Category Archives: Missouri

Tea with the Queen?

Posted on by under Business Succession Planning, Dynasty Trusts, Estate Planning, Family Business, Kansas, Missouri, Small Business, Trusts, Wills

The Daily Telegraph (of Great Britain) has this interesting article about a growing trend among some wealthy Americans of renouncing their American citizenship to become British citizens and take advantage of lower taxes in some situations. On this side of the pond, PGA golfer Phil Mickelson recently made waves by suggesting he might move from California to another state to pay lower taxes.

While we don’t recommend clients move to another state or leave America for tax reasons, we often counsel clients about which states are best for trusts and other estate planning, asset protection, or business issues. Which states allow dynasty trusts that last for generations? Which states give people the best asset protection against potential creditors? Which states are most business-friendly? What’s the difference between Kansas and Missouri trusts and probate? Does Kansas or Missouri give you better bankruptcy protection? We’ve often dealt with these questions and more, so my office, Johnson Law KC LLC, is experienced, ready, and looking forward to help you with your estate planning or other legal needs, please give us a call (913-707-9220) or email (steve@johnsonlawkc.com) for a convenient appointment and free consultation.

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

Reading Your Trust (and Estate Plan)

Posted on by under Business Succession Planning, Estate Planning, Family Business, Financial Powers of Attorney, Gifts to Minors, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Prenups, Retirement, Small Business, Trusts, Wills

Read your trust. Yes, I know, reading a will, trust, or almost anything written by a lawyer (except John Grisham or Scott Turow) sounds as appealing as doing your taxes, having a root canal, getting caught in a blizzard, or spending the night in an airport. And understanding “legalese” is even more daunting. Let’s face it: most lawyers don’t write well, and when they do write, they level forests, producing 50 page “briefs”and minor novellas by the hour. Lawyers speak legalese and often leave a trail of misplaced participles, dangling modifiers, and bizarre archaic phrases (e.g. “hereafter,” “heretofore,” “said party of the first part,” “such party of the second party,” “inter alia,” “res ipsa loquitor,” “stare decisis et non quieta movera,” “cy pres,” “stipulated,”  “subsequent,” “give, bequeath, and devise,” and “situate”). Most people don’t read the small print, we all just want to get it done (and leave the details to the professionals). People hire lawyers to apply their wishes and desires for the future to their family’s legal landscape: clients tell lawyers “we want X,” now figure out how to do it. And lawyers are the professionals who what you need in a will, trust, living will, powers of attorney, and who can answer your tax issues, and other vital questions.

If you’d like to work with a lawyer who speaks and writes in plain English and can help you decipher the legalese of your trust and other estate planning documents, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient free consult with my firm, Johnson Law KC LLC. We practice law differently.

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

Selecting a Trustee

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

So you’ve decided it’s time to do some estate planning and you’ve talked with you estate planning attorney. And the lawyer asks who you want to serve as trustee. A friend or family member? Your bank or a trust company? Here’s a helpful article on some non-legal issues to think about when selecting a trustee.

The lawyer walks you through some of the pros and cons of each option – a friend or family member probably won’t expect to be paid for their service, but they may not know anything about investments or administering the trust for you and your family, so they could jeopardize your financial legacy to your descendants. A bank or trust company will usually serve for a fee of 1%/year of assets under management and they have professional investment and advising services included (so you’ll be getting a good return on investment and monthly or quarterly financial statements), but they might not want real estate or closely held (and non-diversified) business interests or other assets in the trust. And banks and trust companies often change through mergers and other business deals over the years, not to mention the internal turn over of trust officers and employees that you actually work with.

Even if you don’t set up a trust, the lawyer will ask a similar question about your will (who’s your executor?), your living will and your financial and medical powers of attorney (who’s your agent/attorney in fact?). Who’s going to be making decisions on your behalf? Who do you trust to handle your last affairs and settle your estate? The law doesn’t provide many answers, but a good estate planning lawyer can walk you through your options, and help you select the person or institution best suited for your unique situation and your needs. If I can help you on your estate planning journey or answer any other questions, please give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient appointment with my firm, Johnson Law KC LLC.

