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Asset Protection Planning: What is the Nevis LLC?

Have you ever heard of Nevis Island before? It’s a no-tax offshore domicile within the country of St. Kitts and Nevis, which is totally independent. In addition to these benefits the island is a popular location because its passport processing is relatively quick, with the average being just around 6 months for someone to receive a passport.shutterstock_83499952

Structuring an LLC on the Island of Nevis can be done with just one member. This also comes with the added advantage of no mandatory audits. Minimal compliance with meetings means that meetings can be held anywhere.

Unlike Hong Kong, no local residency is required within the legal structure for a Nevis LLC. And any creditor has to first post a $25,000 bond and deal with Nevis courts.

Confidentiality is complete when it comes to a Nevis LLC and there are no public databases of corporate records. Make sure to speak directly with your asset protection planning attorney about whether a specific kind of LLC or offshore location could help to add a layer of protection for your business interests.

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Asset Protection: Increasingly Intriguing and Needed by the Wealthy

We’ve talked about asset protection planning a fair amount on this blog, but that’s because it carries a message worth repeating: you’ve worked hard to build your wealth and it’s equally imporant to protect it as much as possible. This type of advanced planning is becoming more and more appreciated by the ultra-wealthy, who see it as a critical strategy for protecting assets during their lifetime and structuring a plan for when they pass away, too. shutterstock_181812692

One of the reasons for the increased attention to this issue has to do with structure. Our society is litigation-driven, unfortunately. This idea that someone is always to blame for an accident or incident means that individuals face a higher risk of being sued by someone, and being perceived as wealthy only ups this risk.

And the costs associated with a lawsuit extend far beyond attorney’s fees and the expense of a lost suit. It’s about the emotional drain from protracted litigation, too. Extended litigation can be extremely draining for a defendant, particularly when there are no foundations to the allegations. A strong asset protection plan can be essential for not only handling lawsuits when they arise, but also for detracting would-be litigants from filing a suit in the first place.

 

Talk with your attorney about the various strategies that can be used to protect your assets. Set up your meeting today at info@alawesq.net.

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Asset Protection Tips: Vet Your Advisors Carefully

Being aware of where you invest your money might seem like an obvious asset protection tip, but it’s one that bears repeating. Of course, you should always discuss your investment options with your financial advisor and then schedule an appointment with your asset protection attorney to determine the right vehicles for protection.

The sad news is that sham investments are back on the rise. That’s because  a scheme involving Turkish bonds has now emerged, and many people are trying to buy in. These bonds are non-existent.

According to some reports, as many as 120 people have purcahsed more than $28 million in worthless bonds. Even though the individual who created the scheme is off to prison for his part in the scheme. He was not even a financial advisor, either.

How can you protect yourself? Make sure that you’re always working with professional advisors. Look for a financial advisor with credentials and years of experience before agreeing to do  business together. Check around to get references and slowly build your trust with this person. The same goes for your asset protection attorney- look for a team that is truly committed to doing the right thing for you both now and in the long run. With your hard-earned money on the line, it’s critical to carefully vet anyone you consider working with.

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Three Tips for Asset Protection Planning

Making sure you’ve reduced risks associated with your assets is an important part of your overall planning for finances and your estate. Read on to learn more about five key tips to get started. shutterstock_60555508

Consider the Pros and Cons of Offshore Money

Unfortunately, some recent cases involve courts mandating that debtors bring back overseas assets through “repatriation orders”. If you do not comply, the court can issue a bench warrant leading to contempt of court. Make sure you know the rules and current interpretations in the U.S.

Make Sure You Can Explain Your Asset Protection Plan

It’s not very valuable to you if you cannot walk through how it works. Imagine being asked about your planning structure in deposition- could you easily explain the setup? The best plans are those that you can understand and see the benefit of. Make sure you work with an experienced estate planning attorney.

