Category Archives: Family Business

Bad Estate Planning: Celebrity Edition

Posted on by under BDITs, Business Succession Planning, Business Transitions, Dynasty Trusts, Elder Law, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Probate, Retirement, Small Business, Trusts, Wills

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

Posted on by under Business Succession Planning, Business Transitions, Estate Planning, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

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

Posted on by under BDITs, Business Succession Planning, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, IRA, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Retirement, Roth IRA, Small Business, Trusts, Wills

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.

British or American English?

Posted on by under Business Succession Planning, Dynasty Trusts, Elder Law, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Probate, Retirement, Roth IRA, Small Business, Trusts, Wills

British or American English? Tea or coffee? Whether you’re a fan of the Brits (as I am) or not, check out this interesting article  in Wealth Management about the differences between English and American per stripes. Many lawyers will recall this discussion from their law school days studying estates and trusts. “Per stirpes” is a Latin term that means “by the stocks” and refers to who inherits your estate if you die without a will (intestate). Most wills include the term “per stirpes” or “taking by rights of representation” in their definitions section (although those terms aren’t always used in the Kansas or Missouri probate code). This article is a good reminder to attorneys and clients alike: be sure your estate planning and other legal documents say what you want them to say. Using Latin or French or other “legalese” is dangerous if you’re not certain what the terms mean, and if your attorney can’t explain a document to you in plain English, (1) tell him or her to rewrite it or (2) hire an attorney who’s more knowledgeable.

Some lawyers use big words and convoluted sentences in documents because they rely on old forms (from the 1970s or 80s or even older). My law firm, Johnson Law KC LLC, has a personal service, client-centered approach – I personally craft and review every document for a client to make sure it’s readable and that my client understands what it says and does. You get the best of both worlds – big firm expertise with small firm personal attention. I often review and revise my firm’s documents based on the latest developments in the law, business, and taxes, with an eye towards improving readability and organization. I invite you to experience the difference. If I can serve your legal needs, call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation. On a personal note, thanks for being a part of this conversation for 100 posts and counting – I look forward to sharing many more posts and conversations.

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

What Windsor Means for Estate Planning

Posted on by under Estate Planning, Estate Tax, Family Business, Kansas, Missouri, Trusts, Wills

This morning (26 June 2013) the U.S. Supreme Court decided Windsor v. United States, 1 of 2 pending gay marriage cases, involving whether the (federal) Defense of Marriage Act was constitutional. (They also decided the other case, Perry v. Hollingsworth, kicking the case back to the California court on procedural grounds, which isn’t relevant to our discussion.) Based on a combination of federalism and equal protection grounds, Justice Kennedy wrote the 5-4 decision for the bitterly divided Court. Many will spill much ink analyzing the legal reasoning, politics, and historic importance of Windsor and Perry. But putting aside politics, what does Windsor mean for estate planning?

  • Windsor’s holding (a federal blessing of state-authorized same sex marriages) means that Edith Windsor and other gay men or lesbian women who live in states that permit same sex marriage will be able to claim at least some federal benefits that married couples are entitled to receive. For Windsor, a New York resident, she gets an IRS refund of the roughly $363,000 she paid in estate taxes upon her wife’s (Spyer’s) death. Windsor sued the IRS as Executor of Spyer’s Estate for the refund.
  • Windsor explicitly says it doesn’t authorize same sex marriage across the nation. Under Windsor, for the U.S. government to recognize a valid same sex marriage, the local state has to recognize it. How the President and Congress will react (via executive orders and/or Congressional acts) remains to be seen.
  • Windsor’s logic appears to allow a duly married same sex couple (again, under state law) to use martial deductions and other estate planning and IRS tax tools, just as a duly married heterosexual couple would.
  • Under Windsor, attorneys or advisors counseling same sex couples on their estate planning or financial needs would be well advised to counsel them to (1) move to a state that allows same sex marriage and (2) get married.

What do you think Windsor means for estate planning? (again, no politics please)

While the Court’s opinion doesn’t expressly address the tax and estate planning implications of its holdings, these 4 issues are crucial for estate planning professionals and their clients to know about. If my law firm, Johnson Law KC LLC, can serve you or your family’s estate planning or other legal needs, please call (913-707-9220) or email (steve@johnsonlawkc.com) for a convenient, free consultation.

