Page 42 - MetalForming January 2011

Blackman on Taxes By Irving Blackman
Asset Protection and Estate Planning—Essential, Compatible and Wealth-Saving Bedfellows
The typical reader of this column hates paying taxes. Beating up the IRS legally often is their favorite indoor sport. What tax do they fear the most? Hands down, it’s the estate-tax monster. To calm your fear, let’s start with a bit of good news: Your author, with the help of other experts, has learned how to win the estate-tax game. What does this mean? We have developed a system—used hundreds of times over the years—that can, does and will beat the estate- tax monster, every time, no matter how large your estate.
But face it, even a perfect estate plan, at best, is in reality a death plan, because nothing happens until you die. Then, and only then, will your assets go to your heirs (or into a trust, partnership or other entity for their benefit).
All very good. But wait, you ain’t dead yet. In the meantime are your assets protected for the rest of your life? Let’s take a closer look at your situation: Write your age here ____________ (and if married, your spouse’s age here ____________). If you are a guy and you wrote 41, your life expectancy is 77; at 52 it’s 78; at 63 it’s 81; at 74 it’s 84. Even at age 86 you have five more years to enjoy life. If you’re a gal, add three to four years.
What’s my point? Well, your death plan should protect your assets from the IRS when you die. But what about protecting your assets from today (the day you sign your estate-planning documents) until the day you go to that better place?
Sorry, but here comes the bad news: To be brutally hon- est, the reason almost all estate-planning advisors don’t offer asset protection is because they don’t know how. What about those advisors that rely on a software package? They are helpless; asset protection is not part of the package.
Just imagine going to the bank with a large amount of cash. Only a fool would not take the necessary precautions. In a like manner, it only makes good sense to protect your assets, start- ing today and until you go to the big business in the sky.
How and when should your asset-protection plan be done? The when is easy: When you do your estate plan, do a lifetime plan at the same time. Your lifetime plan must include your asset-protection plan.
Your lifetime plan includes such considerations as:
Irv Blackman, CPA and lawyer, is a retired founding partner of Blackman Kallick Bartelstein, LLP and chairman emeritus of the New Century Bank (both in Chicago). Want to consult? Need a second opinion? Contact Irv:
Blackman, Kallick, Bartelstein 10 S. Riverside Plaza, Ste. 900 Chicago, IL 60606
tel. 847/674-5295 Blackman@EstateTaxSecrets.com www.taxsecretsofthewealthy.com
• How to maintain your lifestyle (and your spouse’s, if mar- ried) for the rest of your life;
• How to deal with inflation;
• Succession planning for your business;
• What if one of your kids gets divorced; and
• A host of other issues unique to every family and busi-
ness owner.
Next, the how of asset protection. For most law-abiding
Americans, asset protection is a three-category subject: 1) Protect you and your spouse.
2) Protect your kids and grandkids.
3) Protect your business.
Before detailing the categories it is important to under- stand the goal of asset protection: to protect assets from pos- sible lawsuits (even if you lose and are held liable), creditors, divorce claims and frivolous claims.
Here’s a list of the basic dos, don’ts and strategies to ensure your assets (wealth) are protected.
Protect You and Your Spouse
1) Your residence(s): Transfer to a “qualified personal res- idences trust” or hold title 50 percent in your revocable (estate planning) trust and 50 percent in your spouse’s trust.
2) Other real estate you own (whether vacant or improved): Each property should be in a separate LLC. Exception: prop- erties that are not too valuable can be grouped in one LLC.
3) Investments (cash/stocks/bonds/CDs, and the like, as well as your interests in the LLCs in no. 2 above); transfer to a family-limited partnership (FLIP).
4) Always carry umbrella liability insurance.
5) Never serve on the board of directors (profit or not-for- profit) without adequate error and omissions insurance.
6) Do not cosign or guarantee loans for friends or family. (Your kids or grandkids could be an exception.)
7) Cars can be an expensive asset destroyer:
a) Don’t own the car of an adult child.
b) Don’t own vehicles jointly with your spouse.
c) Don’t let other people drive your car unless your
insurance has proper coverage.
8) Getting married? A prenuptial agreement is a must. 9) You and your spouse must execute property powers of
attorney.
Protect Your Kids and Grandkids
1) Never leave property, including life insurance pro- ceeds or retirement plan funds, directly to a minor—always in trust, to a FLIP or some other protection device.
2) Beware of the divorce devil.
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MetalForming/January 2011
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