Know That the Planning May Become Completely Visible to Creditors 

Even if your plan is successful in shielding your assets, creditors might be able t know what’s in it. A plan that requires secrecy usually has other complex elements like ensuring that a former spouse does not speak to creditors or help from an experienced tax specialist when you must report the activity on returns. Talk with your asset protection attorney about the best structure for your plan.

 

 

 

 

 

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Fast Facts on Holding Companies: Part 2

If you tuned into yesterday’s post, you saw the basic information about how holding companies work and the general situations where they make sense for either an individual or a corporation. Today, we’re going into a little more detail about holding companies.

Many large holding companies will put the entity receiving income from subsidiaries in a country with a low income tax rate. One such example is the Isle of Man. This is a complicated process and should be handled by an asset protection specialist who can advise you about the benefits of locating the company in specific places. shutterstock_50352346

Transferring assets to others can be quite simple using a holding company. Instead of issuing stock certificates out to many separate companies, there is only one certificate that comes from the actual holding company.

The taxation of a holding company is such a big issue that is requires the top attorneys and accountants to help you put it together and manage it. If the company is structured as a c-corporation, a holding company tax can be levied if 5 or less individuals own more than half the stock. One solution to this is structuring the business as a limited liability company or limited partnership, wherein each party can select pass-through taxation and pay out on their own personal returns.

For a wealthy investors, the holding company is a great place for thinking, planning, and putting in money to do the maximum amount of good.

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The Value of Protecting Your Assets Long Before a Nursing Home Stay

A nursing home stay, even a brief one, can quickly deplete retirement savings. Even when you are in relatively good health, it’s a good idea to think about planning ahead for nursing home care in order to prevent sudden and surprising costs. This process is usually referred to as Medicaid planning. DGx9ikR2D8Oer1b8oF2BV7u6VvggRJW0MAFZ_OizYBk

Medicaid planning is very valuable, since the government agency determining eligibility looks back over the previous five years to determine whether you have attempted to transfer any assets. This is why planning when a potential event is not on the horizon is even better, because a sudden medical event can be crippling to a retired couple or widow/widower.

The sooner you contact an elder law professional to talk about your options, the better. The specifics of your planning will depend largely on your circumstances, but there are strategies you can employ in order to protect your estate in a meaningful way.  Scrutiny can be an issue for individuals or couples that appear to be wealthy, but taking some steps now to give away some assets or set up a plan to prepare over the course of several years may pay off in spades if you or your spouse ever need nursing home care.

There’s a lot of confusion over what Medicaid does and doesn’t allow- make sure you’ve received the most accurate information from your elder law professional. Send us a message today at info@lawesq.net.

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Should I Just Give My Assets to My Kids To Qualify for Medicaid?

In the event that you or your spouse are facing a long-term care crisis and are concerned about spending down your assets quickly in order to qualify for Medicaid, it’s important to be aware of some of the potential pitfalls of acting too fast without carefully considering your options.

Individuals who are not familiar with the Medicaid qualification process might think that it’s a safe bet to pass on assets to children in order to reduce the volume of assets linked to the individuals attempting to qualify. Passing on these assets to children may be done with good intentions, but it can actually do more harm than good if you’re not careful. canstockphoto1739163

One of the disadvantages associated with transferring these assets is that doing so gives you no control over them in the future. Imagine a scenario where the child is sued and all of the assets are taken. Although this can be disheartening to think about, it’s also important to consider that giving away too many assets in an attempt to qualify for Medicaid can actually trigger a penalty. Medicaid looks back at gifts over the previous five years to determine if an individual has attempted to disperse assets in order to qualify for the government program. Since Medicaid is geared towards low-income individuals, if it is found that you transferred assets too aggressively in an attempt to qualify, a penalty may be calculated to determine the amount of nursing home care that could have been paid for with that gift. The applicant will be ineligible for Medicaid during a particular period if this is determined.

While Medicaid is a critical program for most individuals facing a long-term care crisis, you need to apply for it and prepare for it under the guidance of an experienced elder law professional. Don’t take any actions until you’ve consulted with an expert- email us at info@lawesq.net.

