estate planning & asset protection in an hour (series: one hour law school 1.0 - tell me what i...
TRANSCRIPT
Estate Planning & Asset Protection in an Hour SERIES: ONE HOUR LAW SCHOOL 1.0 -TELL ME WHAT I NEED TO KNOW
Premiere Date: February 1, 2017This webinar is sponsored by: EisnerAmper
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MODERATOR
Michael Brandess Sugar Felsenthal Grais & Hammer
PANELISTS
Michelle Huhnke Sugar Felsenthal Grais & Hammer
Andrew Katzenberg Kleinberg Kaplan
Var Lordahl Dickinson Wright
MEET THE FACULTY
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ABOUT THIS WEBINARWhether addressing your personal needs or those of a client, estate planning is a fundamental part of making certain that one’s financial life is in order. People need to make sure that, when they die, the wealth they have spent a lifetime accumulating will be passed onto the heirs they want it to go. And, they need to understand that there are ways to protect assets earmarked for heirs from the claims of potential future creditors.
Basic concepts like the “death tax” need to be understood. But estate planning goes beyond financial considerations. It can (and should) include making sure that your children will be raised by the people you want them to be raised by. And it can include making sure your wishes regarding urgent health decisions are followed in the event you become unable to make them yourself. This webinar touches on all these things.
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ABOUT THIS SERIESLooking for a bird’s eye understanding of the rudimentary principles of a complex area of law? Interested in a much needed refresher on an issue that has rapidly evolved in recent years? Short on time? This series explores the essential building blocks of important legal concepts facing business people. Each episode is delivered in Plain English understandable to business owners and executives without much background in these areas. Yet, each episode is proven to be valuable to seasoned professionals.
As with all Financial Poise Webinars, each episode in the series brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. And, as with all Financial Poise Webinars, each episode in the series is designed to be viewed independently of the other episodes, so that participants will enhance their knowledge of this area whether they attend one, some, or all of the episodes.
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EPISODES IN THIS SERIES
EPISODE #1 Estate Planning & Asset Protection in an Hour 2/1/2017EPISODE #2 Intellectual Property in an Hour 3/8/2017EPISODE #3 Labor & Employment Law in an Hour 4/12/2017EPISODE #4 Environmental Law In an Hour 5/6/2017EPISODE #5 Business Tax Law-101 5/24/2017
Dates shown are premiere dates; all webinars will be available on demand after premiere date
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Purpose of Making an Estate Plan?Avoid Intestacy
When a person dies without a will, they die intestate
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Situation Result
A person dies with a will Beneficiaries set forth in will receive property
A person dies intestate 1) Heirs receive property pursuant to state statutes; or
2) If no heirs, property reverts to state (depends on relevant statute)
Purpose of Making an Estate PlanWhat is Probate?
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Probate is the formal legal process that gives recognition to a will and appoints the executor or personalrepresentative who will administer the estate and distribute assets to the intended beneficiaries. The laws ofeach state vary, so it is a good idea to consult an attorney to determine whether a probate proceeding isnecessary, whether the fiduciary must be bonded (a requirement that is often waived in the will) and whatreports must be prepared.
http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/the_probate_process.html
Probate is held in county where decedent resided
No set time frame in which will must be
probated / administered
Executor oversees administration
What happens to your property when you die?Non-Probate v. Probate
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Non-probate• Life insurance• Bank accounts• JTWROS• Etc.
Probate• Need a Court to tell us what to
do
What is an Estate Plan? Will
• Will – legal document which provides for an individual’s final wishes
• A will generally includes: Guardian for minor children Beneficiaries Disbursement of assets Designation of executor
• No will = dying intestate No say on settlement of estate
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What is the Purpose of a Will?Tax Reasons
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Federal Exemption and Annual Exclusion
Gifts
State and Federal Estate Tax Rates
Marital Deduction (avoid tax at first spouse’s death)
What is the Purpose of a Will?Non-Tax Reasons
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Avoid Intestacy
Choose Fiduciaries
Create trusts to lessen risks to beneficiaries
Avoid Probate
Assets in Multiple States
What is an Estate Plan? Living Trust
• Living trust allows you to put your assets in a trust while you’re still alive
• Transfer title of property to trust but retain right to use property
• Numerous benefits, including:
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Helps manage your affairs
Protects your privacy
Easy to create and
change
Greater control
of assets
Avoids probate!
