OJ Simpson made a lot of mistakes, but one thing he did right was put good asset protection planning in place. In fact, OJ played the asset protection game to near perfection, and he didn’t even use an offshore asset protection trust. We can all learn a little something from the asset protection tools that OJ used for protection from lawsuits. Though Simpson more or less “lucked” into his asset protection plan, with the help of an asset protection attorney, you can implement an asset protection strategy that’s even more effective than OJ Simpson’s.
Federal Asset Protection
OJ Simpson began his NFL career playing for the Buffalo Bills. As part of his compensation, OJ received an NFL defined benefit retirement plan, which was in place for the duration of his professional football career. Fast forward thirty years to 1999. By 1999 OJ had been acquitted of double homicide by a “jury of his peers.” The bad news was that in 1997 the Brown and Goldman families had won a $33.5 million dollar civil judgment against Simpson. See Rufo v. Simpson, 103 Cal. Rptr. 2d 492, 497 (Cal. Ct. App. 2001). Despite losing the civil case, Simpson’s defined benefit retirement plan (valued at more than $4 million) was “off limits.” In other words, the judge presiding over the civil case ruled that OJ’s retirement plan could not be used as a source of proceeds to satisfy the judgment won by the Brown and Goldman families.
The Employee Retirement Security Act (“ERISA”) includes an asset protection fail-safe mechanism that ensures employees receive the benefits promised to them by their employers. See 29 U.S.C.A. § 206 (1974). This federal asset protection feature 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.
Plans falling outside of ERISA (e.g. IRAs, Roth IRAs, Life Insurance Cash Value, Annuities, etc.) are only protected to the extent provided by the state in which a judgment debtor resides, and to this end some states are much better than others. For example, Florida asset protection laws provide for 100% protection of IRA accounts, cash value of life insurance, and annuities. California, on the other hand, only provides protection to the extent reasonably necessary for support.
Florida Asset Protection
By 1999, Simpson had also availed himself of Florida’s strong homestead protection laws. Under Florida law at the time, any domiciled resident of Florida could take advantage of an unlimited homestead exemption. That simply meant Simpson’s home could not be touched by the Brown or Goldman families, though following the collapse of WorldCom (and the fact that many WorldCom execs had used their fraudulently obtained funds to build huge Florida mansions), the Florida legislature carved out some “securities fraud” exceptions to the homestead exemption.
Additionally, in 2005 Congress altered the application of state homestead exemptions within the context of bankruptcy proceedings. However, many states still offer very good protection against creditors outside of bankruptcy. Whether or not you qualify for that protection is a function of the state law where you are domiciled.
OJ Only Used Domestic Asset Protection
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.