The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency

© 2016 DailyDAC, LLC d/b/a/ Financial Poise™ 1

The Legal & Tax Aspect of Investing: Asset Protection, Estate Planning, and Tax Efficiency

SERIES: INVESTING BASICS 2016Premier date: March 17, 2016

Premier Date: March 17, 2016

The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency

SERIES: INVESTING BASICS 2016


WE WOULD LIKE TO TAKE THIS OPPORTUNITY TO THANK OUR SPONSORS


meet the facultyPANELISTS

Charles Sikorovsky North Shore Council of the Financial Planning AssociationMichael Terrien West Loop FinancialMichelle Huhnke Sugar Felsenthal Grais & Hammer LLP

MODERATOR Jonathan Friedland,

Sugar Felsenthal Grais & Hammer LLP



Practical and entertaining education for business owners and executives, accredited

investors, and their legal and financial advisors. For more information, visit

www.financialpoise.comDISCLAIMER: THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD

NOT BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.

http://www.financialpoise.com/


about this webinarAre your assets titled in a way that makes them “tax efficient?” Do you have an estate plan, and if so is it the right one for you? Are your assets protected from the reach of creditors as well as they can be and is that something you should be concerned about in the first place? This webinar discusses these issues in the context of your broader financial planning.

about this seriesAre you saving enough money? How much is enough? That depends, in part, on what your goals are and what sort of returns you can get by investing your savings. Many investors who thought they were well situated for retirement were devastated by the 2008 meltdown. Many others in recent years have lost their entire nest egg to fraudulent schemes. This Financial Poise webinar series will give you a solid introduction to the fundamentals of investing.

As with all Financial Poise webinars, each episode in the series is designed to be viewed independently of the other episodes, and listeners will enhance their knowledge of this area whether they attend one, some, or all of the programs.


7

episodes in this series

EPISODE #1 Basic Investment Principles 101-1/28/2016

From Asset Allocations to Zero Coupon Bonds

EPISODE #2 Goal Based Investing- 2/22/2016Planning for Key Events

EPISODE #3 The Legal & Tax Aspect of Investing: 3/17/2016Asset Protection: Estate Planning, and Tax Efficiency

EPISODE #4 Advanced Investing Topics 4/21/2016

EPISODE #5 Options for the Accredited Investor 5/26/2016Dates above are premier dates

All webinars also available On Demand through West LegalEd Center and Vimeo



THIS WEBINAR COVERS 3 TOPICS

Estate planning

Tax efficiency

Asset protection


ESTATE PLANNING DEFINED

Estate planning is the collection of preparation tasks that serve to manage an individual's asset base in the event of their incapacitation or death, including the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law.

-Investopedia.com


TAX EFFICIENCY DEFINED

Tax efficiency involves making investing choices that reduce one's tax bill.

-Investing Answers.com


ASSET PROTECTION DEFINED

An asset protection plan is designed principally to protect your assets from creditors during your lifetime. It can also be designed to protect assets you leave to your spouse, children and other family members.

-AssetProtectLawJournal.com


COMMON ESTATE PLANNING DOCUMENTS

WillPOA-Property POA-HealthCare Living WillOther Estate Planning

Documents


OTHER ESTATE PLANNING DOCUMENTS

Letter of InstructionRevocable ("Living") Trust Various Irrevocable TrustsEthical Will


TRUST DEFINED

“[T]he normal private trust is essentially a gift, projected on the plane of time and so subjected to a management regime.”

-Bernard Rudden, John P. Dawson s Gifts and Promises, 44 MOD L. REv 610. 610 (1981) (book review).


TYPES OF TRUSTS

Private Testamentary Revocable (a/k/a/ “living” or “inter

vivos”) Irrevocable

Charitable Business


WHAT HAPPENS IF YOU DO NOT HAVE A WILL?

o Probate v. Non-probate propertyo Non-probate property=

Life insuranceJT or TIE propertyRetirement benefitsProperty in trustsP.O.D. accounts

o Proceedings are publico More expensiveo Time consuming


WHAT HAPPENS IF YOU DO NOT HAVE A WILL? (con’t)

Who survives you?