Good for dispersed
family assets
What is an Estate Plan? Powers of Attorney for Healthcare and Property
I. Living will/Health Care Proxy
Names an health care agent who can make health care decisions for you during your life when you cannot communicate those decisions to doctors.
Gives guidance to the health care agent regarding your desired medical treatment (e.g. DNR, end of life scenarios, organ donation etc.)
II. Power of attorney for Property
Names an agent who can manage your affairs during your life when you mental or physical cannot.
Examples of tasks – signing a tax return or paying a medical bill.
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See Estate Planning in 2016 by Andrew Katzenberg and Claudio A. De Vellis
Purpose of Making an Estate Plan?Avoid Guardianships for Minors and Incapacitated
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If a will has not been written at the time of the parents’ death, the courtwill decide who becomes the child’s legal guardian. All friends and familymembers can step forward and nominate themselves for the position,despite your feelings for them. A judge will determine who is best suitedfor the job based on evidence as to what is in the best interest of the childgiven during a hearing. A judge might have different values or prioritiesthan you do, so he might not choose the same person you would haveconsidered while you were alive. The child does not immediately go to agrandparent or sibling if the judge determines that relative is not fit forguardianship.- http://www.livestrong.com/article/248389-who-gets-custody-of-
children-if-both-parents-die/
Purpose of Making an Estate Plan?Use Trusts to Lessen Risks to Beneficiaries
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Control your wealth• You can specify the terms of a trust precisely, controlling when and to whom
distributions may be made.
Protect your legacy• A properly constructed trust can help protect your estate from your heirs’
creditors or from beneficiaries who may not be adept at money management.
Privacy and probate savings• Probate is a matter of public record; a trust may allow assets to pass outside
of probate and remain private, in addition to possibly reducing the amount lost to court fees and taxes in the process.
Purpose of Making an Estate Plan?Transmutation Agreements
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Asset Protection Planning
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Retirement Plans
Asset Protection PlanningTrusts
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What is a trust? • A trust is a written agreement between three parties:
(1) settlor (grantor) - puts assets in trust; (2) trustee – manages trust assets; and (3) beneficiary – benefits from trust
Asset Protection Trust • Settlor and beneficiary can be same person• Trustee often licensed/bonded party with obligation to protect assets from creditors• Benefits:
Protect against business creditors; Effective in divorce proceedings; Avoid estate taxes; and Avoid probate expenses
Asset Protection PlanningDomestic Asset Protection Trusts
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Domestic asset protection trusts (DAPTs) are trusts that protect assetsfrom creditors, which include by definition a future spouse. Additionally, aDAPT allows the settlor to name him or herself as a potential beneficiary—hence the name “self-settled” trusts. Beyond its utility as an estateplanning device, asset protection trusts are effective against a settlor’sfuture spouse and other creditors provided the trust settlement does notviolate applicable fraudulent transfer law. Furthermore, in establishing adomestic asset protection trust, there is no requirement that the settlor ofthe trust disclose his or her plans to create a DAPT or the assets withwhich he or she will fund the trust. As such, a soon to be marriedindividual can establish a DAPT in a state permitting such trusts and, uponthe dissolution of the marriage, shield those assets from any equitabledistribution.
Asset Protection PlanningRetirement Plans
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401(k)401(k)• “In general, all assets inside a 401(k) plan are out of reach of creditors, both inside or outside of bankruptcy.
That’s often true of 401(k) assets rolled into an IRA, as well—though you may be required to prove that those assets came from a 401(k). For that reason, never co-mingle rolled over assets with those from a self-funded IRA.” http://time.com/money/3922169/can-creditors-take-my-ira/
• 2 Exceptions • federal tax liens imposed by the IRS• judgments against individuals who had administered an employer-sponsored plan for embezzlement of the
plan or a fiduciary breach against it.
IRA• IRAs, including Roth IRAs, don't have precisely the same shields as 401(k)s -- but under a 2005 law, the
Bankruptcy Abuse Prevention and Consumer Protection Act, up to $1 million in IRA assets are protected in the event of bankruptcy. In other types of lawsuits, IRA protections from creditors vary from state to state and may be different for traditional IRAs and Roth IRAs.
Asset Protection PlanningLife Insurance and Exempt Assets
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• Life insurance or its proceeds can be exempted from creditors• Protections differ widely by jurisdiction
Nevada: beneficiary’s interest in proceeds and avails is wholly protected from all creditors;
New York: beneficiary’s interest in proceeds and avails wholly protected from all creditors provided beneficiary is not owner or insured. Owner’s interest in proceeds and avails of policy insuring another is exempt as against creditors of insured (and owner’s own creditors if insured is owner’s spouse)
• Annuities sometimes protected – but also depends on jurisdiction
Asset Protection PlanningTenancy by the Entirety
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https://www.assetprotectionplanners.com/articles/the-controversial-truth-about-asset-protection-planning/tenancy-by-the-entirety-states-and-community-property-states/
Tenancy by the Entirety is a type of ownership where each spouse owns an undivided interest in the property. Another trait is Right of Survivorship, meaning that when one spouse dies, the other is entitled to receive the share of the one who died.
Only certain states offer this type of property protection.
Estate Planning and Asset ProtectionWhat Lies Ahead?
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ABOUT THE FACULTY:
Michael A. Brandess, a partner at Sugar Felsenthal Grais & Hammer LLP in the firm’s Business Transactions and Bankruptcy, Reorganization & Creditors’ Rights practice groups, is consistently recognized for his dedicated and zealous representation for his clients, finding the most efficient and creative solutions, securing his clientele the most value for their claims. Michael’s practice focuses on representing creditors, debtors and creditors’ committees in complex corporate restructurings.
Michael has a wealth of experience representing both secured and unsecured creditors in complex restructurings and liquidations across the country, in industries ranging from real estate, construction, retail, financial services, telecommunications and restaurant franchises. Michael represents secured lenders both before and during insolvency proceedings, protecting his clients’ collateral from diminution of value, so they may realize a higher return. Additionally, he has successfully represented asset purchasers in complex bankruptcy sales, creditors’ committees in difficult reorganizations and liquidating trustees and plan administrators during the wind-down of multi-million dollar bankruptcy estates.
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MICHAEL BRANDESS
ABOUT THE FACULTY:
Michelle M. Huhnke is a partner with the Chicago law firm of Sugar Felsenthal Grais & Hammer LLP. She focuses her practice on estate planning, charitable planning, and wealth preservation. She works with clients and their families to develop estate plans that address varied family circumstances in a caring, detailed way and include efficient estate, gift and generation-skipping tax planning.
Michelle also represents charities and their donors. She advises clients on structuring charitable gifts in order to foster family philanthropy and maximize income, estate, and gift tax benefits. She also counsels charitable foundations and public charities on governance and business transactions.
Michelle writes and lectures frequently on tax-exempt organizations and estate planning issues. She has also taught Trusts and Estates at the University of Chicago Law School, and is a former Chair of the Estate Planning Committee of the Taxation Section of the D.C. Bar.
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MICHELLE HUHNKE
ABOUT THE FACULTY:
Andrew S. Katzenberg is an attorney at the New York law firm Kleinberg, Kaplan, Wolff & Cohen, P.C. in the Trusts and Estates group, where his practice focuses on wealth preservation, estate and trust administration, nonprofit and tax-exempt organizations and charitable giving. Andrew has been published in numerous law journals and is a member of the New York State Bar Association Trusts and Estates Law Section Tax Committee.
He received his undergraduate degree at Tufts University, his JD from the University of Maryland and his LLM in tax from NYU.
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ANDREW KATZENBERG
ABOUT THE FACULTY:
Val Lordahl is a member at Dickinson Wright, Las Vegas.
He represents individuals, families, and businesses in a wide range of areas including estate planning, trusts, asset protection, probate, elder law, business formation, tax structuring, and tax disputes. He is a Board Member and Secretary of the Foundation for an Independent Tomorrow, a Member of Southern Nevada Estate Planning Counsel, and a Member of The State Bar of Nevada.
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VAR LORDAHL
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