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6/12/2018: Which Asset Protection Strategies Are Right for Your Clients?

From

Condie & Adams, PLLC

611 4th Avenue, Suite A

Kirkland WA 98033
425-450-1040

Condie & Adams, PLLC is a values-driven law firm committed to providing individuals, families and small businesses with personalized, client-centered legal services in estate planning, probate and trust administration, tax planning, and related legal matters.

How You Can Keep Claims From Threatening Their Property

Most of us do not expect to be sued. However, lawsuits are filed every day the courthouses are open. If your clients’ estate plans don’t include adequate asset protection, they could end up losing a substantial amount of their wealth in the event of a claim – even a “frivolous” one.

It’s well worth talking to your clients about what asset protection strategies their current plan includes. Many existing plans may need a revamp, while other clients will need to implement a new plan entirely. Shielding their assets and property against legal claims takes sophisticated planning and teamwork. We’re here to help you develop a tailored asset protection strategy for each of your clients.

Several issues and strategies merit examination in your asset protection conversation with your clients.

  • Domestic Asset Protection Trust (DAPT): DAPTs can protect your clients from a legal claim that may arise in the future by allowing them to place their assets into a special trust that protects them from the reach of a creditor. DAPTs aren’t available in every state, and the most popular states for DAPTs are Alaska, Delaware, Nevada, and Wyoming. DAPTs are a sophisticated strategy that’s not right for everyone. But, for the right clients, they are a potent tool for protecting assets. Like any sophisticated legal and financial strategy, it’s best to work with a team.
    • Planning Tip: Another option is an offshore asset protection trust established under foreign laws. However, placing your clients’ assets out of the U.S. adds significant tax reporting burdens. Also, court orders for asset repatriation can lead to a client being held in contempt of court. Because of the ongoing tax compliance, fiduciary fees, and overall complexity of these foreign trusts, offshore planning is usually not a great option for most clients.
  • Lifetime Trusts: Lifetime trusts protect your clients’ beneficiaries’ inheritances. Think of this tactic as asset protection for the next generation. Although it does not provide any asset protection benefit for your current clients, these trusts can secure the financial well-being of their children after they’re gone. Additionally, assets left in lifetime trusts need long-term management, providing you a valuable opportunity to be introduced to and work with the next generation.
  • Inheritor’s Trusts: Inheritor’s trusts are an excellent choice for clients who expect to receive an inheritance. Rather than acquire assets outright or through a less-than-ideal trust set up by their family (usually parents or grandparents), your clients can strategically secure their inheritances with this type of trust. These trusts work best when they are coordinated with the client’s overall plan. Any client – especially well-off ones – expecting a large inheritance should consider this option.
  • Risk Management Planning: Setting up a corporation, LLC, limited partnership, buying appropriate insurance, negotiating contracts effectively, using retirement plans and other exempt accounts, and other strategies are all part of what we could call risk management planning. Some of these may be built into your clients’ estate plan while others may be part of your client’s business plans.  Many clients have not taken the time to develop a risk management strategy fully, but it is well worth the effort since many of these strategies are “low hanging” fruit, especially compared to more sophisticated strategies like DAPTs.

No matter what kind of asset protection strategies you help your clients implement, make sure they don’t sleep on it. Planning of this type should not be delayed or neglected. Effective strategies like these only protect your clients when they’re put into place early enough — well ahead of a lawsuit, credit claim, or bankruptcy. For clients who have already implemented one or more strategies, it is also a great time to review and ensure the plan will work as expected. Many trusts – even “irrevocable” ones – can be modernized (and their benefits possibly enhanced) using tools like a modification or decanting. Of course, the traditional concerns of estate planning, such as client privacy, freedom to determine who will be in charge of their assets, and reduction of income and estate taxes, must be addressed. Asset protection lets you improve your value to clients by enhancing client control over their property.

  • Planning tip: The Tax Cuts and Jobs Act of 2017 also impacts your clients’ asset protection needs. Far fewer individuals and married couples will have to pay inheritance taxes because of it. However, it also means that lawsuits — even “frivolous” ones — can still spell trouble for your clients. Bankruptcy and divorce can also come into play here, so protective planning to protect and preserve assets is extremely important, even as estate taxes have receded in importance.

