wscounselblog.com » Asset Protection

PA Court Enforces Filial Responsibility Law; It Could Happen in California Too

Jeff Matsen — Tue, 15 May 2012 21:16:47 +0000

In a decision handed down last week, a Pennsylvania appeals court found a son liable for his mother’s $93,000 nursing home bill under that state’s filial responsibility law.

Currently, 30 states have filial responsibility laws on the books, and California is one of them. The California Family Code Sec. 4400 reads:

Except as otherwise provided by law, an adult child shall, to the extent of his or her ability, support a parent who is in need and unable to maintain himself or herself by work.

While these cases are still fairly rare, more may be coming to the fore because of The Deficit Reduction Act of 2005, which made it more difficult for the elderly to qualify for Medicaid long-term care coverage. This federal rule change has resulted in more nursing homes using filial responsibility laws to pay the bills, as in the recent Pennsylvania case cited above (Health Care & Retirement Corp. of America v. Pittas) .

If you have an elderly parent who is financially dependent on you – or could become so – you may want to consider the following:

Estate planning. If you have an aging parent who is financially dependent on you, they should all have at least a simple estate plan. Even if you have to pay for it, taking this step can save you in terms of probate or litigation.

Asset protection planning for Medicare/Medicaid assistance. This can help a parent who may need extensive Medicare/Medicaid coverage avoid losing their assets to the state, but you need to do it now – this must be done at least five years before the need arises.

Life insurance. Look into purchasing life insurance for elderly parents; the benefits could be used to pay final long-term care bills.

Long-term care coverage. If you have elderly parents who count on you for care, buying long-term care coverage may help reduce what can be a substantial cost.

Review elderly parents’ health care coverage. Review your elderly parents’ health care coverage and fill the gaps so your own financial future is not impacted by unexpected costs.

Our California 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.

California Appeals Court Validates Intentional Interference with an Expected Inheritance

Jeff Matsen — Mon, 14 May 2012 20:31:05 +0000

A California appeals court has ruled that intentional interference with an expected inheritance is a valid cause of action in Beckwith v. Dahl, becoming the first California Court of Appeal to do so.

In the case, a dying man named Marc MacGinnis drafted a will that left half his estate to his partner, Brent Beckwith, and half to his sister, Susan Dahl. MacGinnis drafted the will on his personal computer and showed the draft to Beckwith. While seriously ill and awaiting surgery, MacGinnis instructed Beckwith to print out the will so he could sign it. Beckwith could not find the will, so he drafted a new one using online forms. Beckwith then showed the draft will to Dahl. Dahl, who knew that absent this new will she would inherit the entire estate, told Beckwith not to have MacGinnis sign the will and that she would instead have an attorney draft a more tax-advantaged trust. Dahl never had the trust drawn, and MacGinnis died a few days later. Because MacGinnis died with no will, Dahl inherited the entire estate.

Beckwith then sued Dahl for his share of the estate and citing the facts of the case, the Fourth Appellate District California Court of Appeals ruled that “it is time to officially recognize” intentional interference with an expected inheritance (IIEI). The court laid out the five elements necessary for a plaintiff to bring a valid cause of action using IIEI:

An expectation of receiving some beneficial interest via inheritance;
Causation, meaning that there must be reasonable proof that the bequest would have been in effect at the testator’s death if there had not been an interference;
Intent, meaning that a defendant knew of the plaintiff’s expected interest and deliberately interfered with it;
The interference must be independently tortuous;
The plaintiff must allege damage by wrongful interference.

The Court also set limitations on IIEI action, including that a plaintiff must have no other remedy in probate, the defendant’s tortuous action must be the reason that probate does not offer an adequate remedy, and the plaintiff must show with reasonable probability that he would have received the inheritance if there had been no interference.

Our Newport Beach 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.

The 5 Costliest Mistakes You Can Make With Your IRA

Jeff Matsen — Thu, 10 May 2012 17:45:43 +0000

It is currently estimated that Americans have more than $5 trillion invested in IRAs, and much of this wealth will pass to their heirs. To ensure that it does, be sure you are not committing one of these five costly errors:

1. The Missing Form – if your family doesn’t know where to find your IRA beneficiary form, then they will be stuck with the default provisions of your plan – which may mean the IRA assets go to your estate, which is not where you want them to go. Be sure you get an acknowledged copy of your IRA beneficiary form from your plan administrator and keep it with your other important estate planning documents.

2. The Out-of-Date Form – you should review your IRA beneficiary form after major life changes, like a divorce, marriage, birth of a child, etc. Even if you include a beneficiary for your plan in your will, the form still rules. You could inadvertently disinherit a loved one, or worse – have your IRA assets go to the wrong person.

3. No Back-up Beneficiary – if you do not name a back-up beneficiary, a probate court will decide where the assets will go. If you only name your spouse and your spouse dies before you do, then the assets will likely be liquidated and taxed, with the remainder going to your estate. If you name a child as beneficiary, remember that you cannot name a minor! If your children are not yet 21, you can set up a trust with instructions for distribution.

4. Not Taking Advantage of the Stretch – setting up your beneficiary designation to stretch IRA payments over the lifetime of a beneficiary can grow those assets significantly over time, tax-deferred. Unfortunately, this is often undone by beneficiaries who want to cash out immediately – in fact, the IRS says this happens 90 percent of the time. You can prevent this with an IRA Stretch Trust.

