Professional Accountability

The Daily Mail (UK) has this article about the circumstances surrounding the execution of Hughette Clark’s will. Hughette Clark was the reclusive daughter and heir of a wealthy U.S. Senator. (Ms. Clark died at 104 in 2011, having spent about the last 20 years of her life in a hospital room in New York, cut off from her family and friends (by her lawyer and accountant), while her large estates in various states sat unused for decades. Ms. Clark left an estimated fortune of $307 million.) According to papers filed in the New York probate court, where her will is being contested, she was “incoherent and barely able to hold the pen” while signing the documents. To make matters worse, her lawyer, accountant, and the hospital were conspiring to enrich themselves at her expense. Both her lawyer and accountant were to inherit large sums of money from her (her family being cut out entirely) and they apparently took the signed will with them to the local bar to celebrate their good fortune after convincing her to sign the document.

In Kansas and Missouri, lawyers are required to attend legal ethics courses as part of the continuing education requirements. If you don’t attend continuing education, you can’t keep your law license. For attorneys, there are at least 2 glaring ethical violations here: (1) you never allow an incapacitated client to sign a legal document (you always talk with the client first to be sure they know who they are, what they own, and who they want to give it to) and (2) you rarely, if ever, accept any gift in a will from a client. Kansas law says an interested witness (e.g. a lawyer who’s receiving a gift from his client) can’t inherit more than he would be entitled to if the client died without a will. Missouri law has similar provisions. Accepting a gift in a will from a deceased client raises serious ethical issues. Unfortunately, Ms. Clark’s lawyer and accountant did her a great disservice by not acting professionally and by not watching out for her best interests.

At my firm, Johnson Law KC LLC, we work hard to serve every client’s needs with integrity and clarity. If I can help you or a loved one with estate planning, asset protection, elder law, or small business needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.

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Bad Estate Planning: Celebrity Edition

According to this Daily Mail (UK) article, James Gandolfini’s will (following “The Sopranos” star’s recent death in Rome from a heart attack) distributes his $70 million estate so that massive estate taxes (about $30 million) are likely to be owed. One estate planning attorney remarked on the will that ‘It’s a nightmare from a tax standpoint,’ and the will’s segregation of assets was a ‘big mistake’ and the will itself ‘a disaster.’ To be fair, Mr. Gandolfini’s will hasn’t been published yet and it’s not clear whether he had trusts or other entities that held assets. But it sounds like his estate plan may not have been well done, not complex enough for his level of wealth or portfolio structure.

We can learn from the bad estate planning of celebrities and tragic deaths that happen far too early is the importance of good planning. If my law firm, Johnson Law KC LLC, can help you or your family with your estate planning, elder law, asset protection, small business, or probate needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient consultation.

(c) 2013, Stephen M. Johnson, Esq.

 

Going Private

The KC Star has this interesting article about the founders of Silpada Designs buying their company back from Avon. The founders started the jewelry company with $50 and built it into a fashion empire (with $230 million in annual revenue), selling it to Avon a few years ago. Avon has been struggling recently financially, so the founders were able to buy back Silpada for $85 million – quite a deal. Tom Kelly, Silpada’s CEO, explained the going private decision: the “business model is right and the fact that the founders are coming back on board will immediately give positive emotional traction on our revenue and profits.”

Going private is the business counterpart to an IPO – instead of seeking more capital from investors in the equity or bond markets, the founders buy back their company. Business executives can have many reasons for going private – they got bored of retirement, a new venture didn’t go well, changes are needed that require private, closely-held ownership (like Michael Dell’s $24.4 billion bid to go private with Dell), or some other reason.
If my law firm, Johnson Law KC LLC, can help you or your family with your small business, family farm, or estate planning needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation. My firm is passionate about serving your business and personal legal needs.
(c) 2013, Stephen M. Johnson, Esq.

Offshore Banking

Costco’s member magazine has this interesting discussion about offshore bank accounts in its July 2013 issue. (I also recommend this interview with noted author Tom Wolfe, which explores his life and writing.)  They ask various members whether offshore bank accounts are ethical, should be legal, or should be taxed differently than American bank accounts. We know that many celebrities and politicians have offshore bank accounts – see this blog post for more details.

Ethical questions about offshore banking center on whether the account owner is paying a “fair” level of tax on the account. Complicating matters is that the IRS Code treats Americans’ investments abroad differently from other countries – the IRS collects tax on an American’s accounts or investments anywhere in the world, while many other countries only collect tax on accounts their citizens hold domestically (e.g. a Briton who holds an account in London and an account in New York would only pay British taxes on the London account).

Offshore banking may be unavoidable, even inevitable, for many professionals and business owners. If you have a factory or business colleagues or partners overseas or offices around the globe, you may have to use offshore banking accounts. And many companies, mutual funds, IRAs, and other investment vehicles have extensive overseas holdings, which can be a good thing to diversify accounts, invest in emerging markets, and collaborate with business partners around the world.

What do you think? Should offshore accounts and banking and tax havens be allowed or outlawed? Are they ethical? If so, when? Should they be taxed differently than American accounts or investments?

If my law firm, Johnson Law KC LLC, can help you or your family with your estate planning or asset protection needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.