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Asset Protection Trusts: Guidelines for Efficient Integration

One of the most popular approaches to estate planning has to do with safeguarding assets against possible losses. Asset protection trusts are one common way to protect property for you and your beneficiaries. shutterstock_120265729

Asset protection trusts refer to irrevocable trust structures in which a trustee holds property and distributes it out under his or her discretion. The trust protects the assets from being exposed to risk through divorce, a beneficiary’s creditors, or other predators in the future. There are two primary categories for asset protection trusts: third party trusts and self-settled trusts. As the name suggests, a third party trust involves a trust being set up by one party to benefit another whereas a self-settled trust is established by one party for his or her own benefit.

Passing on assets to children or grandchildren these days could potentially be risky in such uncertain times, what with bankruptcies, lawsuits, and divorces all possible. Asset protection trusts can also guard against another common client concern: that a beneficiary will blow through all the money too quickly. In cases where a beneficiary develops a disability later in life, without proper planning this beneficiary may have to spend a large sum to support the needed care while also being disqualified for medical benefits.

These situations call for third-party trusts such as:

  • Trusts for the benefit of adult beneficiaries- This is ideal for those who are not good or comfortable with managing money, those who may get divorced in the future, or those who have an addiction problem.
  • Trusts for the benefit of minors- Since minors can’t legally accept an inheritance, this can be a way to provide assets in the future.
  • Trusts for the benefit of disabled individuals- A large inheritance could disqualify someone from government benefits while forcing them to spend through the assets they receive.
  • Trusts for surviving spouses- This is a popular option if you are concerned that your spouse will remarry or will be unable to manage the inheritance properly.

Consider the flexibility offered in these kinds of trusts and contact our office today for more information. Send us a message at info@lawesq.net

 

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Insulating Your Assets Against Lawsuits: Getting Started

Lance Armstrong has done it- insulated his assets from being totally exposed to creditors. But there are reasons that other people outside of public figures should considering doing the same. While it’s very difficult to imagine all of your money being entirely protected from creditors, there are steps you can take to protect yourself with business planning and estate planning. shutterstock_258583025

One of the approaches to doing this is setting up “hurdles” for creditors. While technically this allows the creditors to still gain access to your assets, the structure of the hurdle is such that they will be unable to do so without having to “pay to play.” For some creditors, it’s simply too expensive to tear through your careful planning. Many opt to settle instead.

Anyone at risk of being sued should consider asset protection planning, because all it takes is one lawsuit to expose your home and a few cars to major risk. Step one in this process is ensuring that the proper insurance policies are in place, particularly those that limit liability. This kind of critical umbrella coverage is essential for safeguarding against the high costs of even just one lawsuit from a car accident or similar incident.

A second layer can be done using trusts that help to shield assets. Money for heirs is placed inside the trusts to protect those assets, but trusts can also be good tools for protecting children from the fallout of a divorce settlement or a lawsuit. Make sure you’ve taken an all-encompassing approach to your asset protection planning. Contact us today to get started or review your existing plan at info@lawesq.net.

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Living Trusts: The Importance of Proper Funding

If you have decided to use a trust to pass on your assets, this can be an exciting decision that gives you peace of mind about the firmness of your plans. If you don’t ensure that the trust is properly funded, however, it’s unlikely that your trust is going to carry out the plans that you intended.

If you already have assets inside the trust, make sure that you set up reminders to continuously review your materials and always have unfunded or new assets titled into the trust’s name. Don’t ever assume that these changes have been made, since the ownership of verification falls squarely on your shoulders. Keep copies of documents that confirm your changes so that you are always clear on what’s been taken care of already. If values have also changed, ensure that is updated as well.2014-10-20_1448

If an asset that you used to own has now passed onto someone else through a sale or closure, make sure it’s removed from your funding portfolio. This makes it easier on your family members in the future and the trust executor so that they are not searching for assets that are no longer present. To review your funding in your living trusts, get in touch with us through email at info@lawesq.net or over the phone 732-521-9455

