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Tax Court Decision a Win for Family-Owned Businesses

Asset Protection, Estate Planning, Tax PlanningNo Comments

IRS Logo 150x150 Tax Court Decision a Win for Family Owned BusinessesA U.S. Tax Court decision in Wandry v. Commissioner has been called a “landmark decision” because it allows for ownership transfers from one generation to another tax-free, according to a Wall Street Journal report.

The facts of the Wandry case are as follows:  The Wandrys, a Colorado married couple, each gave units in their family-owned LLC worth $1,099,000 to heirs in 2004, when the lifetime exemption was $1 million and the annual exclusion was $11,000.  They specified that the gifts should equal the dollar amount of their exemptions, since the value was unknown at the time of the gifting.

A subsequent IRS appraisal found that the value of the gifts had risen almost 20 percent, and the IRS went after the Wandrys for gift taxes on the additional value.  However, the Tax Court said that the Wandrys intended to make a gift equal to their exemptions, so the excess was never given by them – and therefore could not be taxed.

The Wandry case is a memorandum decision by the Tax Court, which means it can be cited as precedent for future cases.  This decision bodes well for family-owned businesses as well as wealthy families using family limited partnerships or entities holding stocks.

The IRS has three months to decide whether or not it will appeal the case, so those contemplating a strategy similar to Wandry should consult with an Orange County estate planning attorney before proceeding.

Contact us today for individualized planning strategies to meet your unique needs.


How to Choose the Right Business Structure in California

Business PlanningNo Comments

Deciding on the proper structure for a new business in California – sole proprietor, partnership, limited liability company (LLC) or corporation – will depend on the type of products or services your business will provide, the ownership structure and the financial situation.

While this infographic provides some good basic information on the decision-making process for determining the proper business structure, it also advises upfront that new business owners should consult with a California business planning attorney before choosing one:

choosing a business structure1 e1335559456688 How to Choose the Right Business Structure in California

Your California legal and financial planning experts are at your service; Contact us today.

Identity Theft of the Deceased: 21st Century Grave-Robbing

Asset Protection, Estate PlanningNo Comments

Estate 122x150 Identity Theft of the Deceased: 21st Century Grave RobbingA new study by ID Analytics detailed in TIME magazine this week has found that as many as 2.5 million deceased Americans have their identities stolen each year.  According to the research, nearly 800,000 cases involved thieves using the stolen identities to open lines of credit and apply for cell phone service.  In another 1.6 million cases, criminals used Social Security numbers belonging to both dead and dying people.

There are steps you can take to ensure you and your family members do not fall victim to these schemes, including:

Look for trouble – if a family member enters a nursing home or assisted living facility, be sure you know who has access to their financial information – bank accounts, credit cards, etc.

Notify state agencies – when a family member dies, be sure the executor or estate planning attorney notifies the proper state agencies so the death is on record.  This makes it less likely that thieves will be able to improperly use their ID.

Identify fraud early – it is important to keep in touch with the estate’s executor or administrator since identity thieves can quickly run up debts in the deceased’s name.  If a creditor files a claim against the estate, the executor will be the first to know.  If the fraud was perpetrated prior to death, you will need to document the nature of the fraud.

Document online presence – be sure to keep a list of email and social media account and passwords up to date, and store it with other estate planning documents.  When someone dies, a survivor should be designated for the job of closing down those accounts.

Let our Costa Mesa law offices help you get started by contacting us today.

MetLife Settles With States for Failure to Pay Life Insurance Benefits

Business Litigation, Estate PlanningNo Comments

california state flag e1335386066467 MetLife Settles With States for Failure to Pay Life Insurance BenefitsMetLife will pay nearly $500 million in unpaid life insurance and annuity benefits to beneficiaries or states acting on their behalf in a settlement announced earlier this week.

A total of 33 states will share in the nearly $500 million settlement; California will receive approximately $40 million on more than 30,000 policies, according to State Controller John Chiang.

MetLife and other national insurers have been accused of failing to make life insurance payments to beneficiaries, even though the company had information from the Social Security Death Master File showing that policyholders had passed away.