5. Not Using Creditor Protection – you can protect your child’s inheritance from creditors, bankruptcy, divorce, business failures of just plain poor money management by using a Castle Trust. These trusts have special asset protection features that help preserve wealth and safeguard assets.

When It Comes to Estate Plans, Be Sure to Redo Before Saying “I Do”

Jeff Matsen — Mon, 07 May 2012 21:11:30 +0000

The wedding season is fast approaching, and if you are planning to remarry this year, you need to first examine your estate plan carefully before that march down the aisle. To ensure your interests are fully protected, be sure to:

Inventory assets. Both you and your soon-to-be spouse need to make a list of your assets and debts and share it with each other. This includes retirement plans and life insurance policies.

To combine or not to combine? Decide with your partner whether or not you want to combine assets once you marry or keep them separate.

Make a plan for your assets. You and your future spouse need to decide where your assets will go when one of you dies. Children from a previous marriage can complicate estate plans, because you have no guarantee that if you die first, your spouse will provide for your children. You can create a trust or purchase a life insurance policy to take care of children, or even provide them with joint ownership of property.

Consult with an estate planning attorney. If either of you have children from previous marriages, consulting with an estate planning attorney is a must. Even if you do not have significant assets, you will need to update your will, powers of attorney, health care proxy designations, and more. An estate planning attorney can also help you figure out if trusts are a good idea for protecting assets for children.

Change beneficiaries. You will probably want to change beneficiaries on your retirement, pension and life insurance plans if your divorce decree allows it.

Consider a prenuptial agreement. Especially in situations when one spouse brings significantly more assets to the marriage, a prenuptial agreement can be helpful in protecting assets.

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.

Boomers Put Family First, Often To Their Own Financial Detriment

Jeff Matsen — Thu, 03 May 2012 19:56:52 +0000

A new study from Ameriprise Financial says that baby boomers are providing financial support for family members in spite of their own uncertain financial futures.

The Money Across Generations study found that boomers are getting squeezed from both ends — 93 percent have provided financial support to their adult children, and almost 60 percent have helped aging parents financially. In addition, the study found that more than half have allowed their adult children to move back in with them rent-free.

Most boomers are failing to realize the impact all this financial support is having on their retirement goals, with only 10 percent reporting that helping parents has slowed down their retirement savings and 34 percent saying the same for helping adult children.

Ameriprise recommends that boomers ask themselves four questions before providing financial support to a family member:

1. Is this a want or a need? When it comes to living expenses, there is an important difference between a true need and a perceived need. If the expense isn’t a basic need, or if you’ve assisted with the same expense in the past, ask yourself if you are enabling irresponsible financial behavior.

2. Is this a loan or a gift? Consider whether your family member’s circumstances or past behavior indicate that they’ll actually be able to repay you. Also ask yourself whether you’ll be okay – financially and emotionally – if they don’t.

3. What are my motivations and expectations? Consider your own feelings and ask yourself if you’ll resent your decision – or your family member – in the future. If your expectations aren’t met, will you be disappointed? If so, it may be better to say “no” than risk damaging your relationship.

4. Will this affect my own financial well-being? It’s crucial to take a look at your short- and long-term goals and ask yourself if you can really afford to help. It’s natural to want to provide support, but don’t let a struggling family member jeopardize your own financial security, especially if you’re approaching retirement. By prioritizing your own financial goals and stability, you may even have the ability to comfortably help family members in the future.

Multiple Marriages Can Make for Complicated Beneficiary Designations

Jeff Matsen — Tue, 01 May 2012 20:33:32 +0000

Since multiple marriages are quickly becoming the rule rather than the exception in the U.S., this can lead to confusion when designating the beneficiaries of a life insurance policy or other assets. Ensuring that a current spouse and children from a previous marriage are all provided for can lead to a situation where no one is happy if estate plans are not made carefully.

If your first spouse is still named as beneficiary of your life insurance policy, you need to change that designation – unless, of course, it is part of your divorce agreement that your ex has to remain as beneficiary. If that is the case, you may want to purchase additional life insurance to benefit your new spouse. But before you do, consider this: if your new spouse inherits the proceeds, there is no guarantee your children will benefit. If your children inherit, your new spouse may not get anything. What can you do to protect both?

One solution would be to create a revocable trust and name that trust as the beneficiary of the life insurance proceeds. When you die, the proceeds will fund the trust and then you can specify how the funds are distributed. You could either give both your spouse and your children access to the trust funds, or you could give your spouse access alone until he or she passes, and then the trust goes to the children.

As you can see, choosing a beneficiary is not always as simple as it may sound. You probably need to consult with an Orange County estate planning attorney to determine the best strategy for your personal circumstances.

Tax Court Decision a Win for Family-Owned Businesses

Jeff Matsen — Mon, 30 Apr 2012 21:09:28 +0000

A 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.

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

Jeff Matsen — Thu, 26 Apr 2012 21:12:10 +0000

A 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.

“Nations Top 100 Attorney” Publishes Insightful New Book

matsen — Mon, 16 Apr 2012 18:53:02 +0000

New Book Helps You Plan for and Protect Your Assets

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 www.matsenvoorhees.com/book .

ABOUT JEFFREY R. MATSEN

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.

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

Jeff Matsen — Wed, 04 Apr 2012 20:48:09 +0000

An excellent post yesterday at Forbes.com 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.

Our Newport Beach estate planning and asset protection law firm has been helping California families protect and grow their assets for more than 35 years. Contact us today for asset protection and estate planning strategies to meet your unique needs.