While “now” is always the time you should start getting your exit plan ready for your business, there are some guidelines about specific year marks that you should use to think about what will happen next. Here is the best advice for exit plans.

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Starting ten years in advance is the best way to maximize opportunities. This is because at this marker, you can start really considering whether the business is intended as a family legacy. If a family member will be taking over the business, the ten year period is a great planning point for incorporating those family members into training and education. Ultimately, this will make the transition period much smoother. Saving taxes is another primary concern at this stage. If a business owner has recently converted the company from C Corp to S Corp filing status, you should wait a minimum of ten years before selling the company.

Five years out is a good place to review because you are a little closer to the finish line here. Cash flow, tax deduction, and tax leverage should all be explored with your planning specialist at this time. Changes regarding cash flow can allow for a strategy in which cash flow to the owner is a focus rather than company growth.

Finally, even one year out provides planning opportunities. For example, we have implemented strategies which could save the Seller the entire [9% - 13%] tax some states collect upon the sale of a business. If the company will be sold, the owner should identify a business broker or investment banker to actually put the business on the market. This gives enough time for a due diligence review, drafting the sales agreement, and delays related to regulatory issues. No matter what stage you’re at, you need to put some planning tactics in place for your exit plan. Contact us today at 732-521-9455 or email info@lawesq.net to get started with your personalized plan.

Despite the marketing that’s attempting to penetrate just about everywhere these days, there’s a lesson to be learned from online programs that make estate planning seem so easy. And the lesson isn’t that you can save money and time by putting it together yourself. Up front, you may very well save some money and time. Just don’t be surprised when those “plans” don’t hold up in court. Just ask the family of Ann Aldrich.

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Aldrich used one of these easy programs to put her will together back in 2004. In the will, neither of her two nieces were actually mentioned. Jump to the present and both those nieces were able to capitalize on their aunt’s poor planning. The Florida Supreme Court recently ruled in favor of the nieces because the will was missing the important residuary clause, allowing all money acquired by the aunt after 2004 to be distributed through intestacy (the same laws that govern property distribution for those who pass away without a will at all).

Aldrich’s will included statements leaving everything to her sister and then her brother. Since the sister died first, the brother argued that he was entitled to everything. Since the “oh so easy” legal form only accounted for listed items, nieces were able to argue their rights to assets not specifically outlined in the will. Although Aldrich’s intentions appear rather clear, her documentation was missing something that an estate planning attorney would have picked up at first glance. Unfortunately, this meant that her wishes were not carried out as she planned. This situation was entirely preventable with a little bit of planning. If you’d like to ensure that your estate planning documents carry out your wishes clearly, set up a consultation by calling 732-521-9455 or emailing info@lawesq.net

Who should raise your children if, for some reason, you or your spouse is unable to do so? It’s not an easy question to answer, but if you have young children, it is a topic you most certainly should address in your estate plan. Otherwise, a court will decide, and its decision might not be the one you would have made. It may not even be in the best interests of your children.

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Some of the most important issues to consider when choosing a guardian include:

• Does the prospective guardian have a genuine interest in your children’s well-being?
• Does the prospective guardian share your values?
• Can he or she handle the role physically and emotionally? What about financially, if you cannot provide him or her with enough assets to raise your children?
• Does the prospective guardian already have children of his or her own? Will he or she have enough time to adequately care for and look after your children?
• Where does the prospective guardian live? Would that be a good fit for your children? Would having to move far away make an already stressful situation for your children even more so?
• Is it essential that all your children share the same guardian? Most parents say yes, but in some circumstances, such as when your children are of significantly different ages, naming more than one guardian is an option.
• Should you choose one person to act as personal guardian and another to manage the financial arrangements for your children—that  is, name a second person to act as custodian or trustee? In certain situations, such as when the best surrogate parent for your children is not necessarily the best person to handle financial matters, this option is worth considering.
• Most important of all, have you spoken to the prospective guardian about taking on such a responsibility, and does he or she seem readily willing to do so?

We have helped many couples select the ideal guardian for their children and designed wills or other planning documents to ensure their wishes are carried out. We welcome the opportunity  to do the same for you.

Planning for blended families presents particular challenges when it comes to ensuring your wishes are carried out. While every situation is unique, here are a few common problems and ways to address them.

