Episode 205: Taxes for Criminals

Taxes for Criminals

Even when a person is accused of or charged with a crime, there are no accepted delays in paying taxes for criminals. Everyone in the United States is required to file tax returns for any income that they make regardless of where that income comes from. This is also applicable to criminals, making taxes for criminals a bit of a niche in the tax practice world.

Why Taxes for Criminals Must Be Filed

In many cases that tax lawyers deal with, there is a person or people who have committed some sort of a crime, financial or otherwise. Just because an individual commits a crime and may be facing incarceration does not prevent them from having to file tax returns. In addition, it could cause more headaches for the person in the following instances:

  1. Plea Bargains and Parole. Not only are criminals not excused from filing taxes, but if they do not file their returns, it could also affect their case. For example, if an individual agrees to a plea bargain or seeks parole or some other form of relief, they must ensure they are indeed current on their tax returns.
  2. New Charges. There can be some instances in a which a person is accused of a crime, but the government may not be able to prove beyond a shadow of a doubt that they committed the crime. This could open the door to the Internal Revenue Service, FBI, or other government entities to change tactics and instead prove that the person in question committed tax fraud by not reporting profits from whatever money-making enterprise they are or were connected to.

The bottom line is that taxes for criminals must still be completed and filed because it is simply the law. It also could become a significant obstacle to their freedom in the long run.

Cases Where the Accused’s Failure to Pay Taxes Worked Against Them

New charges for tax evasion have sometimes famously occurred throughout history and turned out to be the undoing for the accused.

One of the most famous people of note in this situation was Al Capone, a Chicago businessman and alleged gangster during the Prohibition Era. Although many suspected Capone was involved in illegal bootlegging, authorities were unable to prove it. Despite the government not being able to charge Capone with prohibition violations for the illegal sale of alcohol, they were instead able to prove that he was guilty of making money and not paying taxes on that income. Ultimately, Capone was charged with twenty-two counts of tax evasion.

How A Tax Attorney Can Help with Taxes for Criminals

Despite many criminals having problems other than that of taxes, they are still required to file a tax return, and it is in their best interest to do so.

For example, if a person is accused of being involved in a hitman scenario, it is likely that a trial will be held to determine if that individual played an illegal role. Should the authorities be unable to prove the individual’s involvement in the hitman scenario, they may switch tactics by evaluating the individual’s tax returns.

Whether or not it can be proved that the individual made $200,000 from a hitman deal or not, the fact may still remain that the individual made $200,000. As stated before, tax returns are used to declare income wherever it comes from. This individual needed to do a tax return for this amount in order for it not to be an additional legal issue.

While some certified public accountants may be tempted to turn down helping this individual get their tax returns in order, most tax attorneys understand the fact that the individual still has an obligation to pay and report their taxes since they made the $200,000. An accountant could help with the W-2 and home mortgage and record the income and file an official tax return.

Although this is indeed a benefit for the accused by keeping the Internal Revenue Service or Justice Department from prosecuting them for failure to file a tax return and ultimately tax evasion, a tax attorney knows that completing and filing the tax return serves the federal tax system.

In a slightly different scenario of plea bargaining, a tax attorney may also be able to help. It is essential that an individual who has been accused of a crime and wants to begin the plea bargain process in the federal criminal system must be current on their tax returns. Again, certified public accountants may shy away from this type of assistance, but a knowledgeable tax attorney understands that the person still needs to pay their taxes and file the returns and can assist the individual in doing so. The attorney can complete an honest and accurate tax return and present it to the taxpayer, their criminal lawyer, and ultimately the justice department.

At this point, if the taxpayer is able to make payment on the return so that any tax related obstacles to plea bargaining or other sentencing implications are removed, they should do so. This in turn allows the justice department and criminal defense attorneys to work with the case at hand instead of having to focus on other issues such as those that may be tax related.


