Over the past several decades, expanding theories of liability and the great proliferation of litigation have given increased emphasis to asset protection planning.  Potential liability is now a major concern for doctors, lawyers, other professionals, real estate investors, business owners and persons of high net worth in general.

What this means is that if you have assets and you don’t plan and set up a structure to protect them, then all of the hard work and effort you put into creating the assets may be wasted. Here are our Top 10 asset protection planning tips:

1. Plan for a claim before one happens; once a claim arises, you can’t go back to put asset protections in place.
2. Planning after a claim arises usually gets you in deeper trouble instead of helping to bail you out.
3. Don’t confuse asset protection planning with insurance; one is not a substitute for the other.
4. You cannot protect personal assets by putting them into your business; establish a trust instead.
5. Proper asset protection strives for a balance of control; too much control still in your hands does not protect you.
6. Asset protection planning and estate planning don’t always mix.
7. Don’t put all your asset protection eggs in one basket.
8. Don’t think bankruptcy will solve all your problems.
9. Keep your asset protection planning simple.
10. Assume that your creditors will find out about your asset protection plan and its purpose.

In view of the onslaught of litigation and risks involved in general and real estate investments, it is absolutely essential to properly plan and prepare an asset protection structure in advance.  Not only should asset protection be devised and strategized, it also needs to be properly implemented with the help of a skilled and experienced Orange County asset protection attorney.

A number of news articles have sprung up lately regarding offshore bank accounts, investments and trusts due to the disclosure by GOP presidential candidate Mitt Romney about his Cayman Islands financial accounts.  A recent SmartMoney.com article took a look at two reasons wealthy Americans seek offshore asset protection, including:

Litigation risk – mitigating litigation risk is a primary reason for investing and banking offshore.  Wealthy individuals will likely encounter more lawsuits than the average American, and U.S. courts have no overseas jurisdiction to enforce judgments.

Political risk – one wealth manager noted that many wealthy clients want diversification protection from U.S. governmental policies and banking systems, saying that the last few years have shaken confidence in our system.

As California asset protection goes, an offshore trust is a great choice for those looking to keep their liquid assets protected in the event of lawsuits (such as malpractice). An offshore trust can be more powerful than a simple offshore account because it can harbor liquid assets like a regular bank account, but it can also safeguard intellectual property and other types of assets that an offshore account cannot.

Those with large estates and professionals who are at greater risk of being sued due to the nature of their occupation are encouraged to look at offshore trusts as a part of their California estate plan. If you’d like to protect your assets and have considered offshore accounts, consult with an Orange County estate planning attorney to determine if an offshore trust is a good fit for your estate.

Today is President’s Day as well as Washington’s Birthday – although he was born Feb. 22, 1732, his birthday has been celebrated with that of Abraham Lincoln on the third Monday of February as a federal holiday since 1971.

Washington wrote and attested his own will on July 9, 1799, five months prior to his death on Dec. 14 1799.  Washington’s will is fascinating reading, revealing much about the character of our first president as well as the extent of his holdings.  At the time of his death, he was a very wealthy landowner, with property in Virginia, Maryland, Pennsylvania, New York, Ohio and Kentucky.

Washington’s will begins in elegant fashion:

I GEORGE WASHINGTON of Mount Vernon, a citizen of the United States, and lately President of the same, do make, ordain and declare this Instrument; which is written with my own hand and every page thereof subscribed with my name, to be my last Will & Testament, revoking all others.

His first order of business is to discharge his debts, ordering that they be punctually and speedily paid.

One of the most interesting aspects of Washington’s will is his detailed provisions for the Mount Vernon slaves.  Washington specified in his will that all slaves be given their freedom upon the death of his wife, Martha.  He noted that, To emancipate them during her life, would, tho’ earnestly wished by me, be attended with such insuperable difficulties on account of their intermixture by Marriages…

Washington further provided for the care of the aged and the education of young Mount Vernon slaves by his heirs: Seeing that a regular & permanent fund be established for their support so long as there are subjects requiring it; not trusting to the uncertain provision to be made by individuals.

Washington was charitable beyond his slaves, establishing a trust to benefit the Academy in the Town of Alexandria towards the support of a Free school, established at, and annexed to, the said Academy; for the purpose of educating such orphan children, or the children of such other poor & indigent persons as are unable to accomplish it with their own means: and who, in the judgment of the Trustees of the said Seminary, are best entitled to the benefit of this donation.