Who is spouse?

Who are descendants?


WHAT HAPPENS IF YOU HAVE A WILL BUT NOT A TRUST?

Probate Privacy Issues Directives for Managing Affairs when

Infirm/Unable Creditor/Spousal Protection for heirs


ADVANTAGES OF TRUSTS

Control over when a beneficiary inherits.

Creditor protection.

Lifetime management of property.

Possible tax planning.

Probate avoidance, even if no successors named.

Unified bucket for assets


THE LAW VARIES STATE-TO-STATE


WHAT CAN A WILL AND TRUST NOT DO (AT LEAST NOT COMPLETELY)?

Health issues

Tax Efficiency

Asset Protection


WHAT/WHO MAY YOU WANT TO PROTECT YOUR ASSETS FROM?

Personal guarantees

Medical expenses

Divorce

Lawsuits

Other creditors


ASSET PROTECTION

Deter litigation

Incentive for settlement

Protect assets


EFFECTIVE ASSET PROTECTION PLANNING

• Complements existing liability insurance

• Undertaken before problems arise

• Comprehensive throughout one’s financial affairs and estate planning

• Does not involve excessive complexity


EFFECTIVE ASSET PROTECTION PLANNING IS NOT

Tax avoidance

Based upon secrecy or hiding assets;

A means to defraud creditors

A substitute for liability insurance


LIMITED PARTNERSHIPS & ASSET PROTECTION

• Concentrates control in general partner

• Provides for discretion in general partner to accumulate partnership assets

• Requires the consent of general partner to dissolve or liquidate partnership


ASSET PROTECTION TRUST-BENEFITS MAY INCLUDE:

• Non-recognition of foreign judgments

• Standard of proof required: beyond a reasonable doubt

• Shorter statute of limitations


INSURANCE & ASSET PROTECTION

Property insurance Umbrella insurance Health insurance Disability insurance Life insurance Long term care insurance Malpractice insurance Business (D&O; E&O)


MISTAKES SMALL BUSINESS OWNERS MAKE IN NOT PROTECTING THEIR DOWNSIDE

Not doing business through an entity

Signing personal guarantees


EXEMPT ASSETS & ASSET PROTECTION

• Generally not reachable by creditors• Exempt assets generally include:

-Homes in most states (to widely varying limits)

-Qualified pension, profit sharing and 401(K) plans

-IRAs in most states-Life insurance policies if owned by the

insured.• Annuities typically not exempt


IRREVOCABLE TRUSTS

AND THE SPENDTHRIFT

CHILD


TYPES OF IRREVOCABLE TRUSTS

ILITs A-B Trusts Charitable trusts GST ("dynasty") trusts QPRTs 1st party and 3rd party special needs

trusts Medicaid trusts Intentionally defective grantor trusts Credit shelter trusts, etc., etc.


TAX EFFICIENCY: HOW BEST TO HOLD ASSETS

Taxable account?

Tax-deferred account?

Tax-exempt account.


GIFTING &

OTHER STRATEGIES TO

MINIMIZE ESTATE TAX


MINIMIZING INCOME TAX


STRATEGIES FOR THE SUPER WEALTHY Life Insurance Trust

Minor’s Trust

Family Limited Partnership

Charitable Trust

Domestic Asset Protection Trust

Other Irrevocable Trust

Gifting Program


EVEN IF YOU HAVE A PLAN, FROM TIME-TO-TIME, YOU SHOULD REVIEW TO POSSIBLY UPDATE

Beneficiary designations

Account titles

Deeds

More About The Faculty: JONATHAN FRIEDLAND

[email protected] Friedland is a partner with Sugar Felsenthal Grais & Hammer LLP. He regularly represents parties in the purchase and sale of businesses and counsels businesses and their owners in their everyday affairs. Jonathan is also a nationally recognized expert in matters related to financially distressed companies.

Jonathan holds the highest possible rating from Martindale-Hubbell (AV® Preeminent™) and AVVO (10/10), has been repeatedly recognized as an Illinois “superlawyer” in the areas of Business/Corporate Law and Bankruptcy & Creditor/Debtor Rights, and has received several other similar distinctions. He is licensed to in Arizona, Illinois, New Jersey and New York.