Taxes for criminals are an area of law that tax attorneys should be equipped to handle. This assistance may be helpful not only in their current circumstances as they face incarceration but will also be helpful to them when they get out of prison or complete whatever punishment they are given and rejoin society. Their tax returns will be current and prepared. This keeps them from having to scramble to complete returns that lapsed since their pre-incarceration period.

While a criminal can’t benefit from filing taxes, it is required by law to file them. A reputable tax attorney assisting with taxes for criminals can also serve a function for government and society in general by allowing the criminal and tax systems to work efficiently.

Episode 204: Weird Real Estate

Episode 204 Weird Real Estate

Real estate is always evolving and encompasses a variety of different moving parts, which is part of what can contribute to weird real estate issues. Real estate lawyers have long since found a number of title, lien, and possession issues with some unusual circumstances that have made for interesting cases over the years. To help give readers an idea of what weird real estate issues can look like, we have put together a list of what some of those scenarios might be.

What Weird Real Estate Can Look Like

When you are talking about what weird real estate can look like, the sentiment is a bit of an oxymoron because it is not the real estate itself that is weird. Typically, a real estate related issue such as title, ownership, or possession of a property is what can become the basis for the weird factor.

For example, if someone is seeking title insurance for a property it is so the title insurance company can ensure the fact that buyer or lender received a clear title that prohibits the following:

  • Anyone from coming to take the property from them
  • An easement messing up the planned usage of the property
  • A lien that would have to be paid

The three different areas of real estate that become important in these scenarios include:

  1. Who has the title?
  2. Are there any liens?
  3. Who has possession?

Realistically, any of the above three areas of real estate could potentially be a problem.

How Who Holds the Title Can Become an Ingredient for Weird Real Estate

If a title holder acquires a title by making an illegal loan (one that requires the former owner to give the lender a deed), there is a provision in Texas law that says that is void. If the current owner of the property suddenly tries to evict the homeowner of more than twenty years, it becomes a battle between the title holder and the person in possession of the property. It also creates a problem for the lender who is now not getting paid and is facing questions as to whether their lien on the property is valid.

The Connection Between Weird Real Estate and Easements

Sometimes there could be an easement which may allow someone who does not possess or own the property to still use the property. Many times, this is not an issue because it is common to have an easement for someone like the power company so power lines go to the house.

The problem can happen when the usage of a property cuts off access to the property. If someone else has the right to use the front part of a property and does so constantly in a way that interferes with a person’s rights to the property, it can create a problem.

There are some legal mechanisms to deal with this although they are not foolproof. If access to the property is restricted due to an easement, it will either be necessary to deal with the easement holder or for the owner to simply find an alternative point of access, which typically devalues the property.

It is worth noting that easement issues can develop over time. For an example, what used to be an easement on a person’s property for two or three families to make their way to church once a week through an area can become tricky when years later a subdivision is established and grows, as now it yields dozens of people crossing over that same property to get to church.

Potential Issues with Estates and Trusts

If a person passes, a will generally makes it easier to determine who gets possession of a property. Without a will, the rights to a property can become a gray area because it involves searching for family and heirs and such.

Should there be no will, but thirty family members or potential heirs were found, it requires either:

  • Getting all thirty people to agree on what to do with the property, or
  • Taking the battle to court for partitioning of property, the sale of the property, and distribution of the purchase funds

Trusts are no stranger to weird real estate issues either. If a trust is the owner of a piece of property, then it requires you to deal with the trustee, who will be governed by a trustee agreement or document. This legal document will dictate what the trustee is allowed to do.

It may be possible for a person to set up a trust and twenty years later the trustee passes away and the trust certificate is nowhere to be found. This type of situation usually requires a court of law to get involved for a resolution.

If there is a legal way to resolve a weird real estate situation like any of those mentioned above or another one altogether, a reputable attorney should be able to find it.

