OJ Simpson made mistakes in a lot of areas. Having a great asset protection plan in place was not one of those areas. In fact, OJ played the asset protection aspect of his life to near perfection, without the use of offshore trusts, and we can all learn a little something from an analysis of the mechanisms that OJ used (perhaps unwittingly in the two instances discussed below) to protect his assets. Please keep in mind throughout this discussion that with the help of an asset protection attorney, many additional layers of protection can be achieved.
In 1969, after winning the Heisman Trophy, OJ Simpson began playing for the Buffalo Bills. As part of his compensation for playing in the NFL, OJ received a defined benefit retirement plan. Fast forward thirty years to 1999. By 1999 OJ had been acquitted of double homicide. That was the “good news” for him. The bad news was that in 1997 he had lost a civil case brought by the Brown and Goldman families who had obtained a $33.5 million dollar judgment against Simpson. See Rufo v. Simpson, 103 Cal. Rptr. 2d 492, 497 (Cal. Ct. App. 2001). The judge presiding over the civil case ruled that Simpson’s defined benefit retirement plan could not be used a source of proceeds to satisfy the judgment. It was valued at more than $4 million in 1997.
The Employee Retirement Security Act (“ERISA”) has an asset protection fail-safe mechanism in place to ensure that employees receive the benefits promised to them by their employers. See 29 U.S.C.A. § 206 (1974). The mechanism simply prevents creditors from satisfying judgments out of certain ERISA qualified retirement plans such as pensions, defined benefit plans, profit sharing plans, and 401(k) plans to name a few. Non-ERISA plans (e.g. IRAs) are only protected to the extent provided by the state in which a judgment debtor resides.
By 1999, Simpson had also availed himself of Florida’s homestead protection laws. Under Florida law at the time, one needed only to be a domiciled resident of Florida to take advantage of an unlimited homestead exemption, meaning that the Simpson’s home could not be touched by the Brown or Goldman families to satisfy their judgment. In 2005, Congress made certain changes to federal bankruptcy laws that altered the application of state homestead exemptions within bankruptcy proceedings. However, many states still offer very good protection against creditors outside of bankruptcy filings. Whether or not you qualify for that protection is a function of the state law where you are domiciled.
Not all asset protection strategies involve offshore trusts, but they do all require adequate planning. A qualified asset protection attorney can help you determine how best to prepare for an unknown future. And a failure to plan is one mistake that none of us can afford to make.
[…] exempt property includes ERISA qualified retirement accounts, and California is generous in that it offers protection of non-ERISA plans as well. Unmatured […]
Was all of OJ’s assets held in a retirement plan or did he also have a specialized type of trust in place? (It is rumored he utilized a Scott on Trust type of trust.) Are you familiar with Scott on Trust? Does it protect assets?