We’re here to help you and your clients.
Your clients trust that you have the expertise to guide them toward their financial goals, and that often means pulling an estate planner into the conversation as part of their team of experts. Give us a call today to chat about how we can build asset protection into your clients’ plans.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

 

You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.

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Condie & Adams, PLLC 611 4th Avenue, Suite A   Kirkland WA 98033 

June 12, 2018 Continue reading

5/9/2018: Solve the Troubled Adult Child Beneficiary Dilemma in Three Easy Steps

Solve the Troubled Adult Child Beneficiary Dilemma in

Three Easy Steps

How to Plan a Successful Financial

Future for Every Family

Many clients with concerns about a

struggling adult child are apprehensive

about discussing such a sensitive topic.

But broaching this subject can lead to a

number of benefits for all parties

involved — for the family, for the adult

child, and for you as their financial

advisor.

Working with us rounds out the team of

professionals needed to achieve the

client’s goals and fully protect a client’s

family, resolving these sensitive

situations smoothly.

Step #1: Discuss the issue with your client

Adult children who are struggling with addiction, irresponsibility with money, or messy

marital issues all fall into the “troubled adult children” category because these issues

typically concern parents. Many parents are concerned about where their financial assets

will end up if distributed to these troubled children. No one wants their legacy to be

squandered on a harmful addiction, seized by a creditor, or absorbed by a contentious

divorce.

If you sense that this is an issue with a family you advise, ask them, on a scale of one to

ten, what level of anxiety they feel about distributions going directly to the child in

question. This is an easy way to determine how much follow-up is needed. If the anxiety

is high (anything over a seven), then loop us in as soon as possible. This first step can be

daunting, as it often touches on an emotionally loaded topic for the family, but asking

them about the anxiety level in these numerical terms, rather than the specifics of the

situation, helps clients express their concern without having to discuss potentially

uncomfortable details. As a result, you can begin to put their minds at ease, assuring them

From

Condie & Adams, PLLC

611 4th Avenue, Suite A

Kirkland WA 98033

425-450-1040

Condie & Adams, PLLC is a

values-driven law firm

committed to providing

individuals, families and

small businesses with personalized, clientcentered

legal services in estate planning,

probate and trust administration, tax

planning, and related legal matters.

that there are ways to manage the situation with everyone’s best interests in mind.

Step #2: Explore trusts and policies together

One solution that can mitigate the negative impacts of unstable adult children on a

family’s wealth is the use of the lifetime trust. Lifetime trusts hold and manage assets,

while making distributions throughout a beneficiary’s life rather than a one-time

distribution of assets. This minimizes the risk of irresponsible or unwise spending.

Because the inheritance is never distributed into a joint account, these types of trusts can

also keep the assets out of the hands of unhappy ex-spouses after a divorce. Plus, lifetime

trusts can contain tax planning that minimizes income and estate taxation.

Keeping money within a trust not only solves your client’s concerns by adding extra

protection to the management and distribution of a child’s inheritance, it also benefits you

as their advisor by allowing you to retain more assets under management. It’s a win-win

for all parties involved. Additionally, unmet life insurance needs, annuity needs, and

other factors may need to be met in order for the plan to fully protect the client and his or

her family.

Step #3: Work with a professional team

Working in concert as a professional team makes it easier to provide your clients with a

sustainable and beneficial roadmap for dealing with the issue of troubled adult children.

You can enjoy an enormous value-add when you partner with us to deliver a solution that

puts the client’s mind at ease.

As a trusted financial advisor, you are perfectly positioned to empower clients to protect

their family from bad decisions and bad people, and we can help. Call us today to discuss

how we can transform this all-too common challenge into a fantastic outcome for all

parties involved.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a

Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax,

accounting, financial, or legal planning strategies.

You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions

about this or any matters relating to estate planning.

Unsubscribe from this newsletter

Condie & Adams, PLLC 611 4th Avenue, Suite A Kirkland WA 98033

May 9, 2018 Continue reading

4/11/2018: Helping Clients Plan From the Heart: Beyond Money in Estate Planning

Many clients and advisors think of estate planning as a logistical process designed to reduce taxes, avoid court, and protect assets. Of course, proper planning does enhance the security of their families and assets, but estate planning is actually much more.