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Let’s say you want to disinherit your ex-spouse. At the very least, make sure you have replaced him or her as the named beneficiary of your retirement plans and other assets. You should also consider a Long-Term Discretionary Trust (LTD Trust) to administer your children’s inheritance, with a party of your choosing serving as trustee. In this way, even if your children reside with your ex-spouse, your trustee will control the inheritance through the LTD Trust and ensure it is used only for your children. Should one of your children predecease your ex-spouse, the inheritance would remain
in your LTD Trust for your grandchildren and, if there are none, for your surviving children or other beneficiaries of your own choosing.

Another useful trust is called a Qualified Terminable Interest Property Trust (QTIP Trust). It can protect your new spouse by providing income and even principal for life. It can also protect your new spouse’s inheritance in the event of a subsequent remarriage and divorce. And, upon the death of your new spouse, the QTIP Trust assets may pass to the LTD Trust you established for your own children.

To learn more about the unique planning problems associated with blended families, and how we can help address your particular concerns and goals, please contact us for a consultation.

Challenges to wills and trusts are more common than you might think.

These disputes can turn very ugly, very quickly. Resentment between family members can last a lifetime, and the financial consequences can be devastating for all parties involved. Here are several ways to prevent potential disputes from arising in the first place, avoid estate litigation, and help ensure your wishes are carried out.

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Try to treat siblings as equally as possible
Granted, in some family situations this may seem easier said than done. However, the principle is sound and can help avoid a number of potential problems. If you have two children, leave each of them the same amount. However, the “equality principle” doesn’t just apply to money. There is also the issue of control. If one of your children seems better able to manage money and you name him or her as executor of the estate (or trustee of the trust), the other child will likely feel slighted. Naming a corporate executor or trustee can nip this thorny issue in the bud. Another potential problem is when inheritances are left to grandchildren, and one sibling has more grandchildren than the other. However,

if you follow the equality principle, many conflicts can be avoided.

Never underestimate the emotional value of certain family heirlooms and other tangible property
That vase in the foyer or old sofa in the living room might not seem valuable to you, but to certain members of your family it could hold special meaning and value. A statement in a will or trust that essentially says ‘tangible personal property should be divided as my heirs see fit’ can lead to a host of conflicts. By putting specific items that you believe are of interest to certain family members in writing, and discussing these decisions in advance, many emotionally charged disputes can be avoided.

If you gave money to one heir in the past, don’t forget about it your plan
Let’s say that several years ago you gave one of your sons $20,000 to help with the down payment on a home. Since your goal is to treat all of your children equally, you might want to address this gift in your will or trust. For example, it can be classified as an advancement, with the $20,000 counting as part of the money you ultimately leave to that particular son.

Consider putting a no contest clause in your will
If you suspect that one of your children, or his or her spouse, might make trouble over your will, a no contest clause can help avoid potential problems. In essence, this clause makes the risk of challenging your will outweigh the potential benefit of doing so.

A no contest clause typically stipulates that if a beneficiary contests the will’s validity its provisions, his or interest in the will is forfeited. Of course, you have to leave the heir in question enough of an inheritance to motivate him or her not to challenge the will.

Prove that you are of sound mind
This might sound “crazy,” but it’s not. Challenges to wills often involve allegations that the maker of the will (the testator) was not of sound mind when the will was signed. This tactic is particularly common when changes have been made to the will shortly before the testator’s death. You can help prevent this type of challenge by obtaining an evaluation from a treating physician and a psychiatrist right before you sign or make changes to your will.

If you are going to disinherit someone, make sure it is noted clearly in your will
Our children can and sometimes do disappoint us. Sadly, the level of disappointment may be so severe, the behavior so egregious, that the only solution seems to be disinheriting the son, daughter, or grandchild entirely. If you find yourself in this situation, make sure your decision is noted in your will. You don’t want to give a reason for your decision, as this could become the foundation for a potential lawsuit. However, you need to make it clear that your decision was intentional.

Depending on who you talk to, your estate planning specialist might recommend wills over trusts or trusts over wills. Let’s walk through some of the differences between these two planning tools to see if one might be a better fit for your needs.

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If you are planning to use a will as your primary tool, bear in mind that your assets must first go through the probate process in order to be eventually received by your beneficiaries. Some states have lengthy and cumbersome probate processes, meaning that it could take your beneficiaries a while to actually receive the assets. Probate is also very public, meaning that details about your financial situation will be shared in a less-private forum. If you’re concerned about this, a trust might be a better option.