One of the most common questions a real estate attorney can receive is, “What does cleaning up a title to real property mean?” This phrase and the terminology in it are used frequently when working on real estate matters. To help those entering into these types of transactions, we have created a basic road map of what it can mean to clean up title to real property.

Cleaning up Title to Real Property

There are three keys to cleaning up a title to real property:

  1. Have the whole title
  2. Get possession of the property
  3. Ensure there are no liens

Someone who wants to buy a piece of property (whether it be a house, ranch, office building, or some other type of property) generally needs to make sure they have a title to the property and that it is properly recorded. This helps confirm the title is in their name so no one else can say they own it. If another party does try to say the own it, the person can show they have a superior claim and that they are indeed the owners. A purchaser’s goal should be the whole title.

A buyer should also want to be able to possess the property. This means they should not have to deal with issues such as squatters or tenants on the property that have to be evicted, or any other people who are occupying the property that may have some legal claim to do so. They want to get possession.

The purchaser also must ensure the property is free and clear of liens so there are no tax liens, and no prior owners have abstracts, a judgement, a mechanics lien on the process, or that no one else has a mortgage on the process. The purchaser may have their own mortgage but they go to a mortgage company voluntarily so they can allow them to buy the property. A purchaser wants to make sure there are no other problems with that.

There could be properties that have problems such as being adverse to the current owner who is occupying the property and would need to be evicted. Maybe they have some claim that would require more than just a regular eviction process and may ultimately result in a lawsuit and a determination regarding whether they have any ownership or title rights to the property. There could also be liens filed against the property that may or may not be valid and may or may not be in statute. Some liens may have two and four year statutes, for which if the lien holder does not do anything, sue to enforce their rights or foreclose on the property, they lose those rights.

There could be a situation where there are liens on the property that are more than four years old. If that is the case and the liens matured more than four years ago, an attorney should be able to get those eliminated. If the liens are three years old, it may make more sense to simply wait a year and if the owner does not do anything, then attorneys can begin cleaning up in the process.

There may also be situations where there is an estate and the property is in the estate. There could be liens against property in the estate. If there is more than one beneficiary, the beauty of that is there is a court that can clean up whatever it is. If there are lien holders, the court can determine the validity of the lien. If there are beneficiaries, the court can determine if all the beneficiaries agree what to do or if the executor has the power to do that. If an agreement is needed and cannot be reached, the court handles that, which can include selling the property.

An attorney can take a piece of property and open title with a title insurance company. The company then determines what sort of liens, claims and title hiccups are present and need to be dealt with. Then we go through the process of trying to deal with those. This may mean getting a release from somebody who had a lien who got paid off but did not release the lien. Or it could be a matter of determining if the statute of limitations has run out or not. Other times it may be necessary to determine who needs to be paid and how much in order to get whatever liens there are released in the process. Taxes can be a good example of this as they tend to stay with a property no matter who owns it, and at some point in time they must be paid.

The Title Company’s Role

The title company is the one that will tell an attorney and purchaser what needs to be cleaned up. Then those parties can go about cleaning it up. Generally, if a title company is willing to insure title, then the title company will be willing to defend and pay lawyers to defend the claim and ultimately pay money to resolve the claim if it turns out that there really was a problem and some party really does have a lien or ownership claim to the property that was originally insured at the closing.

When someone is either buying or loaning money on a property, they want to make sure they have a clean title. An experienced and reputable attorney can help you go through the process to make sure that the title is clean and work with the title insurance company so a buyer can get the title insurance and move on with their transaction.


Episode 203: Trusts and Fraudulent Transfers

Episode 203 Trusts and Fraudulent Transfers

Trusts can be an excellent estate planning tool in order for an individual to provide for their heirs, but when a trust is formed in a reactive effort to avoid judgements or creditors, it may be possible for the law to see a fraudulent transfer in play, and that has the potential to come with serious consequences. However, if an individual works closely with an attorney to proactively establish a trust under valid circumstances, it can be effective for the person forming the trust as well as their intended heirs.

