On this site, our law firm presents a detailed discussion on a range of asset protection strategies designed to shield and insulate our clients’ wealth from personal and business liability risks.
Our clients are physicians, corporate officers, business and real estate owners who wish to practice their business or profession without jeopardizing the assets they have accumulated over the years. A thoughtful, carefully tailored asset protection legal plan can generally accomplish this worthwhile result.
The latest version of our book “Asset Protection for Physicians and High-Risk Business Owners” is available for download and provides a comprehensive discussion of key issues in asset protection planning.
Provided in this site are detailed examples, diagrams, real life case studies and the pros and cons of popular asset protection techniques such as the Family Limited Partnership, Limited Liability Companies, Family Savings Trusts , Offshore LLC’s, Offshore Trusts, Privacy Plans, Private Retirement Plans, Equity Stripping techniques for Real Estate and Accounts Receivable and many other popular asset protection strategies.
ASSET PROTECTION NEWS – October 2016
Up to date asset protection and estate planning news and comments on the latest cases and legislation.
Now available for free download – ”Selected Topics on Asset Protection“. Download as a full book pdf, or you may choose independent articles from the Contents. This new edition updates case law, legislation and new developments in the field of asset protection and represents an important addition to “Asset Protection for Physicians and High-Risk Business Owners“. Topics include “Piercing the LLC Veil” , “Protect Assets From Unexpected Medical Expenses” as well as other key articles about the latest court cases, legislation and changes in asset protection law.
Family Limited Partnerships: Change in Discount Rules
There are new rules proposed for family limited partnerships which may have an impact on your planning.
The Treasury Department has proposed final regulations which would effectively eliminate the “discount” applicable to the value of family limited interests. Traditionally, parents could significantly reduce estate taxes by transferring interests in the FLP to children or other family members. These interests were then discounted in value because of lack of control and marketability. The result was that the taxable estate was substantially reduced without any significant sacrifices by the parents. For many years now, transferring FLP interests has been the most popular estate planning technique available. See example
Although Treasury originally proposed limiting the discount only for FLP’s which held primarily cash and marketable securities, in their current form, the rules would apply to FLP’s holding business interests as well. Here is an article from the New York Times which discusses the impact of the proposed rules in detail. If adopted in this form, they would most likely go into effect starting on January 1, 2017. Note that these rules only impact the estate tax benefits of FLP’s and do not affect the asset protection features.
If you have an estate which is currently worth over or near the threshold of $5.4 million ($10.8 million for a married couple), or might be at some time in the future, planning before the deadline may produce significant tax savings. Feel free to get in touch if you have any questions or would like to discuss this further.
“Asset Protection Solutions” - In this article we will look at two common asset protection situations to see how the client’s particular circumstances can affect the design of an asset protection plan. In the first example the client needs access to his accumulated savings to pay for current living expenses. This is often the case for those who are fully or partially retired. Also, those who rely on income from investment real estate often use cash flow for living expenses and surplus for new investments. In these cases the necessary income is produced by the assets the client wishes to protect. This contrasts with cases where the client has a source of income separate from accumulated assets and doesn’t need the income produced by those assets for living expenses. This is the case for those practicing medicine or any other profession or who are employed in business or own a stable company. Our distinction here is those who derive all or most of their income from their assets and those whose earnings are separate from their savings.
Why Your Living Trust May be Broken – Living Trusts are the foundation of most estate plans. A properly drafted and funded Living Trust allows property to pass in a seamless transition to a surviving spouse or other family members without a court supervised probate and costly legal fees. Living Trusts can also be designed to provide significant tax savings as well as strong asset protection for surviving family members, shielding family assets from claims of future spouses or potential liabilities. To preserve these benefits and avoid serious legal and tax consequences, Living Trusts drafted prior to 2013, when The American Taxpayer Relief Act of 2012 (ATRA) became law, should be reviewed and modified if necessary, to comply with these new rules. ATRA significantly impacted all estate planning with ramifications for years to come. Living Trusts which do not conform to the new law may face unfavorable tax results and burdensome administrative costs.
ASSET PROTECTION SOLUTIONS
Key asset protection issues and solutions
How can I protect what I have from the risks of my business?
One often overlooked tool for asset protection is a Private Retirement Plan. California allows for the creation of a Private Retirement Plan, which is entirely exempt from judgments and bankruptcy. That is, retirement savings plans which are not IRS Qualified Plans, may be protected under state law if certain requirements are satisfied. Read more
I’m in good health but worry that an injury or illness might create medical bills that would wipe out everything I own. Is there a way to protect my home and savings from future medical expenses?
An issue of increasing importance in the legal community addresses the question of how to protect accumulated savings from medical expense related liability risks. Stated simply, a brief stay in the hospital can cost tens of thousands of dollars. A serious injury or illness lasting weeks or months has the potential to bankrupt all but the wealthiest hedge fund managers. Read more
I’ve heard about Piercing the Corporate Veil but does an LLC have the same vulnerability?
The purported protection of the LLC law is often and increasingly disregarded by the courts under a variety of legal theories leaving personal assets exposed and unprotected from business risks – exactly the result that the owner was attempting to avoid. Read more
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