In comparison, trusts tend to pass by the court system for the majority of the administrative process. Since these are privacy documents, there’s less public scrutiny into your finances or your plans, and some clients prefer this confidential approach. Unlike wills, which become active on your death, a trust can be rendered effective immediately. Additionally, trusts can also be used for incapacity planning, adding another layer to their usefulness.

Both wills and trusts can do tax planning for credit shelter trusts. The bottom line is that it depends on your needs. If you are not concerned about the red tape of the probate process, there are still advantages (especially regarding privacy) for the establishment of a trust. We work with clients to create a customized plan for you since we recognize that each client is unique. To talk more about the kinds of trusts we can help you establish or to begin generation of your will, contact us today at 732-521-9455 or through e-mail at info@lawesq.net

Security breaches seem to be on the rise. Target’s customer data breach impacted 110 million Americans and the Neiman Marcus breach affected 40 million, and it seems like we are hearing about new breaches every few weeks. Staying ahead of the curve is critical for those in the hospitality industry, and hoteliers have an excellent opportunity to consider their own risk reduction and planning tools in the wake of security breaches across other industries.

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Hotels are major targets for financial and identity theft. Since all hotels work through credit and debit cards on file, this already exposes a lot of risk for private customer information. Those credit cards can be accessed and digitally “swiped” any number of times during a guest’s hotel stay- whether it’s at the bar, ordering room service, or for a spa charge. Every swipe opens the door for identity theft without the hotel’s knowledge.

One common gaping hole for hoteliers is unsecured wireless internet. While a hotel owner may think he or she is doing the right thing by providing free and easy access, an unsecured network really poses a big threat. Hackers can more easily access your network and programs in order to steal information and records from your service.

There are a few steps hoteliers can take to beef up security. Restricting access to data and collection of data is one way to protect customer privacy. Critical identifying information should be stored securely and a database should be created about under which computers and servers various information is kept. Encryption is one easy way that hotels can store information safely, reducing the risk of guest identity or financial theft. This is a great opportunity to review your existing procedures and policies to determine the risks.

If you’d like to talk more about how planning can help you prevent problems & how asset protection planning can help you to shield your assets from such liabilities, contact us at 732-521-9455 or info@lawesq.net today.

Today’s high net worth individuals are deeply sensitive to the risks they face with state income taxes. Since state income taxes can be such a burden for a wealthy person, more individuals are transferring billions of dollars’ worth of assets to trusts in states without tax, like Alaska, Nevada, and Delaware.

While these moves are currently quite legal, they are getting attention from officials in places like New York. New York officials have recognized a $150 million a year loss from avoiding taxes using out of state trusts. Wise wealth planners are clued in to these kinds of strategies, recognizing that many clients are concerned about the negative hit their assets will take when subject to such taxes. Wealth planners report that more clients are asking for assistance in protecting their money wherever possible, and out of state trusts are proving to be a vibrant market with many opportunities.

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Although these transfers are happening at the individual level, they seem to mirror corporation behavior, too. Companies like Google have moved across national borders in order to cut down on the high taxes they are forced to pay if they stay in the U.S. Likewise, some people who want to sell their companies move shares out of home states and into out-of-state trusts to protect gains from state income taxes.

Estate attorneys that are in the know look at every aspect of a client’s portfolio to find the best ways to promote growth and protect from risk. Any client with a substantial portfolio might want to consider this strategy to cut down on the high state taxes that would otherwise be paid. Clients have been successful and satisfied with moving assets across the spectrum from several hundred thousand all the way up to hundreds of millions.

Nevada and Delaware have been engaged in a decades-long battle to get business from wealthy Americans through trusts. Part of the strategy for getting this business is by writing laws that make it simpler to transfer property across several generations and reduce the risk that assets will be attacked by creditors. As a result, Nevada has no state income tax and Delaware doesn’t place a tax on any out-of-state beneficiaries.

One of the most popular strategies is to use a Non-Grantor Trust, known as NING (Nevada Non-Grantor Trust) and DING (Delaware Non-Grantor Trust). Wealthy individuals who live in high-tax states can make the best of friendly policies in other states without the fear of violating any state or federal laws. In fact, a growing number of individuals are moving the assets just far enough outside their control so that they aren’t responsible for state income tax while also protecting them from being hit with a 40 percent gift tax. Most of these trusts are private, so there’s no clear data yet about just how many people are taking advantage of these incredible trust opportunities, but planners and attorneys are both reporting higher numbers of clients getting on board.