Although we write frequently to you about the tax, asset protection, and court-avoiding benefits of estate planning, the process can also be an expression of love, hopes, dreams, and goals for your clients’ loved ones. There are a number of ways your clients can pass on their legacy to their heirs through archival projects, incentivized trusts, charitable contributions, and more. By highlighting and helping deliver on the human side of estate planning, you can strengthen client relationships and increase retention, build a stable base of long-term retention of assets under management, and become known in your community as an advisor that cares about more than just the numbers.

Telling their story
Your clients may not realize that a will or trust can do more than just provide for the distribution of their assets.  In their estate planning documents, they can specifically reference and provide context for important family artifacts left behind. These family artifacts include audio or video recordings, collections of notebooks or letters, photo albums, and sentimentally-valuable heirlooms. Clients can then pass down the physical items along with the personal and family significance of the items.

By designating who will be the caretaker of important family items and sharing “final messages” with the family through a video or letter, estate plans can serve as a sort of time capsule distilling the views and values your clients wish to be remembered for. By facilitating the conversation about the client’s legacy, you’ll strengthen your relationship with them and their families, leading to a greater intergenerational bond that will serve all parties in the long run.

Incentivizing values and sharing wisdom
In addition to using estate planning to share the family story and history, clients can also incorporate core interests and beliefs into their estate plans. Many clients wish to pass along values like responsibility, dedication, or perseverance, while discouraging or minimizing the risk of so-called “affluenza.” There are a variety of specific estate planning strategies that can incentivize certain life paths for their beneficiaries, empowering your clients to pass along values and wisdom alongside wealth.

Facilitating personal expression for your clients creates a tremendous relationship building opportunity. What are their beliefs about the best ways to approach wealth? What are their hopes and dreams for the future lives of their beneficiaries? What are some struggles they have overcome on their path to success that may guide beneficiaries?

Estate planning need not be dry and unemotional. Revealing the potential for personal expression in their planning is a great way to build trust and loyalty with your clients and their families. This type of expression, when backed with some of the strategies discussed below, provides you with the opportunity to deepen relationships with every generation of the family.

Just talking about values is one thing. For the plan to achieve the client’s legacy goals, it must be backed with a sound legal and financial structure. Many options exist, depending on the needs of the client.  For example, an educational trust establishes funds for children, grandchildren, or even great-grandchildren to pursue higher learning. An incentive trust can ensure disbursements only under certain conditions, such as a beneficiary keeping a full-time job or performing a certain type of work your clients want to encourage. For those clients that are philanthropically minded, there are many charitable planning options, ranging from charitable trusts, donor advised funds, or private foundations. Although the 2017 tax reform reduced the overall tax incentive for charitable giving for many clients, using charitable planning is a great way for clients to keep their legacies alive by setting aside certain assets to support causes that mean a lot to them.

Expressing their hopes
In addition to helping your clients decide how they’d like to pass their values on through their estate plan, you can also remind them that they have the freedom to decide how they’d like their life to be celebrated. It’s often overlooked when clients consider the components in their plans because the focus is so often on taxes, asset preservation and protection, but their visions for their funeral service and memorials can also be included in their plans.

As we’ve discussed, estate planning isn’t only estate tax planning or about assets and liabilities. Connecting with the purpose behind planning results in greater client retention and engagement and an opportunity to bond with the next generation that will inherit wealth. Give us a call today so we can strategize the best approaches to take with your clients in exploring  and developing the human side of their estate plans.

April 11, 2018 Continue reading

9/12/2017: 4 Times You Should Call an Estate Planning Attorney Right Away: Using Your Clients’ Entire Financial Team Improves Results

From savings-building strategies to

concerns about investments, financial

advisors like you work closely with your

clients throughout the year. As estate

planning attorneys, we typically see those

same clients far less often, but there are

numerous circumstances where

collaboration between us can help secure

the best outcomes for our mutual clients.

It may not seem intuitive to loop in an

estate planning attorney. After all, you offer

comprehensive services to your clients.

Why bring more cooks into the kitchen?

The truth is, working collaboratively with

estate planning attorneys can add

significant value to your clients’ outcomes.

Sustainable planning is a team sport

Think of a typical client of yours—let’s call her Elizabeth. Like any fiscally responsible person,

Elizabeth has put together an all-star team to help her reach her financial goals. On her team,

every player has their role. The team works best when there’s clear communication at every

play. The team can rely on each other to assist when there is an opportunity to score extra

points for Elizabeth.