To better understand this topic, we will define what a fraudulent transfer is, how it may happen in relation to a trust, and what it can mean for creditors.

What Is a Fraudulent Transfer?

When defining the legal term fraudulent transfer, there are two primary prongs to keep in mind:

  1. Actual Intent: If a transferor transfers money or property to another person, entity, or a trust with the actual intent to delay, hinder, or defraud one or more of their creditors, then the law usually sees that as a fraudulent transfer. For this reason, it can be set aside by the creditors or a bankruptcy trustee.
  2. Constructive: Without regard to what the transferor’s original intent was, if the transfer was made at a time when the transferor was insolvent or had insufficient capital to continue operating and the transfer does delay, hinder, or defraud one or more creditors, it can be considered a constructive fraudulent transfer. It too can be set aside with certain legal action by creditors or the bankruptcy trustee of the transferor.

As we move forward to discuss how fraudulent transfers come into play for trusts, it is recommended to keep this information in mind.

How Fraudulent Transfers Can Come into Play When There Is a Trust

People set up trusts for a number of different reasons and then transfer money and property to them. Trusts are usually formed to benefit a beneficiary after the person forming the trust has passed.

There are three main roles in the formation of a trust:

  • a donor
  • a trustee
  • a beneficiary

In the eyes of the law, someone could be two of those three persons, but not all three because one person performing all of these roles could manipulate them for self-benefit.

To learn more about how a fraudulent transfer can come into play when there is a trust, let us consult the following examples:

  • The Typical Trust: In this type of situation, it is common to see a grandparent put together a trust for their grandchild to eventually go to college. To do this, during the grandparent’s lifetime or as part of their will, they will set aside a fund of money or property (that can be sold at a later time to gain money) to be put into a trust so that money or income source can eventually pay for the grandchild’s education. The grandparent may even appoint their son or daughter to be the trustee in the event that they die before the grandchild becomes of college age.

Despite the grandparent appointing one of their children to be the trustee of the funds, it is typically not considered an asset to them. In the situation that the trustee was to experience financial problems such as judgements or bankruptcy, these are not considered the trustee’s funds. Although the trustee controls the funds for their child, the funds do not belong to them. The funds belong to the beneficiary or grandchild of the deceased party. Therefore, if there were to be a judgement against the mom, it would not allow creditors to garnish the funds in the trust account.

  • A Fraudulent Trust: If there is an individual who believes they are about to get a judgement against them and they have some money they would like to keep creditors from getting to, they might decide to quickly establish a trust that they pour all of their assets into and say it is for the benefit of their heirs. In this case, the transferor established the trust with the primary intent to defraud their creditors. The transferor was likely also insolvent, which can make it harder for creditors.

Either under an actual intent or constructive prong of a fraudulent transfer, the creditors would be able to sue the trust or the trustee and force the trustee to pay the funds or property that was fraudulently transferred to the creditors to satisfy their judgement. If the transferor filed bankruptcy, the bankruptcy trustee can sue the trust and recover the money for the benefit of the creditors.

A Final Word to Creditors About Trusts and Fraudulent Transfers

Essentially, there are good trusts and bad trusts.

Making sure that money is transferred properly in a way that creditors of the trustee cannot get to it is important if you are doing estate planning.

It is also important to read the situation if you are a creditor and run across a situation where the debtor you are dealing with does not have any money, but somehow there is a trust around for the benefit of one of the debtor’s relatives or judgement creditor.

Just because there is a trust out there for a debtor, does not necessarily mean a creditor cannot recover it. This depends heavily on the facts and circumstances around the trust, such as how it was funded and how the transfers were made.

Know the waters that you are swimming in when forming trusts and transferring assets into them and dealing with the creditors who may want to grab those assets. Make a lawful trust part of your estate planning process today with a reputable attorney to better protect a portion of your assets and ensure they are set up to benefit your intended beneficiaries.