As for his own passing, Washington sets forth his instructions in his will as follows:

The family vault at Mount Vernon requiring repairs, and being improperly situated besides, I desire that a new one of Brick, and upon a larger Scale, may be built, at the foot of what is commonly called the Vineyard Inclosure, on the ground which is marked out. In which my remains, with those of my deceased relatives (now in the old Vault) and such others of my family as may chuse to be entombed there, may be deposited. And it is my express desire that my Corpse may be Interred in a private manner, without parade, or funeral Oration.

You can read the entire Last Will and Testament of George Washington here.

A study last year by SunAmerica Financial Group shows that the economic recession has had a profound effect on the mindset and expectations of those getting ready for retirement.  A majority of those surveyed said that they now view retirement as a new chapter in life rather than a way to wind down – yet more proof that baby boomers are remaking retirement in their own image, instead of their parents’.

Here is an infographic that breaks down the study results into four categories of mindsets among pre- and current retirees – note that those who have the most positive attitude about retirement are also those who say they have developed a plan for saving and investing for retirement:

For more information on planning for retirement, contact our Newport Beach estate planning and asset protection law firm.

President Obama’s budget proposal was released last week and contains several proposed changes that effect estate planning, including:

Re-set Estate, Gift and GST Taxes to 2009 Levels.  The President has asked that the estate, gift and generation-skipping transfer tax rates be reinstated to the 2009 levels permanently.  This would set the top tax rate at 45 percent, with the estate tax and GST exclusion amount capped at $3.5 million and $1 million for gift taxes.  Portability for estate and gift tax exclusion would be made permanent.

Minimum Term for GRATs.  The President proposes a minimum term of 10 years for grantor retained annuity trusts (GRATs) and a maximum terms of the life expectancy of the annuitant, plus 10 years.

Limitation on Term of GST Tax Exemption.  The President wants the GST exclusion to terminate on the 90^th anniversary of a trust.

Long-Term Capital Gains Rate Increase.  Increase long-term capital gains rate of 20 percent for single taxpayers with annual income of $200,000+, $250,000 for married couples filing joint returns and $125,000 for married taxpayers who file separate returns.

In addition, the proposal calls for requiring consistency in value for transfer and income tax purposes, and a modification in the valuation discount rules.

Whether or not many or any of these changes come to fruition, you can be sure that the only thing you can count on from Washington when it comes to estate planning is change.  The best way to protect your assets is to partner with an experienced California estate planning attorney to keep up on the latest legislative changes.

Our Orange County asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Retirement is so much easier if you don’t have significant expenses to worry about on a regular basis.  Here are five things you should definitely try to pay off before you retire:

Mortgage:   Usually 30-40 percent of an average America’s monthly expense, paying off your mortgage before you retire will free up a lot of extra cash for doing what you really want to do.

Major home repairs:  Inventory your home and make a list of the repairs you’ll need to make over the next 15-20 years – a new roof?  A kitchen remodel?  A new air conditioner?  Plan for it in advance by setting money aside as part of your retirement planning.

Minor repairs:  If you’ve been living in the same house for decades, it may be time to consider an update – a fresh coat of paint, new window treatments or new floors will add value to your home if you decide to sell, and it’s easier to pay for it while you’re still working.

Cars:  In the current economy, most people are delaying purchasing a new car, which is a way to save in the short term.  However, if your current vehicle is on its last legs, you’ll either need to replace it before you retire or set funds aside in your retirement budget to cover the cost of a new one at some point.

Supporting the kids:  Many Baby Boomers will be reaching retirement age at the same time their children are going off to college.  Plus, many children who have graduated are flocking back to the nest.  If your children are not self-sufficient, you will need to take into consideration when they will be and how much you will be involved in getting them there.

For more information on planning for retirement, contact our California estate planning and asset protection law firm.

What is a provision that could potentially outlaw stretch IRAs doing in a transportation funding bill?  We have no idea.  But unfortunately, there it is.

Montana Senator Max Baucus, who is also Senate Finance Chairman, added the provision to the Highway Investment, Job Creation and Economic Growth Act of 2012.  Under the proposed legislation, starting in 2013, nonspouses who inherit traditional IRAs will be required to withdraw the entire amount from a traditional IRA within five years.