4 situations to pick up the phone

We don’t need to be in touch for every decision, but here are four situations where two heads

are definitely better than one. Give us a call when you run across any of these scenarios.

1. High-growth assets

What about that high-growth asset that’s just about to pop up in value tomorrow? Maybe it’s

From

Condie & Adams, PLLC

611 4th Avenue, Suite A

Kirkland WA 98033

425-450-1040

Condie & Adams, PLLC is a

values-driven law firm

committed to providing

individuals, families and small businesses

with personalized, client-centered legal

services in estate planning, probate and

trust administration, tax planning, and

related legal matters.

founder’s stock, a private placement that’s about to go public, an art collection that’s suddenly

spiked in demand, or something else entirely. Wealth can change overnight, and Elizabeth’s

financial plan must be flexible enough to allow for room to grow.

How we can help: With the help of an estate planning attorney, Elizabeth could sign onto an

incomplete non-grantor trust that would organize her state and federal tax liabilities into

separate entities. This way, her high-growth asset could be managed under the trust in a state

with favorable income tax laws. That means that when Elizabeth does decide to sell her hot new

startup or her collection of Warhols, she’s only responsible for the federal portion of the taxes

associated with the sale. This strategy could save significant state income taxes if she lives in a

high-tax jurisdiction, and that’s a big win for her.

2. Hard-to-value assets

Hard-to-value assets like commercial real estate, small business interests, and closely held

companies are another reason you might want to bring us into the loop as soon as possible.

Suppose that Elizabeth has inherited her father’s regionally-beloved ice cream franchise. It’s

hard to tell what the company’s current value is, but it’s easy to tell that the number of

franchises in different locations makes her vulnerable to heavy estate taxation and challenging

valuations going forward.

How we can help: A wide variety of planning options are available to Elizabeth depending on

her goals and her other assets. A business succession plan, a grantor retained annuity trust

(GRAT), a life insurance trust (ILIT), or several other tools could help Elizabeth incorporate this

new hard-to-value asset into her holdings. Of course, it doesn’t just have to be an inheritance

that’s hard to value. Any difficult to value assets should be considered when developing a

comprehensive financial plan and estate plan, thereby providing a big relief for Elizabeth and

those like her.

3. New homeownership

Buying a new house, be it a principal residence, vacation property, or rental property, is a huge

decision. Is she making the right choice, and is she taking smart, strategic financial steps in the

process? Thanks to Elizabeth’s career success, she’s able to purchase the type of high-value

house she’s been dreaming of for her family. But before signing for it, there’s an estate planning

tactic that could substantially benefit her down the road by removing the appreciation of the

property from her estate.

How we can help: Before the purchase is official, Elizabeth could set up a qualified personal

residence trust with the help of an estate planning attorney. This helps her in a few ways. For

one, she can name her children as beneficiaries that would inherit the property after her death,

with less gift tax cost than she’d otherwise have to deal with. She can still live in the home

during the tenure of the trust. Now Elizabeth has both a new home and a great asset lined up

for her children in the future. Even if a qualified personal residence trust isn’t a great fit, it still

makes sense for Elizabeth to discuss whether her new home should be titled in the name of her

trust.

4. Charitable giving

If Elizabeth is thinking about making a large charitable gift, you’ll want to make sure to work

with us to assess any opportunities to get the most out of Elizabeth’s generosity.

How we can help: There are numerous charitable tools available, such as charitable remainder

trusts, charitable lead trusts, gift annuities, donor advised funds, and private foundations. There

are no one-size-fits-all solutions to planned giving, but there are so many options available that

it’s almost certain that something will work for Elizabeth to make the most of her gift.

Give us a call today

We can work with you to help you strengthen your client relationships by solving these issues.

Collaborate with us to improve outcomes and generate strong, long-lasting relationships with

your clients. Give us a call today.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a

Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax,

accounting, financial, or legal planning strategies.

You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any

questions about this or any matters relating to estate planning.

Unsubscribe from this newsletter

Condie & Adams, PLLC 611 4th Avenue, Suite A Kirkland WA 98033

September 12, 2017 Continue reading