How the Rich Shield Assets

Why would Jamie McCourt sign a post-nuptial agreement giving up her rights in the Los Angeles Dodgers? She and Frank McCourt are now in the midst of a divorce and she is trying to claim that she didn’t know what she was signing.

Frank has the more plausible explanation. The couple borrowed money to buy the Dodgers then took out cash from the team to buy seven vacation homes. Frank says that Jamie wanted the agreement so that they could shield these homes from creditors and possible losses related to the Dodgers.

This asset protection strategy is not illegal or uncommon. Richard Fuld did the same thing in 2009 when he sold a multimillion dollar home to his wife for $10. It’s also how “bankrupt” Michael Mastro is still able to live in a mansion, drive a Rolls, and take vacations.

“Do you think there should be more stringent laws against asset shielding?”

Robert Frank, How to Shield Assets Like the Rich, W.S.J., Aug. 31, 2010.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.