Category Archives: Illiquid Assets

Gifts and FLPs in 2012

Posted on by under BDITs, Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Family Business, Family Limited Partnerships, Gift Tax, Illiquid Assets, Kansas, Missouri, Small Business, Trusts

CNBC has this interesting article regarding the increasing popular estate planning tactics of gifts and setting up family limited partnerships or family limited liability companies (FLPs) in 2012 to take advantage of the $5.12 million per person gift tax exemption. Our firm is advising numerous clients on leveraging the gift tax exemption this year (before it falls back to $1 million on January 1, 2013 when the Bush tax cuts sunset absent Congressional action) and drafting FLPs or family LLCs to meet client’s estate planning needs.

If you had over $1 million, real estate, business interests, or want to extend your family’s legacy to your children and grandchildren and beyond, now is the time to look at gifts and see whether a FLP, family LLC, or dynasty trust may be right for you. Call (913-707-9220) or email us (steve@johnsonlawkc.com) for a convenient appointment to discuss your estate planning strategy. We offer a complimentary 30 minute consultation. Our firm has experience counseling high net worth individuals and families on their estate planning needs and we frequently design FLPs or trusts for clients. A well-designed and carefully crafted FLP or trust is like a finely polished diamond: We understand the legal, tax, and business facets of protecting your assets, providing for your family, and ensuring the legacy of your values continues for generations.

(c) 2012, Stephen M. Johnson, Esq.

Interesting investing trend

Posted on by under BDITs, Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Family Business, Generation Skipping Tax, Gift Tax, Illiquid Assets, Kansas, Missouri, Probate, Small Business, Trusts, Wills

According to this CNBC article, many very affluent investors are shifting their investment portfolios around as they search for (1) safety and (2) yield. Safety or asset preservation and yield or accumulation are two often conflicting goals for investors. The article does point out that following the investing habits of very affluent investors (those with over $30 million to invest) is not necessarily a good idea for ordinary investors. But as Robert Frank notes, wealthy investors “set the tone for the broader market,” so if they are dumping publicly traded U.S. stocks in favor of private companies, real estate, and commodities (as the study suggests many are), it may send signals rippling through the broader stock markets for some time.

For both asset protection (from creditors, taxes, divorcing spouses, and spendthrift children) and tax benefits, we’re recommending Inheritor’s Trusts or Beneficiary Defective Inheritor’s Trusts (BDITs) to many of our affluent clients, clients who anticipate  receiving an inheritance from their relatives of  over $400,000, and entrepreneurial clients who like to start, grow, and sell small businesses. An Inheritor’s Trust works well in any of these situations and is an exciting new tool to help facilitate your estate and financial planning needs. Call (913-707-9220) or email (steve@johnsonlawkc.com) our law firm, Johnson Law KC LLC, to learn more about how you can benefit from an Inheritor’s Trust and for a convenient and free half-hour consultation.

(c) 2012, Stephen M. Johnson, Esq.

Heckerling Insights on Family Businesses and Gift Planning

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, LLCs, Missouri, Small Business

Here’s the first part of the Trusts and Estates annual roundup from the Heckerling Institute in Florida. The Heckerling Institute is America’s premier estate planning seminar for attorneys and other professionals. If we can help you with your family business, gift planning, or other estate planning, call or email us.

(c) 2012, Stephen M. Johnson, Esq.

Offshore estate planning

Posted on by under Business Succession Planning, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Income Tax, Kansas, Missouri, Small Business, Trusts

The Wall Street Journal has this interesting article on offshore estate planning tactics with reference to Mitt Romney’s IRA. If I can help you with offshore or domestic estate planning issues, please call me at your convenience.

(c) 2012, Stephen M. Johnson, Esq.

Passing on Your Vacation Home

Posted on by under Dynasty Trusts, Estate Planning, Estate Tax, Family Limited Partnerships, Generation Skipping Tax, Gift Tax, Illiquid Assets, Kansas, Missouri, Trusts

The Wall Street Journal offers some interesting insights about different ways families can keep a vacation home or similar special property in the family for generations to come while minimizing taxes. If I can help you pass your vacation home on to the next generation in your family, give me a call at your convenience.

(c) 2012, Stephen M. Johnson, Esq.

“Mom/Dad, I need some money…”

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Income Tax, Kansas, Missouri, Small Business, Trusts

CNBC offers this advice to parents whose children want more money. If you need counsel on estate planning or gifting options to your children, give me a call to schedule a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

Conflicts of interest

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

This Daily Mail article highlights a classic case of lawyers (and accountants) getting removed from a case by the judge because of conflicts of interest, in the Clark case, for each being slated for an $8 million bequest from the estate. This is a classic legal ethics question that confronts estate planning attorneys – can the lawyer accept a gift from the estate of the deceased? Short answer is “no.” If a lawyer drafts estate planning documents for family members, the relative is entitled to independent legal counsel if they so choose and the lawyer may not receive more than an intestate share of the estate (e.g. what they would’ve received if the relative had died without a will). A client can theoretically leave gifts to their lawyer or other professional advisors in a will or trust, but those gifts are automatically suspect and best practice is to only be paid your attorney’s fees and not accept gifts from a client’s estate.