MetLife also said that it would match its records against Social Security death files every month, as well as make an effort to contact their oldest policyholders who may not have provided a date of birth or Social Security number when they purchased a policy.  The company estimates that most of the policyholders in this group are over the age of 90.

The MetLife settlement goes into effect once 20 states have signed on.  Chiang made similar settlements with Prudential and John Hancock in 2011 for a combined settlement of $40 million.

Help is available to you by contacting your Southern California financial planning experts today.

Social Security Trustees’ Annual Report Sounds Warning

Estate Planning, Retirement PlanningNo Comments

social security check e1335301183270 Social Security Trustees’ Annual Report Sounds WarningThe Social Security Trustees’ annual report released yesterday did not contain much good news for the those counting on Social Security benefits to live comfortably in retirement.  According to the report, the fund will be unable to pay full benefits beginning in 2033 – three years sooner than was projected in the same report last year.

For Medicare, the news was more dire: Medicare’s Hospital Insurance Trust Fund will have sufficient resources to maintain full benefits only until 2024, just a dozen years from now.

Social Security Administration Commissioner Michael Astrue was quick to point out that, “exhaustion is an actuarial term of art and it does not mean there will be no money left to pay any benefits. Come 2033, if Congress does nothing, there will be sufficient assets to pay 75% of the benefits.’’

Projections are based on economic assumptions and actuarial data, and are by no means cast in stone – however, what experts have gleaned from the report is that the funding shortfalls are real and measures need to be taken sooner rather than later to address them.

The bi-partisan solution from the Bowles-Simpson Commission in 2010 recommended that closing the gap could be achieved through increasing the amount of wages subject to Social Security tax, gradually increasing the age of full retirement for those born after 1960, cutting the annual cost of living increase to retirees by about 0.3 percentage points annually, and providing fewer benefits to the well-to-do.

While waiting for Congress to take action, the wise pre-retiree should take action by consulting with an estate planning attorney to develop a personal plan for a secure retirement, regardless of the presence – or absence – of Social Security benefits.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

Does Your Estate Plan Need a Little Spring Cleaning?

Estate PlanningNo Comments

estate planning image 284x250 150x150 Does Your Estate Plan Need a Little Spring Cleaning?Reviewing and updating your estate planning documents can be just as important as creating them in the first place.  As the season of renewal, spring is the perfect time for this ritual, with particular attention paid to these five areas:

1. Estate plans should be reviewed to ensure the strategies used when your plan was drafted still align with your current situation.  This applies to wills, trusts, powers of attorney and living wills.

2.  Assess whether or not the individuals named as executors, trustees or guardians are still in good standing to assume these roles.  If they are not, others should be named.

3.  Are there trusts set up for minor children who have now grown to adulthood, perhaps with children of their own?  Perhaps you’ll want to change those trusts to include grandchildren.

4.  Have you acquired property or other assets that need to be placed in a trust?  This doesn’t happen automatically; you must transfer the asset to your trust during your lifetime.

5.  Does your estate plan comply with current estate tax laws?  Even if it does, it should be reviewed with an eye toward changes that are on the horizon in 2013.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

California Business Planning Attorney: Insights on How Family Businesses Can Endure

Business PlanningNo Comments

new business e1334954710230 California Business Planning Attorney: Insights on How Family Businesses Can EndureIf you have put a lot of sweat equity into building a business, it’s natural that you would want your business to endure beyond your years at the helm.  However, the Family Business Institute reports that just 30 percent of family-owned businesses survive past the second generation, and only 12 percent make it to a third generation.

A recent New York Times article examined several owners of family-run businesses to identify four primary traits that ensure longevity:

Willing to reinvent.  For family businesses that endure, the ability to reinvent themselves is one of the primary keys to successfully operating through the generations.  Whether it is expanding product lines or to new markets, the family businesses that continually find a way to reinvent themselves continue to prosper.

No employment promises.  Companies that base employment on skill rather than familial relationships also survive more readily than those that guarantee employment for family members.  Setting rigorous standards for family involvement is key.

Succession planning.  Strategic succession planning is another hallmark of long-lived family owned businesses.  Some family business CEOs choose their successor and some put it to a family vote; however they do it, successful family-owned companies make sure that best practices in succession planning are followed.