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

 

Tax-free Retirement?

Posted on by under Elder Law, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Illiquid Assets, Income Tax, IRA, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Retirement, Roth IRA, Trusts, Wills

CNBC has this helpful article about how to plan for a tax-free retirement with lots of good tips and portfolio ideas. Many retirees can expect lower income tax bills than those of us still working (and earning more income), but the article wisely points out the wild card – the Congress/tax wild card.

Thoughts? What are your ideas for planning a tax-free retirement?

If my law firm, Johnson Law KC LLC, can help you or your family on your estate planning or other legal needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a convenient and free consultation.

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

Asset Protection 101

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Illiquid Assets, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

What does asset protection mean? Asset protection is about preserving and safeguarding your hard-earned money and other assets from creditors, divorcing spouses, or others. Asset protection is best done through a trust, an LLC, or a family limited partnership. The key to asset protection is (1) finding a good, protective place and (2) setting up an entity to hold the assets. Missouri was one of the 1st asset protection states in America. Kansas or Missouri residents can set up a Missouri asset protection trust to hold their assets. Kansas law doesn’t allow an asset protection trust, but does allow other trusts. An asset protection trust is irrevocable – a stand-alone entity that must file an annual income tax return. LLCs or family limited partnerships (FLPs) can be used to hold farm land, real estate, stock, the family business, or other assets. A family LLC or FLP must have a valid business purposes, but members or partners may be able to claim some discount off the value of contributed assets – e.g. if you put a minority (say 30%) interest in the family farm or business into a family LLC or FLP, you can claim a discount since your stake wouldn’t be easily marketable to outside buyers.

My law firm, Johnson Law KC LLC, is experienced counseling families and small business owners on using various asset protection tools. If I can help you or your family with your asset protection needs, call (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a convenient, free consultation.

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

Becoming a Philanthropist

Posted on by under Dynasty Trusts, Estate Planning, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Kansas, Missouri, Trusts, Wills

The WSJ has this interview with  Laura Arrillaga-Andreessen, a Stanford business school lecturer and leading philanthropist in Silicon Valley. Her Stanford course is to be offered free online. She argues that individual philanthropists (whether of the $10 or $10 million variety) tend to give sympathetically, instead of strategically.

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

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

Undue Influence?

Posted on by under Business Succession Planning, Business Transitions, Elder Law, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

This NY Times article discusses how a hospital manipulated a long term patient (net worth > $100 million) to obtain gifts, pledges, and other favors from her. Undue influence is a common probate or trust litigation issue. Wills in Kansas and Missouri are only valid if executed without undue influence. Most attorneys hear undue influence and think of a child or other prospective heir trying to persuade a family member to favor them over other relatives or heirs. But what about organizations, hospitals, and others looking for a piece of an individual’s or family’s inheritance? Food for thought.

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

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

Is New York “Offshore?”

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Generation Skipping Tax, Illiquid Assets, Income Tax, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

The NY Times has this fascinating article about the recent corporate tax controversy of large global companies parking money in international holding companies that have domestic bank accounts or investments. But poof (now you see it; now you don’t) – by tax accounting magic, the money’s held internationally. America has the highest corporate tax rate in the developed world –  35%. Some other countries, like Ireland, have much lower tax rates, so having the money held by an Irish subsidiary in a New York bank account yields a substantially lower (say 13%) tax rate.

While offshore bank accounts (for individuals or corporations) are often discussed in political terms, they’re a bipartisan issue. While companies some might view as conservative do it (like oil and gas companies), so do seemingly more moderate or even liberal giants like Microsoft, Google, and Apple. (A few months back, Apple passed ExxonMobil as the biggest company by market cap – all those iPhones, iPads, and iPods everybody loves fueled its rise to the coolest big business on the planet.) And wealthy folks of all political stripes like Mitt Romney, Al Gore, Terry McAuliffe, and Penny Pritzer have offshore accounts or investments. Why? Lower tax bills. Whether you think offshore holdings are great or terrible, the math tells the story.

The unfortunate moral of the story is the obscene complexity of America’s tax law – call it the lawyers’ and accountants’ full employment act. Most Americans, whether conservative or liberal, favor a less complex IRS Code. Meanwhile, if my law firm, Johnson Law KC LLC, can help you or your family with your personal estate planning or small business needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a free consultation.

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