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

Gun Trusts: Inheriting Firearms

Posted on by under Business Succession Planning, Estate Planning, Family Business, Gun trusts, Kansas, Missouri, Small Business, Trusts, Wills

The NYT has this interesting article about gun trusts. A gun trust allows an individual to buy or give certain firearms or paraphernalia  to the next generation. Gun trusts aren’t widely used for most common firearms (antiques, pistols, revolvers, rifles, or shotguns), but are a useful tool for more exotic firearms and accessories (machine guns, silencers, and other items). As the article notes, they’re a perfectly legal, if mostly unknown, way to buy, own, or pass on firearms.

If you have questions about a gun trust or other estate planning, asset protection, or business succession issues, please call (913-707-9220) or email me (steve@johnsonlawkc.com) at your convenience and my firm, Johnson Law KC LLC, will be happy to serve your legal needs.

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

Preparing Your Kids for an Inheritance

Posted on by under BDITs, Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, LLCs, Missouri, Probate, Small Business, Trusts, Wills

The WSJ/Barron’s has this fascinating article about the new $5.25 million per person lifetime gift tax exemption that Congress passed as part of the deal to avert the fiscal cliff. But the question that arises, especially as some young, wealthy heirs and heiresses’ antics grace the tabloid and Internet headlines: can a child properly handle their inheritance? If you give your child $5 million, will they save and invest it wisely, or will they spend it frivolously and waste your hard-earned wealth and financial legacy to them? This age-old issue is nothing new – there’s a non-tax reason that custodian bank accounts exist for minors, that trusts are popular, that savings bonds, CDs, and 529 college savings accounts exist – parents and grandparents need to be able to shepherd the money their children and grandchildren will receive. Yes, a gift is giving away money without formal strings attached – not reserving some right to take it back if a financial rainy day comes along, if your child wastes the money on things you don’t approve of, or if the child turns out not to have any financial or investing sense. But legal techniques exist to help protect the gift while your child learns how to work with their inheritance.

If the economic downtown hit your portfolio like high tide hitting a beautifully crafted sand castle on the beach (as it impacted most people’s hard-earned investments, savings, and home equity), or if you’re still working to build up wealth as the economy slowly recovers, you may be looking at smaller gifts for family members. Maybe  you anticipate giving tens or hundreds of thousands to loved ones, not millions. The same principle still applies – can you child or grandchild handle getting a check for $5,000, $10,000, $100,000?

Parents and grandparents need to talk with their children and grandchildren about money, investing, saving, and inheritances. It may not be an easy or fun talk and it might be awkward at first, but it’s a lot easier to discuss now than when you’re gravely ill or when your family is trying to clean up a messy estate after you’ve died. Look for some tips on how to inherit and handling an inheritance soon on this blog. In the meantime, if I can help you or your family with your estate planning, small business, or asset protection needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com). At Johnson Law KC LLC, we’re here to serve your needs – now and for many years to come.

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

Happy New Year: The “Fiscal Cliff,” Your Taxes and Estate Planning

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

Happy New Year! While the nation technically went over the “fiscal cliff” at 12:01 am Tuesday morning, the U.S. Congress has reached a deal to retroactively avert the fiscal cliff crisis and the bill has passed the House and Senate. Here’s the scoop:

  • Portability survives – you can use your deceased spouse’s unused estate tax exemption. Using portability requires filing an federal estate tax return (even if no estate tax is owed) and careful tax planning with your attorney.
  • Estate and gift tax exemptions are $5.25 million per person (inflated adjusted). Using portability, a married couple can give their children $10.50 million. The maximum estate tax rate is 40% on estates over $5.25 million. See Sec. 101 (c)(2) (page 11) of the Senate bill for exact estate tax rates. See Sec. 101(c)(3)(A) (estate and gift transfers after 12/31/2012).
  • Annual gift tax exclusion is now $14,000 per person/year ($28,000 per couple/year), as the IRS announced an inflation adjustment in November 2012.
  • Generation skipping tax exemption is $5.25 million per person. See Sec. 101(c)(3)(A) (generation skipping transfers after 12/31/2012).
  • Grantor income tax trust rules the same. So intentionally defective grantor and beneficiary defective trusts (IDGTs and BDITs) are legal wealth transfer techniques for estate and business planning. These trusts allow parents to transfer wealth, businesses, farms, and other assets to their families without the assets being included in the parents’ estates, while being income taxable to the grantor or the beneficiary, depending on the trust’s design.