Outside counsel.  Family businesses that thrive for the long haul have either a board or a “kitchen cabinet” of outside advisers to help them with the big decisions.

Contact us today for individualized planning strategies to meet your unique needs.

Scammers Find When There’s a Will, There’s a Way to Steal Your Identity

Estate Planning, WillsNo Comments

will3 Scammers Find When There’s a Will, There’s a Way to Steal Your IdentityIt seems as if clever fraudsters have found a new way to steal identities for profit:  through the wills of unsuspecting victims.

Once your estate is probated, your will becomes a matter of public record.  And there have been reports of identity thieves in the UK scouring public records for passwords to digital accounts, then draining those accounts of their assets.

Protecting digital assets has become a necessity in the Internet age, but putting your password and account information in your will is not the way to do it.

Instead, draft a separate document that lists all your digital assets in the form of a letter of instruction to your executor or agent.   You can provide instructions on which accounts should be deleted and which should be passed on.  This document should be kept with your other estate planning documents, but should probably not be passed on to family members until you’re gone.

You also have the choice of setting up a revocable trust for your digital assets if you are so inclined, or use the services of an online digital asset afterlife provider that, often for a nominal fee, stores all your digital assets for you and your eventual heirs.

Your California legal and financial planning experts are at your service; Contact us today.


“Nations Top 100 Attorney” Publishes Insightful New Book

Asset Protection, Business Litigation, Business Planning, California Trusts, Domestic Asset Protection, Estate Planning, Foreign Asset Protection, Living Trust, Offshore Trusts, Real Estate, Retirement Planning, Tax Planning, UncategorizedNo Comments

New Book Helps You Plan for and Protect Your Assets

Book RGB online1 e1334601969431 “Nations Top 100 Attorney” Publishes Insightful New Book Orange County, California (March 29, 2012) – There are few things in life more certain than death and taxes and perhaps, in today’s society, Law suits.  However, the fact is few people actually plan for them.

In the New Book The Ladder of Success: An Asset Protection Planning Primer, Attorney Jeffrey R. Matsen (“Top 100 Attorneys in U.S.” Worth Magazine) has provided a straightforward and elementary description of what Asset Protection really is and demonstrates how it can be effectively implemented by taking various steps, like rungs on a ladder, to truly climb the ladder of success.

“The one constant over the many years of my practice and among the hundreds of different clients I have served is the imbalance of, on the one hand, their profound concern regarding Asset Protection, and on the other, their lack of understanding as to how to implement it,” says Attorney Matsen. “I have dedicated my career to assisting these clients in planning the fortification of their resources to ensure their financial security in the face of taxes, liability and creditor attacks.”

The Ladder of Success: An Asset Protection Planning Primer explains:

  • Why Plan?  The Need for Asset Protection
  • The Limitations
  • The Operating Business Entity
  • Basic Estate Planning
  • Bankruptcy Considerations, Exemptions and Marital Planning
  • Liability Protective Entities for Investment Assets
  • Domestic Asset Protection Trusts and Modular Planning Utilizing LLCs
  • The Offshore Asset Protection Trust and the Modular Planning that Accompanies It
  • Advanced Estate Planning Techniques
  • Special Issues and Strategies for Physicians and Dentists
  • Climbing the Ladder and Putting It All Together

Chock full of authoritative information about estate planning and asset protection, The Ladder of Success: An Asset Protection Planning Primer is one book every conscientious person should own.  “Nobody understands the nuances and practicalities of this area better than Jeff Matsen.  His unique ability of making issues clear for clients and their advisors is a gift.  This book is required reading for any layperson or professional who wants to learn more about asset protection and more importantly, take action,” says Bill Deitch, Leading Estate Planning Attorney, Chicago.

“Jeff Matsen is an expert to the experts in the asset protection field.  Those seeking asset protection often share common characteristics—such as wealth, business ownership, real estate ownership, considerable income and estate tax exposures, as well professional practice ownership—and I recommend they read Jeff’s book to protect their families,” states Joseph J. Strazzeri, Fellow, Southern California Institute; Co-founder, Laureate Center for Wealth Advisors.