Currently, nonspouses who inherit IRAs have to begin taking distributions by Dec. 31 of the year following the receipt of the inheritance, but can “stretch” their withdrawals over their expected life spans – which provides potential decades of tax-deferred growth in a traditional or Roth IRA.

The proposed legislation would put an end to the “stretch” IRA except for beneficiaries who are disabled, chronically ill, a minor child or a beneficiary who is not more than 10 years younger than the IRA owner.  The rules for inherited Roth IRAs would remain unchanged.

If passed, this legislation could put a halt to an important estate planning strategy used, for example, by grandparents who leave an IRA to fund a grandchild’s college education.  The tax on the inherited IRA could be high enough in some cases to thwart these plans, discouraging saving and transfers of wealth between generations.

Protecting your assets can be complicated by changes in legislation.  Our Orange County asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

As an Orange County estate planning attorney, I am rarely surprised at what people do to leave that one lasting impression on loved ones and friends.   However, I must admit being a little taken aback that those who wish to communicate from the grave can now do so via Facebook and Twitter.

A new Facebook app – If I Die – provides users with a way to leave one last post and tweet upon passing.   Its promotional message of “What will you leave behind?” really begs the question, “Is that it?”

There are many more meaningful ways to create a lasting legacy for your loved ones – a will, any number of trust instruments – that come to my mind as a California estate planning attorney.  The video on the If I Die website encourages users to leave a lasting message, even suggesting a message regarding “an old score you want to settle.”  If that “old score” involves a disinheritance, a Facebook post or tweet will not do the job – you must specify exactly who you wish to disinherit in your will, and leaving such an important move to a social media network would likely unravel your plans and lead to litigation for your estate.

I blogged recently about the 10 reasons to create an estate plan – there are undoubtedly several reasons that apply to you.  Tomorrow is Valentine’s Day – take the opportunity to create a lasting legacy for your loved ones by contacting a California estate planning attorney to help you develop your estate plan soon.

As an Orange County estate planning attorney, I believe it is important for women to know these additional important estate planning facts, as a continuation of yesterday’s post:

Women need to execute financial and healthcare durable powers of attorney and consider choosing a close family member if that person is willing to assume the responsibility of making financial and/or medical decisions on your behalf in case of incapacity.

Don’t own your own life insurance policy as the proceeds may be subject to estate tax after you die.  Instead, designate a spouse or other family member as owner or set up an irrevocable life insurance trust (ILIT), which buys the policy and holds the proceeds for beneficiaries.

Keep beneficiary forms for retirement accounts (IRAs, 401(k)s, etc. ) up to date, as they determine who receives the assets of each retirement account.

Make sure there is enough money in a joint account to cover any immediate expenses if your spouse dies suddenly. You may not be able to access a deceased spouse’s separate bank account right away.

Remember that the individual 2012 estate tax exclusion of $5.12 million ($10.24 million for married couples) is scheduled to return to $1 million in 2013 unless Congress acts.

For help with your California estate planning, contact our Orange County asset protection and estate planning law firm, a trusted source for estate planning, asset protection and retirement planning for more than 35 years.

Women outlive men, make less during their careers and have less in savings due to pay discrepancies and time taken out of the workforce to raise their children.  In the opinion of this Orange County estate planning attorney, this is why it is important for women to know these important estate planning facts:

The unused portion of a deceased spouse’s estate tax exclusion can be transferred to the surviving spouse’s exclusion through 2012 (unless Congress acts) – which means the surviving spouse can have an estate tax exclusion of up to $10.24 million.  However, this exclusion transfer must be claimed by the deceased spouse’s executor filing an estate tax return.

Assets inherited or received as a gift from a spouse are not taxable.  A surviving spouse has nine months to renounce any gifts received from the deceased spouse, so it can be transferred to another family member or put into a trust for their own benefit.

Married couples can participate in “gift splitting”, which means they can share each other’s $5 million lifetime gift exclusion and give more to their children now tax-free.

A will and a living trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes.  A living trust can take effect while you are alive or after death, and allows you to hold assets for your benefit during your lifetime, which can be helpful in the case of future incapacity. A living will can also be beneficial if you own real estate in another state. A will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.

For help with your California estate planning, contact our Orange County asset protection and estate planning law firm, a trusted source for estate planning, asset protection and retirement planning for more than 35 years.