The fiscal cliff deal also includes new income tax rates, capital gain tax rates, and other tax provisions of interest to individuals, couples, small business owners, farmers, and ranchers. Individuals earning more than $400,000 per year, or couples earning more than $450,000 per year, should contact their accountant immediately on these issues. Forbes has this helpful article on how the fiscal cliff deal affects various taxes, IRAs, charitable deductions, and other planning considerations.

If I can help you or your family with estate planning or small business or family farm transfer planning, please contact our office, Johnson Law KC LLC – call us at (913) 707-9220 or email us at steve@johnsonlawkc.com.

In reaching the fiscal cliff deal, Congress delayed until March dealing with the massive spending cuts that are required by law as part of the last budget deal (the sequestration cuts). While it seems unlikely, it’s possible that Congress will revisit some of these rules in March or add additional restrictions to existing estate planning techniques. If Congress did change these rules in March, there’s a small probability of having 2 estate tax regimes (as we did in 2010, where an estate could elect a stepped-up basis and pay estate tax, or use a carryover basis without owing estate tax).

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

Retirement for Small Business Owners

Posted on by under Business Succession Planning, Business Transitions, Estate Planning, Family Business, Family Limited Partnerships, Illiquid Assets, Kansas, Missouri, Small Business, Trusts, Wills

Bloomberg Businessweek has this fascinating article about some of the risks entrepreneurs and small business owners face when deciding to retire and sell their business. Unlike many of their employees, small business owners often have minimal diversification in their financial and investment portfolios (and instead have concentrated investments in their small business. If business slows down with bad economic conditions or other industry turmoil, the entrepreneur or small business owner risks losing her income and her concentrated investments in her business – a “double whammy” as the article puts it.

Don’t let your business or retirement be hit by the double whammy – plan now and plan well to be sure your future and your business’ future is secure. If we can help you or your family with your small business, estate planning, or business transition needs in Kansas or Missouri, call (913-707-9220) or email (steve@johnsonlawkc.com) the Johnson Law KC LLC for a convenient appointment.

(c) 2012, Stephen M. Johnson

To Plan or Not to Plan: Rip Van Taxes

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

Happy Thanksgiving! Yahoo Finance has this article about the coming “fiscal cliff” and some people’s race to do year-end estate and tax planning, while others are brushing off the tax planning opportunity and waiting to see what, if anything, Congress will do.  While the estate, gift, and generation-skipping tax exemptions are likely to be at the highest point in our lifetimes and the rates are probably at historic lows, the article  points out that maxing out your exemptions may only really matter if you’ve got $10 million of spare assets to give away in trusts. Anecdotally, many estate planning attorneys are seeing clients with $5 million+ estates setting up irrevocable trusts this year, but many middle class clients aren’t as concerned about looming tax increases. The article correctly notes that the estate tax “is not a tax on everyone, it’s a tax on people [with substantial assets] who aren’t paying attention.” Whatever you’re stance on the fiscal cliff and taxes, don’t be caught unprepared for the changes ahead like Rip Van Winkle.

So if you don’t have $5 million+ in assets, why bother with estate planning? Well, if you’re a high risk professional (accountant, architect, attorney, doctor, executive), asset protection is an issue. Maybe you’ve recently gotten married, divorced, or had a child. Or maybe you’re like most clients we work with who want to ensure their family’s taken care of and a surviving spouse and children don’t have to deal with a legal and financial mess after a loved one’s passing.

Whatever your estate planning motivations or needs, we can help. Our office, Johnson Law KC LLC, has years of collective experience doing estate planning, ranging from simple wills for individuals and young couples to complex dynasty trusts and advising on how best to transition the farm or family business. Give us a call (913-707-9220) or email (steve@johnsonlawkc.com) and we’ll schedule a convenient appointment to serve your estate planning needs.

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

“It’s Beginning to Look a Lot Like Christmas”: Give $10.24 Million to Your Family, Tax Free

Posted on by under BDITs, 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, Kansas, Missouri, Small Business, Trusts, Wills

The NYT has this interesting article profiling Jonathan Blattmachr and his wife, Betsy, and their estate planning strategy. Blattmachr is one of the nation’s most preeminent estate planning attorneys and a tax law expert than many attorneys, accountants, and others read for advice on navigating the complex labyrinth that is the IRS Code. He’s a classic example of the Type A personality who immerses himself in the materials of a particular topic and then declares with certainty (often to others’ bemusement) that he’s absolutely certain if you do X, Y will occur. Most attorneys, accountants, and other estate planning professionals are smart, analytical, and risk averse; Blattmachr is the proverbial smartest guy in the room who believes (and often convinces others) that he’s devised a solution so ingenious that despite the critics’ howls and groans, it’s flawless and incontrovertible. And he’s usually right: his work holds up well under IRS attack.

Estate planning attorneys across America have been encouraging affluent clients to max out their $5.12 million lifetime gift tax exemptions before Dec 31, 2012 (since the exemption falls back to $1 million on Jan 1, 2013) (pardon the cheesy title, but clients are well-advised to take advantage of these historically high exemptions). And because of a(n IRS approved) technique called “split gifting,” if you’re married, your $5.12 million individual exemption is actually $10.24 million. So far so good, right? Well, as the article mentions, there’s an old tax law ghoul called the reciprocal trust doctrine. And the reciprocal trust doctrine says if a husband and wife set up trusts with identical terms that make each other beneficiaries and trustees, the IRS can step in and pull the plug, and tell the couple that their clever estate planning is undone and the $10.24 million gift (designed to remove assets from their estates) is now back in their estates (and taxable at the 45%+ estate tax rate). The reciprocal trust doctrine prohibits the wink wink nod nod, quid pro quo, I’ll scratch your back if you scratch mine estate planning strategy in irrevocable trusts. But there are ways around the reciprocal trust doctrine.

To avoid the reciprocal trust doctrine, attorneys vary the terms of the trusts. We (1) set them up at different times, (2) name different beneficiaries, (3) name different trustees, and otherwise vary the terms to make them materially different.

If you’re looking to set up trusts for your family and descendants, sell or transition your small business, or do other estate planning before 2013, time’s running out. Our firm, Johnson Law KC LLC, has experience advising individuals, families, small business owners, and entrepreneurs in all facets of estate planning – whether simple or complex – and we can handle your other legal needs as well. Give us a call (913-707-9220) or email (steve@johnsonlawkc.com) if we can be of service to you.

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

2012 Charitable Giving Strong Despite Weak Economy

Posted on by under Business Succession Planning, Estate Planning, Family Business, Generation Skipping Tax, Kansas, Missouri, Small Business, Trusts, Wills

Charitable giving is a great way to help others and the community. It’s a staple topic of conversation among estate planning attorneys, accountants, and related financial professionals, as well as fresh on the mind of many affluent individuals, families, and small business owners. CNBC has this article encouraging people not to use the uncertain 2013 tax situation as an excuse for procrastinating, but rather to map out charitable giving scenarios and choose one to follow this year. And the WSJ has this blog post about the 2012 Bank of America study of high net worth charitable giving with some encouraging findings, including that affluent individuals and families are still giving generously to charities despite the difficult economy we’re all grappling with.

Charitable giving can be done through a trust, a donor advised fund (at the Greater Kansas City Community Foundation, the  National Christian Foundation, or the Jewish Community Foundation, for instance), or through individual or corporate donations. Even amidst the economic turmoil and uncertainty we’re all experiencing, we encourage everyone to honor their favorite charities or causes and remember those less fortunate this holiday season in their personal charitable giving – remember, we’ve all been blessed immeasurably and sharing with others is caring for them. If you want to set up a trust or donor advised fund for your charitable giving, our law firm, Johnson Law KC LLC, can help. Give us a call (913-707-9220) or email (steve@johnsonlawkc.com) to schedule a convenient appointment.

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