If you need legal counsel with year end estate planning or if you’re an attorney who has a conflict of interest and need independent legal counsel to help, give me a call or send me an email. Merry Christmas and see you in the New Year – 2012, here we come!

(c) 2011, Stephen M. Johnson, Esq.

Time to Sell Your Small Business?

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, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

Interesting NY Times article about business owners thinking of selling in the current economy. There’s a wonderful piece of old-fashioned, homespun wisdom quoted: “success is when opportunity and preparation intersect.” Successful business people have to be alert for new and emerging opportunities to capitalize on those venues and maximize their enterprise profitability. Perhaps a few business successes come down to being in the right place in the right time, serendipity, or luck, but most business people (and certainly most lawyers) would say that chance favors the prepared – you have to do your homework, which will often show you openings or opportunities that your competitors don’t see. Or as one early rising quipster put it, the comfort of being awake near dawn is “my competition is still sleeping,” so an edge or lead can be acquired. In this economy, business people and successful individuals must capitalize on every edge or lead they can find or create to distinguish themselves and get ahead.

The article’s advice reminds me of a piece of financial/investment advice I read a couple years ago in The Great Depression Ahead by (gloom and doom) economist Harry S. Dent. If I can help you in the process of selling your business or thinking about the pros and cons of the sale decision, give me a call or email me to set up a convenient appointment. If you are going to sell your business, getting the wheels of the deal in motion before December 31 is ideal for tax purposes.

(c) 2011, Stephen M. Johnson, Esq.

Planning for Life’s Unexpected Moments

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, Gift Tax, Gifts to Minors, Illiquid Assets, Income Tax, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

CNBC has this story of a family who benefited greatly from doing basic estate planning, when the unexpected happened and the father and family patriarch died suddenly. Every adult – regardless of age, wealth level, or other factors – needs a will, a living will, and medical and financial durable powers of attorney. To live life without these basic estate planning documents is to play Russian roulette with your future and your family’s.

(c) 2011, Stephen M. Johnson, Esq. All rights reserved.

The Brave New World of Estate Planning – Trusts and Estates in 2011

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, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, LLCs, Missouri, Probate, Small Business, Trusts, Wills

As the 2010 holiday season descended upon America, Congress passed and President Obama signed an extension of the 2001 Bush tax cuts.  The new tax law has many provisions that last until the 2012 election, but most significant for our purposes are the new estate tax and the new gift tax.  The federal estate tax is now 35% on any estates over $5 million for a single person or $10 million for a married couple.  The new gift tax is 50% of any gift to a person of over $13,000 per year with the lifetime exclusion (the maximum amount you can give to someone other than a spouse during your lifetime) now at $5 million from its prior $1 million threshold.  Count on the 2001 Bush tax cut extension to be a big deal for President Obama and his Republican colleagues in 2012, especially with the economic cauldron of high unemployment, exploding deficits, promiscuous and unsustainable spending, a weakening dollar, states teetering on the edge of bankruptcy, and potential inflationary pressures, all boiling to a simmering storm of uncertainty and populist discontent.

Many estate planning attorneys, including many that I have talked with in the Kansas City area, find these new developments very troublesome.  Won’t it eliminate our clients? Not many people have $5 or $10 million, the argument goes.  Those that do already have relationships with private banks, investment firms, and noted law firms. Does anyone still need a trust?  Or do we simply terminate trusts and execute new I-love-you wills that leave everything to the spouse and children?  Won’t that kill our revenue streams from trust drafting and asset re-titling? Is it worth it to be an estate planning attorney any more? These are all good questions that need to be answered and I plan to answer soon in much more detail.

For now, let’s focus on what every client needs: (1) a will (2) a living will (3) a durable medical power of attorney and (4) a durable financial power of attorney.  Anyone over the age of 18 who doesn’t have these legal instruments in place risks catastrophic consequences a la Terri Schiavo and Nancy Cruzan if they get in a car accident or die leaving student loan debt (or other secured debts, like a home mortgage) for their parents (buying life insurance to pay these debts off may be wise). If you are married or have children, the stakes are even higher – your spouse might have to probate your estate and get the Court to appoint them Guardian and Conservator of your child.

Maybe you’re an individual and figure you’re fine, you don’t drive a Ferrari or have millions of dollars, so you don’t need an estate plan, right? Wrong. An estate plan doesn’t need to be expensive or complicated, but you need one, whether you’re Bill Gates or Bob Jones the college student.  Call (913-707-9220) or email me (steve@johnsonlawkc.com) if I can help.

(C) 2011, Stephen M. Johnson