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Lessons from the Joan Rivers Estate

Joan Rivers was heralded as a stellar performer, but she also left behind a legacy as an incredible businesswoman. Her estate included income, collectibles, and real estate that was estimated in value between $150 million and $250 million. She left behind detailed instructions for her assets after her death, which is rare in a society when many celebrity deaths highlight the weaknesses of their estate plans. Photo Credit: breitbart.com

Looking at her careful planning, there are a few key lessons: be prepared for the unexpected, outline plans for pets, and correctly title the assets. Joan Rivers was also masterful in giving her family a brief overview of the estate plans to help improve clarity and reduce the possibility of arguments. Rivers made use of family trusts to reduce the tax burden for her beneficiaries and titled her assets

appropriately to allow for the smooth transition of business assets. This act alone helped to diminish her capital gains taxes.

Regardless of the size of your estate, proper planning allows you to pass on assets to your heirs in the most efficient manner while minimizing the tax liability. Contact our offices today for a consultation for your business and personal needs through email at info@lawesq.net or contact us via phone at 732-521-9455.

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Should I Worry About Protecting My IRA?

This past June, an important ruling from the Supreme Court found that an inherited IRA is not protected as retirement funds. If a beneficiary of inherited IRA funds files for bankruptcy, the funds they inherited could be subject to creditor claims.

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This new finding highlights the value of a trust. If the inherited IRA funds were received by a beneficiary though a trust, this would help to protect those funds so that they could be used in the manner desired by the person setting up

the beneficiaries. One such example is the use of a Standalone Retirement Trust, where inherited funds flow to a third-party trust after the retirement plan owner passes away. While the beneficiary still retains access to the funds, the fact that he or she didn’t create the trust allows quite a bit of protection for the beneficiary.

There are some states where laws on the books do protect inherited retirement accounts from creditors, but it’s always wise to consult with an estate planning attorney to discuss best structures for passing down assets. To learn more about your options, send us an email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.

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What Qualifies as a Digital Asset?

One of the biggest buzzword phrases in estate planning today is “digital asset”. But what does that mean, and how should you plan for it? Does everyone have digital assets? What happens if you fail to plan? These are all great questions, and this brief article will provide you with some details about how to approach this new concern.

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You’ll want to identify your digital assets before you set up plans for them. These might include:

  • Domain names/hosting rights
  • Credit card accounts
  • Debts
  • Email
  • Storage
  • Financial and banking account
  • Stocks
  • Bonds
  • Securities
  • Utility accounts
  • Social media
  • Online loyalty accounts
  • Retirement accounts
  • Tax accounts
  • Insurance accounts

As you can see, you very well could have quite a few digital assets. When outlining your list, include the account number, usernames, and passwords. You can store this on a hard media source or through the use of an online program. There will be numerous passwords, especially when it comes to accessing a device, the operating system, opening documents, etc. This way your account information is kept secure.

To manage these accounts, you need a digital fiduciary. It’s easiest if this is the same person who is serving as your will executor, trustee, or agent through a power of attorney. That individual would manage identifying the digital assets, copying or deleting information, and distributing the asset to the intended person.

Without a digital asset plan, your digital information could be forever lost. Even family photos that you have saved on a hard drive could be difficult to access without specific instructions. To learn more about comprehensive planning for all your assets, contact us at 732-521-9455 or through email at info@lawesq.net to begin.

 

 

 

 

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Don’t Make This Mistake With Digital Assets

As virtual currencies like Bitcoins become more popular, even the IRS has recognized the possible value in these assets. As the owner of any kind of digital asset, you should also be aware of how to properly include these in your estate plan. Along with this goes avoiding one of the most common mistakes made with digital assets: failing to tell your beneficiaries about them.

Other kinds of assets, like stocks, bonds, real estate, and retirement plans have been part of the estate planning arena for so long that planning attorneys and trustee administrators are well versed in how to deal with them, even when beneficiaries are not entirely clear of their existence or worth. They also tend to be easier to hunt down if necessary, but the virtual world can be complex and heavily password protected.

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With digital assets, it’s different. Unless somebody knows you’ve got these assets, it’s very likely that none of your heirs will ever gain access to them. It’s most likely that this wasn’t what you intended. So make it clear: if you’ve got someone in mind that you would like to take over your digital assets, tell them about it. Better yet, communicate it to your estate planning attorney as well to limit any confusion and to ensure that you have covered all your bases. For a comprehensive estate planning consultation, contact us today by email info@lawesq.net or via phone at 732-521-9455.

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Real Estate Owners, Doctors & Gun Collectors: How to Plan for Special Assets

In many cases, and especially for business owners, there are assets in an estate plan that require special consideration. For example, a company that requires certain expertise or specific licenses will need their own planning, like a special trustee to administer those assets.

An individual or business owner that has a gun collection, for example, would be placed into a trust that is monitored by another individual with a gun license. Likewise, a doctor might choose a trustee who is also a doctor to control the medical practice’s ownership corporation in the event of incapacity.

Another example involves real estate, where there is a home that the owner would like to keep in the family. There are several reasons why it makes sense to establish a house trust to explain how the house could eventually be sold, and how it can be shared and used by everyone in the short term. Heirlooms and pets represent further causes for special planning.

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Trusts are a highly beneficial tool for a wide variety of individuals and businesses because of the many advantages they offer. An individual has more control over the passing down of assets and there are also be tax benefits, too. To learn how to plan for your special circumstances with a trust, email info@lawesq.net or call 732-521-9455.

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What is a Self-Settled Trust? Asset Protection & Tax Savings.

Right now, gift and generation skipping transfer tax exemptions, set at $5.34 million each, have caused a resurgence in interest regarding self-settled trust. As of now, only fifteen states allow for these types of trusts: Alaska, Delaware, Hawaii, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia and Wyoming. Several of these states, including Delaware and Nevada, tend to be popular locations for DING/NING trust establishment when the trust creator lives in a high state income-tax and capital gains tax environment.

What is a Self-Settled Trust? Asset Protection & Tax Savings.

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Under a self-settled trust, grantors may even be a beneficiary of an irrevocable trust that is established for their own family. As long as no assets are transferred fraudulently, no exception creditors, and no pre-existing arrangement between the trustee and grantor, a trust grantor can establish himself or herself as a beneficiary.

These trusts are most often used for domestic asset protection in four separate ways: a self-settled trust, spendthrift protection, modern discretionary trust protection, and the establishment of a limited liability company to shield and own trust property. In their most common form, self-settled trusts are used as an alternative to off-shore trusts. To learn more about trust creation and management that maximizes protection, email us at info@lawesq.net or contact us via phone at 732-521-9455.

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Indian HSBC Client Found Guilty of Hiding Offshore Accounts

Offshore account taxpayer Ashvin Desai was recently sentenced to six months in prison in addition to six months of home confinement for not reporting foreign bank accounts on tax returns and FBAR filings. The medical device manufacturer had previously been convicted of hiding more than $8 million in foreign bank accounts.

Indian HSBC Client Found Guilty of Hiding Offshore Accounts

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In addition to being charged with tax evasion and tax perjury, he also pleaded guilty to failing to file an FBAR. The money from his offshore accounts were used to invest in CODs, where he earned interest rates up to nine percent. In addition to all the other charges and penalties for the efforts he took to hide the assets, he was also assessed a $14,229, 744.00 FBAR penalty. While these penalties may seem severe, he was actually very lucky in the sentencing, as he could have been facing 552 months in prison.

The government was forced to prove their case in court, but what sealed the deal was email proof that Desai was making efforts to conceal the money and how it was being transferred. While there are obvious lessons here about using email to share any kind of sensitive information, it’s also an opportunity to highlight the importance of proper FBAR filing. To ensure the proper compliance with FBAR, contact us today at info@lawesq.net or via phone at 732-521-9455.

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How Did Shelly Sterling Control the Clippers Sale Decision?

The Los Angeles Clippers sale recently seemed to go ahead just the way that most players, fans, and the NBA commission wanted it, leading to an agreement that sold the team to former Microsoft CEO Steve Ballmer for $2 billion. The control behind the sale, however, went to Donald Sterling’s wife, Shelly, causing many to wonder just how she managed it.

How Did Shelly Sterling Control the Clippers Sale Decision
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Shelly made her move with a boilerplate provision included in the Sterling family trust, which maintained ownership over the Sterling’s interest in the Clippers. Since both Shelly and Donald were co-trustees holding equal authority over that trust, she was eligible to make the decision based on another standard trust provision regarding mental competency.

Shelly had already had Donald evaluated for mental competency. Under the trust’s guidelines, if either Shelly or Donald were found by two qualified physicians to have “an inability to conduct business affairs in a reasonable and normal manner”, that individual could be removed as co-trustee. As a result, Shelly would have become the sole trustee with the decision making power and authority to sell or manage the business how she saw fit and that is her strategy.

Whether planning for your family’s assets or for those of an NBA team owner, when in generating trusts’ planning attorneys may recommend that provisions like the one above are put into the language for the protection of both individuals. If not included, the co-trustee (or business partner, as it may be) could be exposed to serious risk in the event of some form of incapacity. If not planned at all, it could all be left up to a court to decide. Get more details about trust planning today by contacting us at info@lawesq.net or at 732-521-9455.

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Is a Roth IRA the “Cadillac” of Assets to Leave for Heirs?

If you’re looking down the road to retirement, you may be wondering which of your accounts you should tap into first, and which you should leave possibly set aside to pass on to beneficiaries. Those individuals with traditional retirement accounts, brokerage accounts, Roth IRAs, and a 401k may feel overwhelmed by the options, but it all depends on your estate planning goals.

Is a Roth IRA the Cadillac of Assets to Leave for Heirs
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For the most part, Roth IRAs seem to be good accounts to leave behind for others. Since the distributions can be taken out tax-free and can be stretched over the course of a lifetime, the majority of the original investment can continue growing tax free during that same period. Since the federal estate tax exemption for a married couple is more than $10 million, Roth IRAs may be more likely to be free of estate taxes and income taxes. For that reason, it could be worth your time to convert other traditional retirement accounts into a Roth for the ultimate benefit or heirs.

Doing so, however, requires understanding that you’re probably going to have to leave that money alone for at least ten years, so don’t make a decision without careful consideration of your own cash flow situation. If you convert and begin taking income out, the potential growth for that IRA is halted. To learn more about estate planning strategies that leave a legacy behind for family, call us at 732-521-9455.

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Preventing End of Life Costs from Destroying Your Estate

It’s very rare that anybody has covered all possible risks in terms of their wealth management when it comes to income and cash flow, guaranteed income, cash, investments, and the connection between long term care and your estate. If you skip planning for long term care expenses, you may find that your other wealth management tools and strategies don’t hold up to the rising cost of healthcare.

Preventing End of Life Costs from Destroying Your Estate
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The average cost per month for a long-term care facility is over $7,000. That’s why long term care planning is so essential. When a long-term care insurance policy is too expensive or not an option because you do not qualify.

There are alternatives, however. Structuring your estate in a particular manner can help you guard against the cost of long term care. Two common strategies are eliminating assets through trusts and transfers. This means that down the road, if you need to reduce your assets for Medicaid eligibility, you’ve already done most of the work. If you are confronted with a long-term care event before you have done this, you could find yourself having to “spend down” your assets anyways before government assistance kicks in, depleting your savings and forcing you to do it rapidly, which is rarely in your best interest. However, if you do it incorrectly, it has the potential to have a severely negative impact on eligibility and penalty periods. To learn more about trust planning, gifting, and other strategies to mitigate risk in estate planning, email info@lawesq.net or contact us via phone at 732-521-9455.