Tim Voorhees, JD, MBA President, Family Office Services;  Principal, Matsen Voorhees, Orange County, CA. explains “Because of Jeff’s broad, multi-disciplinary experience, he knows how to integrate protection from lawsuits with protection from taxes. Jeff’s ability to combine creditor protection with tax planning helps clients accumulate more wealth and maximize upside potential.”

“Jeff Matsen is one of the best estate planning and asset protection attorneys in the country.  His knowledge, wisdom and direct experience have truly made him one of the elite group of top experts in his field. If you are concerned about protecting your assets and want to leave a legacy for future generations, I highly recommend you read this book,” says Stephen Fairley, CEO of The Rainmaker Institute, LLC, The Nation’s Largest Law Firm Marketing Company.

Marc Selden, Nationally Recognized Estate Planning Attorney, New York City, states “Jeff is widely recognized in the legal community as an asset protection guru.  In this book, Jeff does a wonderful job of explaining the principles and strategies of complex asset protection planning in a very clear and easy-to-understand way.”

The Ladder of Success: An Asset Protection Planning Primer,  $19.95, Paperback 179 pages, ISBN 978-0-9852041-1-2, is published by Wealth Strategies Counsel, and is available by calling 714-384-6527 or by visiting .



JEFFREY R. MATSEN, JD, received his law degree with honors from the UCLA School of Law and served as a Military Judge with the rank of Captain in the US Marine Corps.  Matsen has been a Professor of Law in Business, Estate Planning and Advanced Taxation. He is a highly sought-after and respected speaker and educator and has published numerous legal articles.  Matsen is the founder of “Wealth Strategies Counsel,” the Estate Planning and Business Transactions Department of Matsen Voorhees and Bohm, Matsen, Kegel & Aguilera, LLP, in Orange County, California.  His practice areas include: Business and Estate Planning, Asset Protection, Probate and Trust administration and litigation, Real Estate and Offshore structures.  Matsen has been designated one of the Nation’s “Top 100 Attorneys” by Worth Magazine, A “Super Lawyer” by Los Angeles Magazine and he is listed in The Best Lawyers in America.  The Nationally Renowned Attorney Rating Service, AVVO, has rated Matsen a perfect “10/10 Superb.” Besides continuing to achieve the highest “AV rating,” he has been designated a “Preeminent Lawyer” by the prestigious attorney rating directory, Martindale Hubble.

Let our Costa Mesa law offices help you get started by contacting us today.

Newport Beach Estate Planning Attorney Shares Tips on How to Plan Like a Billionaire

Asset Protection, Estate Planning, Tax PlanningNo Comments

estate plan 150x150 Newport Beach Estate Planning Attorney Shares Tips on How to Plan Like a BillionaireAn excellent post yesterday at by financial writer Deborah L. Jacobs examines the estate planning strategies used by billionaire tech executives like Mark Zuckerberg of Facebook to transfer wealth and protect assets from taxes and creditors.

The post is lengthy, but worth your time.  Here is a list of the strategies Jacobs has gleaned from watching the estate planning moves made by these wealthy individuals (especially relevant information for anyone involved in a pre-IPO situation):

Gather an “A” team of financial and legal advisors.  Choose advisors for the long-term and use members to provide checks and balances, with one acting as quarterback for the group.

Exercise options strategically.  Not paying attention to options until they become highly valuable can be a costly mistake.

Pre-pay tax on options.  Some companies allow for exercising options before the end of the vesting period.  Usually associated with an 83(b) election, this allows the option holder to report the income and pay taxes before the options vest.

Use gift tax exemption wisely.  Making gifts at the pre-IPO stage when asset values are lower allows you to pack more into gift tax exemption limits.

Capitalize on no-risk or low-risk wealth transfer strategies.  A grantor retained annuity trust (GRAT) allows you to bet on the upside potential without downside risk.

Sell assets instead of giving them away.  Using an installment sale to an irrevocable grantor trust allows older family members to sell assets to a trust to benefit younger generations.

Build in flexibility.  Uncertainty should not delay planning.

Build in protection against creditors.  Asset protection trusts – both foreign and domestic – can help shield assets from creditors.

Offset spikes in income with gifts to charity.  Donating company stock to a charity avoids capital gains tax.

Help is available to you by contacting your Southern California financial planning experts today.

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