Jonathan has been profiled, interviewed, and/or quoted in numerous publications, including Buyouts Magazine; Smart Business Magazine; The M&A Journal; Inside Counsel; LAW360; Business Week.com; The Bankruptcy Strategist; Dow Jones Daily Bankruptcy Review; Bankruptcy Court Decisions; Dow Jones LBO Wire; and The Daily Deal. He has authored three books and more than a hundred articles, and has spoken on more than 100 panels.

Jonathan is also the founder and chairman of DailyDAC, LLC, d/b/a Financial Poise™, an on-line provider of continuing education, information, and business intelligence for business owners, investors, and their trusted advisors. Jonathan graduated from the State University of New York at Albany, magna cum laude, in 1991 after three years of study and from the University of Pennsylvania Law School in 1994. He clerked for a federal judge before entering private practice, spent several years teaching MBA candidates as an Adjunct Professor of Strategic Management at the University of Chicago Booth School of Business, and was the 2006 Clayton Center for Entrepreneurial Law Visiting Professor of Business Law at the University of Tennessee College of Law. Jonathan was a partner with Kirkland & Ellis LLP before joining SugarFGH.


More About The Faculty: D

MICHELLE HUHNKE

© 2016 DailyDAC, LLC d/b/a/ Financial Poise™

[email protected]

Michelle M. Huhnke is a partner at 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 helps individuals and families minimize estate and gift tax problems using a wide range of advanced techniques, including family partnerships, leveraged and discounted gifts and various gift trusts. She routinely helps clients administer estates and trusts by preparing federal estate tax returns and advising fiduciaries regarding family issues, tax problems, and their duties and rights.

Michelle also represents charities and their donors. She advises clients on the use of charitable trusts, private foundations and donor advised funds to foster family philanthropy and maximize the income, estate, and gift tax benefits of charitable giving. She advises charitable foundations and public charities on governance and business transactions.

Michelle frequently teaches and speaks on estate planning, tax, and exempt organization issues.40


CHARLES SIKOROVSKY

Charles Sikorovsky is Chair of the North Shore Council of the Financial Planning Association and has also served on the FPA of Illinois State Board. He currently works with Rick Harig, CFP® at Legacy Resources, LLC, a financial planning firm in Northbrook. In a prior career, Charles was a software consultant and technical trainer, and he brings his technical background and passion for teaching to Financial Poise.



MICHAEL [email protected]

Michael S. Terrien is the founder and Managing Member of West Loop Financial LLC (WLF). WLF is a registered investment advisor (RIA) committed to disciplined, evidence-based investing and personalized, comprehensive financial planning designed to help clients build their tomorrows while guarding against the pitfalls on the road today and in the future.

West Loop Financial is a member of The BAM Alliance (BAM), a nationwide network of like-minded advisors. Mr. Terrien brings the intensive commitment to client service and attention to detail developed over a legal career spanning more than 20 years to West Loop Financial.


Visit www.eisneramper.comEisnerAmper. Let's Get Down to Business®

EisnerAmper LLP is a leading full-service advisory and accounting firm, and is among the largest in the United States. We provide audit, accounting, and tax services, as well as corporate finance, internal audit and risk management, litigation services, consulting, private business services, employee

benefit plan audits, forensic accounting, and other professional advisory services to a broad range of clients across many industries. We work with high net worth individuals, family offices, closely held businesses, start-ups, middle market and Fortune 500 companies. EisnerAmper is PCAOB-registered and provides services to more than 200 public companies and to thousands of entities spanning the hedge, private equity, brokerage and insurance

space in the financial services marketplace. As companies grow we help them reach their goals every step of the way. With offices in New York (NY), New Jersey (NJ), Pennsylvania (PA), California (CA), and the Cayman Islands, and as an independent member of Allinial

Global, EisnerAmper serves clients worldwide.


http://www.eisneramper.com/

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Important Notes

• THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY.

• IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.

• YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.

The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency

Education

Transcript of The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency