The WSJ has this helpful article surveying different asset protection options with an eye towards insulating your hard earning wealth from lawsuits. We’ve discussed the basics of asset protection in this post, Asset Protection 101. Another asset protection motive is to protect your wealth from divorcing spouses – either yours or your children’s or grandchildren’s. A well drafted prenuptial agreement can help. As can holding the assets in a corporation, LLC, or irrevocable trust, outside of your direct control or ownership. The key with asset protection, as the WSJ article emphasizes, is to move some (not all) of your assets into a protective structure before creditors loom on the horizon. Like sharks circling on the trail of blood in the water, once creditors are in the picture, asset protection becomes much harder.
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 (firstname.lastname@example.org) to schedule a convenient, free consultation. You owe it to yourself and your family to protect your hard work.
(c) 2014, Stephen M. Johnson, Esq.
The Kansas City Business Journal has this helpful article with strategies for protecting your business and assets if a divorce or other unpleasantness arises in your life.
While divorce or creditor lawsuits are never welcome developments in someone’s game plan, the best offense is a good defense. My firm has experience working with individuals and families throughout the business and estate planning processes. I’ve enjoyed working with clients ranging from single young professionals who want to plan for the future to business owners with complex trusts and tens of millions in assets. If my law firm can help you or your family with your estate planning, elder law, asset protection, business law needs, or digital estate planning, call me (913-707-9220) or email me (email@example.com) for a free, convenient appointment. I want to make business and estate planning simple and straightforward to serve your legal needs and help protect you and your business from lurking liabilities.
(c) 2014, Stephen M. Johnson, Esq.
About a month ago, I had the pleasure of attending a wedding of two dear friends. A month or so before the wedding, I shared some advice with the groom (I’ve shared the same advice with other friends over the years). Every bride and groom encounter various financial, tax, and legal questions in the busy and chaotic wedding planning time and after the honeymoon’s over and the new couple adjusts to life together. Good planning is crucial. Nobel Laureate T.S. Eliot memorably wrote, “What we call the beginning is often the end/And to make an end is to make a beginning./The end is where we start from.” (The Four Quartets, Little Gidding, V). True with estate planning as with many endeavors in life. So what’s the end game? Start from there to figure out how to get there.
- Don’t buy your fiancé expensive gifts in his or her name. Whether a car, house/condo, jewelry, vacations, clothes, furniture, artwork, antiques, or other big ticket items, wait until you’re married. Federal law allows you to give your fiancé a gift of up to $14,000 tax free per year, but if the item costs $14,001, you’ll owe gift tax and have to file a gift tax return (not fun or romantic). The IRS says a gift is anything you receive without paying fair market value. (Kansas and Missouri don’t have state gift taxes.) Instead buy the item in your name and give it to your spouse once you’re married, as husbands and wives can give each other unlimited gifts without tax consequences.
- Don’t add your fiancé to real estate deeds until you’re married. Again, any gift (like a house or farm) over $14,000 will cost you gift tax and require filing a return with the IRS.
- Don’t pay off your fiancé’s credit cards, car or student loans before you’re married. Gifts are romantic, but gift taxes aren’t. Wait until you’re married.
After the wedding:
- Execute living wills, and durable medical and financial powers of attorney. These are inexpensive, but vital documents that can last for decades. Your spouse can’t talk with your doctor, authorize surgery, or make financial decisions for you without these documents in place. My firm’s financial powers of attorney include cutting edge digital estate planning and elder law provisions, standard. My firm’s living wills and medical powers of attorney include HIPAA, HITECH, and Affordable Care Act (ObamaCare) privacy releases and can easily be custom tailored at no extra charge to reflect your beliefs and convictions about end of life treatment issues. (Having these done as a single person is wise, especially if you have health issues, travel frequently, or have various assets (family business stock or a small business, home mortgage, intellectual property, etc) – you can change your attorney in fact (or agent) quickly and inexpensively once you’re married.
- Execute a will and/or trust. Simple, no-frills wills for a couple are economical. Wills that include a trust (testamentary trusts), or pourover wills that leave everything to a standalone trust are also affordable. Kansas law automatically invalidates an existing will when you get married and have a child. Missouri law is different. A will or trust allows you to leave specific instructions for how you want your financial affairs handled, how much your spouse and children receive, who cares for your child, and so on. Kansas and Missouri both allow a separate personal property list (highly recommended) to leave specific items to different family members or friends. Whether you’ve got $5,000 in student loans or $5 million in your stock portfolio, you need a will or trust. If you die intestate (without a will), your family will pay more for probate administration and endure a longer, more complex court process than if you have a will. And who wants the government to dictate how their things are distributed and who gets what? My firm has worked on dozens of probate estates in Kansas and Missouri, but it’s easier on everyone to plan ahead. Avoid LegalZoom, Rocket Lawyer, and other do-it-yourself books or websites – I’ve seen (and fixed) online/DIY documents for clients that any practicing attorney would’ve been embarrassed to have drafted. Like many other services, you get what you pay for – good planning requires expertise. My firm has the training and expertise to guide you through the process, leavened with friendly counsel.
A few other ideas for newlyweds:
- Joint or separate bank accounts
- Change IRA/retirement plan beneficiary to spouse
- Change life insurance beneficiary to spouse
- Car titles – joint or separate
- Real estate – joint or separate – joint tenancy in Kansas or Missouri; tenancy by the entirety in Missouri
- If you’re moving to another state once you’re married, you have about 30 days to change your driver’s license, legal name, etc
My firm has experience working with young professionals, young families, and newlyweds to make the estate planning simple, easy, and inexpensive. My firm also has experience working with high net worth individuals and families with tens of millions in assets, closely held businesses, real estate, and other issues. We provide reliable, easy to understand documents so you can rest easy and enjoy your life. Give me a call (913-707-9220) or email me (firstname.lastname@example.org) to schedule a convenient, free consultation.
IRS CIRCULAR 230 Disclosure: Unless expressly stated otherwise, any U.S. federal tax advice contained in this blog post or links is not intended or written by Johnson Law KC LLC to be used to avoid IRS or other tax penalties, and any tax advice cannot be used to avoid penalties that may be imposed by the IRS.
(c) 2013, Stephen M. Johnson, Esq.
Fox Business has this brief, helpful article with 7 reasons why a person would want or need a trust.
1. Don’t Want Children to Inherit at Age 18
2. Asset Protection from Creditors
3. Someone Else at the Helm
4. Complicated Family Situation
5. Avoid the Probate
6. Take Care of a Disabled Child
7. Safeguard Your Privacy
All 7 of these are good reasons to consider a trust. My firm often works with clients wanting or needing asset protection, privacy, avoiding probate, or caring for a disabled child (or parent). Trusts come in a variety of options and are affordable, smart choices for many clients. If my law firm, Johnson Law KC LLC, can serve you or your family’s estate planning, asset protection, elder law, special needs trusts, or business needs, call me (913-707-9220) or email me (email@example.com) for a convenient, complimentary consultation. My firm looks forward to serving you and your family with reliable, friendly experience and counsel at an affordable cost. And there’s no better time than before the holiday rush, amid the beautiful autumn colors, to get your financial affairs settled.
(c) 2013, Stephen M. Johnson, Esq.
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 (firstname.lastname@example.org) for a convenient free consult with my firm, Johnson Law KC LLC. We practice law differently.
(c) 2013, Stephen M. Johnson, Esq.
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 (email@example.com) for a convenient appointment with my firm, Johnson Law KC LLC.
(c) 2013, Stephen M. Johnson, Esq.
Last week’s Facebook IPO made several early investors billionaires or millionaires – kudos to them on having a nice payday from their investment. Donald Trump offered some indirect advice – get a premarital agreement – to Mark Zuckerberg, Facebook’s co-founder, official face, and the world’s youngest billionaire. As it turns out, Zuckerberg married his long time girlfriend the day after the IPO in a private ceremony – congratulations to the happy couple!
So do estate planners recommend premarital agreements for their clients? It depends on the lawyer. I recommend couples consider premarital agreements when it’s a 2nd marriage for both spouses, to help resolve potential inheritance issues with their children from previous marriages. But I don’t usually advise couples to get premarital agreements in cases of wealth inequality or some other circumstances. What do you think? To prenup or not?
(c) 2012, Stephen M. Johnson, Esq.
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.
Interesting story about the changing calculus of prenuptial agreements from CNBC. While prenuptial agreements have traditionally been used by men in the past, the new economic realities in which we live are causing more women to consider prenuptial agreements as well.
From an estate planning perspective, prenuptial agreements are best utilized where: (1) one prospective spouse has previously been married or in a relationship and has children from that relationship, and is concerned that those children may get left out of the estate plan when the spouse dies and is survived by the 2nd husband or wife, or (2) where the prospective spouses come to the marriage with grossly disproportionate assets (e.g. a very wealthy man and a woman with minimal financial assets, or vice versa) that they feel the need to protect from potential divorce property settlements in the future.
The law of prenuptial agreements may also evolve over time as more states opt for co-called “covenant marriage” laws, which bind the spouses more stringently than the traditional marriage laws coupled with no-fault divorce laws nationwide. For most individuals approaching marriage, effective and honest communication with one’s fiance about finances, estate planning, and other issues is a far better panacea than a prenuptial agreement .
(C) Stephen M. Johnson, 2010. All rights reserved.