pay the federal government’s bills.

Democrats and commentators in favor of ignoring the limit cite section 4 of the 14th Amendment to the U.S. Constitution, which says, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions…, shall not be questioned.”

They argue that the U.S. government is bound by the Constitution to pay its bills and won’t be able to do so if the debt ceiling is respected. As a result, the law creating the debt ceiling is unconstitutional in this particular scenario because it would force the federal government to violate a provision of the U.S. Constitution. Taking on new debt isn’t just about future spending. A significant amount of any cash generated by a new debt issue is needed to service existing debt.

In short, default is unconstitutional, and the debt ceiling is unconstitutional to the extent it restricts the President from following the Constitution’s requirements.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

Posted in Wealth Management | Tagged: , , , , , , , | Leave a Comment »

Battle Brewing Over Employments Status of Financial Advisors

Posted by William Byrnes on February 7, 2012


Are you an employee or independent contractor of your firm? If you’re doing business in California and get the classification wrong, you could be in for criminal charges and up to a $25,000 fine.

California State Bill 459—which would impose strict recordkeeping requirements and severe penalties on firms that misclassify employees as independent contractors—passed the state senate on June 2. The bill moved to the Assembly and went on to a hearing at the Assembly Committee on Labor and Employment two weeks later. The bill is expected to come to a vote in the Assembly later this summer.

Under the bill, firms that mischaracterize employees as independent contractors can be subject to fines of up to $25,000. They also will be required to keep records verifying independent contractor status for at least two years or face a fine of $500 per employee and misdemeanor criminal charges.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of income taxation, see Advisor’s Main Library: Income Taxes.

Posted in Wealth Management | Tagged: , , , , , , , | Leave a Comment »

Domestic Asset Protection Trusts: Equal to Their Offshore Brethren?

Posted by William Byrnes on February 2, 2012


The Domestic Asset Protection Trust (DAPT) is the onshore response to concerns surrounding offshore asset protection vehicles, but are the onshore and offshore varieties of asset protection equivalent? Despite the surface similarities between DAPTs and asset protection vehicles based in the Caribbean and other offshore hotspots, the degree of creditor protection offered by them can be very different.

After a brief discussion of the history of DAPTs, this article examines the battle tactics used by creditors to break DAPTs and access trust assets.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of DAPTs in Advisor’s Journal, see Domestic Asset Protection Trusts: New Chart Ranks the States (CC 10-30) & The Spendthrift Clause (CC 09-32).

For in-depth analysis of DAPTs, see Advisor’s Main Library: G—Domestic Asset Protection Trusts.

Posted in Wealth Management | Tagged: , , , , , , , | Leave a Comment »

 
%d bloggers like this: