Controlling Your Facebook Digital Legacy

Dear Clients, Colleagues, and Friends,

Twelve years ago, Ellen’s mother passed away after 96 wonderful years of life. She was not the wealthiest of persons, but her life was rich with memories of her children growing up, watching them raise their children, and even getting to know her great-grandchildren. This could not have been more evident than when Ellen went to her mother’s fourth floor New York walk-up to clear out her mother’s belongings, and was met by countless photos of family spanning the decades – they were hanging on the walls, preserved in photo albums with handwritten stories, and in frames on the bedside tables. The pictures were beautiful to behold – and easy to distribute to family or discard if appropriate. But today, as they say, times are different.

While some of today’s photographs and stories are preserved in tangible form, a great deal are digital and make their homes online – on Facebook, Instagram, and the Cloud – not to mention other digital assets, such as emails, a LinkedIn account, and personal websites, which may leave behind a person’s digital legacy for hundreds of years into the future. Social media is new in the grand scheme of time – and while the Uniform Fiduciary Access to Digital Access Act (UFADAA) was approved on July 16, 2014, states and tech companies have been slow to adopt it. But the reality of an online digital legacy remains, and while legislatures figure out ways to handle the issue, some online forums, such as Facebook, have created their own option as a solution for users with a concern for what will happen to their account after they pass away.

By going to the Facebook drop down tab, selecting Settings, Security, and then Legacy Contact, a Facebook account holder can name a person as their Legacy Contact, thereby giving that person permission, and the ability, to manage the decedent’s account after the account holder passes away. The Legacy Contact can pin a post to the decedent’s Timeline, thereby, for example, providing information as to memorial service information; accept or deny friend requests, for instance should a family member request to be a friend after the person passes in order to learn information about memorial proceedings; and can update the decedent’s profile picture. By logging into the Legacy Contact area of Facebook, an account holder can opt to give permission for their Legacy Contact to download a copy of the account user’s posts, photos, videos, and About Me section, or can choose to instruct Facebook to delete their account after Facebook is notified of the person’s passing. If an account is not set to be deleted, it will be Memorialized, with the word Remembering shown next to the person’s name in the profile. Further details and information can be found on Facebook’s website, and we encourage interested Facebook users to take advantage of the easy-to-use planning opportunity provided by Facebook so as to have a say in their own digital legacy.

To discuss this and other digital legacy planning opportunities, please contact our office.

Jeffrey M. Verdon, Esq.

Yes, It Can Happen To You

Dear Clients, Colleagues, and Friends,

Legal Malpractice. It lurks in the darkness, waiting to pounce on naïve, unsuspecting lawyers, and yes, even the great ones too.

These are two of the most terrifying, haunting words, and in abject terror, we shape our entire professional careers to avoid any situation that could lead us into the deep hole of exposure. We agonize over our daily choices as we feel forced to tiptoe around combative clients, race against looming deadlines and unreasonable opposing counsel, research the newest case law updates and determine the judiciousness of being asked to lower our fees yet again.

It’s always in the backs of our minds… that fear of being caught up in something we can’t control, but still we think, “It can’t happen to me.”

Although most of us live in tenuous denial, malpractice lawsuits do happen. And they happen fairly often. An article published by the American Bar Association stated that an estimated 5-6% of all attorneys face legal malpractice claims yearly, with some individual claims of liability reaching over $50M in damages. The ABA also reported that lawyers starting their legal career in private practice today are likely to have between one and three legal malpractice claims during their professional career. That number rises if legal work involves a highrisk practice area. The most common malpractice claims include failure to know and correctly apply the law, planning errors, failure to file documents, conflicts of interest, fraud, clerical errors, tax consequences, and poor client communication, among other types of complaints.

These statistics aren’t simply academic. Recently, several high-profile legal malpractice cases in the news have sobered the legal community. Some cases are so huge that entire firms have imploded, even when only one member of the firm is at fault.

The law firm of Rutter, Hobbs and Davidoff was recently slapped with a $10M jury verdict when a former client claimed the firm committed legal malpractice in drafting a separation agreement between he and his employer. Although only two attorneys were ultimately implicated in the claim, the mid-sized firm quickly dissolved under the huge liability as its other partners and associates jumped ship. In another example, rapper 50 Cent sued his former lawyers at Garvey Schubert Barer for $75M in damages, claiming that their misinformed legal counsel had grave financial consequences that directly led to his bankruptcy.

It’s probably safe to say that not many firms carry professional liability insurance of $75M. What happens to a firm’s assets – and the partners’ assets – when insurance carriers only cover a fraction of the cost of a potential legal malpractice judgment? Can a lawyer do anything to protect against a disastrous legal malpractice claim, justified or not?

As any good lawyer will tell you, it depends. After all, timing is everything. If you “firewall” your assets by performing comprehensive estate planning with asset protection BEFORE a lawsuit occurs, you may be able to protect yourself. If you try to do it AFTER, it’s already too late.

Asset protection planning can help protect businesses and estates against unforeseen lawsuits. First class estate and asset protection planning services are not cheap, but what will the cost be if you do get sued and haven’t installed these legal “firewalls?” Defending a legal malpractice lawsuit could cost more than what it might cost to protect an attorney’s whole business or entire estate for their whole life. And, even better, Uncle Sam could help subsidize the cost through the utilization of the tax code.1 Considering these benefits, coupled with the potential risks of losing it all, an upfront investment in such asset protection planning now seems like a no-brainer in protecting yourself later. For any lawyer practicing today, this is an opportunity for peace of mind and job stability.

Take this moment to consider your own situation. Are your personal and professional assets “firewalled” against unforeseen liabilities? Whether you are seeking to protect business or personal assets, a timely and effectively created asset protection structure to protect against a future unforeseeable liability claim can make recovery beyond your insurance policy limits unlikely and get the case settled early and for far less than not having a structure in place at all.

If your assets are exposed, call us for a consultation to discuss “firewalling” your business or estate with a comprehensive estate or business plan with asset protection. Don’t let time, money or denial come back to haunt you.

Yes, lawsuits can happen to you… but assets can be protected.

1 IRC Section 212(3) permits the fees paid for tax planning to be expensed.

Succession Planning Requires Teamwork

Dear Clients, Colleagues, and Friends,

“Teamwork makes the dream work, but a vision becomes a nightmare when the leader has a big dream and a bad team.”

– American Clergyman, John C. Maxwell

Paul can’t believe it’s been forty years since the night he died.

The last thing he remembered was blowing out the candles on his 20th birthday cake – then nothing. One minute he was fine, the next minute he was dead.

Fortunately, his death was short-lived. Paul’s nurse practitioner aunt performed CPR, and by the time the ambulance came, he was breathing on his own. Unfortunately, his prognosis was not good. Paul needed life-saving, highly experimental surgery that hadn’t been invented yet. After making hundreds of calls, Paul’s aunt found an enterprising doctor who quickly developed a special tool to help save him. This launched Paul on his life’s mission to get specialized medical devices into the hands of doctors around the world. Today, his company – one that has directly saved the lives of tens of thousands of people – is worth millions.

Because of Paul’s near-death experience, he understands the importance of business succession planning. He doesn’t want his inevitable death to also be the death of his business.

Years ago, Paul hired a key employee who is now poised to buy the company when he dies. To facilitate the transaction, Paul had his financial and tax people perform a fair-market valuation of the business, he had his lawyer draft buy-sell paperwork, and he had his life insurance agent put a life insurance policy in place to finance the terms of the agreement. Paul felt like he was making some smart moves.

But he neglected something… communication. Paul failed to insist that his lawyer, his life insurance agent, his financial planner and his tax advisor coordinate with each other. This might not seem like a big deal – after all, these professionals are paid good money to answer all the “what ifs” we could never think of on our own.

But “what if” our professional advisors aren’t answering the same “what ifs?”

Without communication and coordination among his professionals, Paul’s plan might not take into account hundreds of tiny little details that could cause the failure of the business succession plan. Former Laker’s coach Phil Jackson said, “The strength of the team is each individual member. The strength of each member is the team.” In succession planning, this statement could not ring more true.

Take the recent case of Broeferdorf v. Bachelor, No. 15-2117 (U.S.D.C. E.D.PA. Sept. 14, 2015), as a perfect example. In this case, Amy Bosich, the owner and founder of Flying Nurses International, executed a right of first refusal buy-sell agreement with her longtime employee, Robert Bachelor, funding his potential right to buy the company with a life insurance policy, which he owned and could control. Unfortunately, this was not a one-way buy-sell agreement, and the insurance policy terms allowed Bachelor to unilaterally change the beneficiary of the policy to himself without informing Bosich. To complicate matters, the buy-sell agreement gave Bachelor the right to refuse to exercise his option to buy the company. In the end, this is exactly what Bachelor did, declining to buy FNI and cashing in the $1M life insurance policy for himself. Bosich’s executor sued under a number of different legal theories, but there is one, inescapable fact: failure of the team members to coordinate Bosich’s succession plan resulted in a failed succession.

That would be one of Paul’s worst fears.

Paul schedules a group meeting with all of his professional advisors. He asks each of them to explain to each other what they’ve contributed to his business succession plan, and then he voices concerns about whether it will all work together. Each professional is understandably proud of their individual work and defensive about Paul’s sudden case of “what ifs,” but as they all discuss the details of the plan, they slowly discover that it actually might contain some potentially fatal holes. None of these defects would have been detected by the individual professionals, but together, they were able to get a 360° view of the plan and detect where problems might arise.

Energized with renewed urgency, Paul asks his professional advisors to coordinate a comprehensive strategy to ensure the success of his business succession objectives. As the plan takes shape, each of his advisors’ respective strengths enhances its viability. Score one for teamwork.

Our law firm works with professional advisors and their clients to develop comprehensive business succession plans. Call us now to schedule a consultation about how we can help coordinate your professionals to help obtain that important 360° view. After all, teamwork really does make the dream work. Put us to work for your dreams so they don’t die when you do.

Jeffrey M. Verdon, Esq.

No Good Deed Goes Unpunished

Dear Clients, Colleagues, and Friends,

Do you remember when the medical profession used to be about the patient and not the insurance carrier? Dr. Nelson, a surgeon affiliated with Hoag Hospital, remembers it well.

Since March of 2010, with the advent of Obamacare, he has seen millions of Americans becoming insured on plans with out-of-network benefits. In addition, narrowing insurance networks meant that many providers were being left completely out of network, so to remain in business forced him to consider an out-of-network strategy as a means of survival.

Dr. Nelson knew he had to make a change. He knew physician ownership in Ambulatory Surgical Centers (ASCs) allowed for maximum professional control over the clinical environment and over the quality of care delivered to patients. As a result, he opened a new business with his own ASC.

90% of ASCs have physician ownership, and many ASCs are jointly owned by local hospitals and physicians. This ownership gives Dr. Nelson professional autonomy over the work environment and over the quality of care that has not been available in hospitals. Furthermore, hospitals embrace the value of the ASC model as it helps reduce frustrating wait times for patients and allows for maximum specialization and patient-doctor interaction, unlike large scale institutions.

Dr. Nelson finally felt that medical care was back to being about the patient. As a medical professional, he was bound by a strict code of medical ethics, and so was the ASC, so he was quite confident he had protected his future and would be safe for years to come.

Then he was blindsided.

One of the insurance carriers, Cigna, filed a lawsuit against 11 ASCs, including his, alleging the surgery centers attracted out-of-network members by reducing the members’ copays and other fees but charging Cigna inflated prices to recoup losses. Cigna allegedly paid the 11 surgery centers more than $6.5 million in claims before realizing the centers were allegedly using the “fee-forgiving” model for out-of-network patients and now wanted it back.

His ASC did not have contractual arrangements with Cigna and, therefore, was “out of network”; how could Cigna legally force his ASC to collect copays and deductibles? Even if he overcomes this lawsuit, paying his defense costs could be devastating to his business. He could lose everything. How could this happen to such an honorable doctor?

The defendant ASCs have not yet filed an answer to the Complaint. The complaint can be read in its entirety by clicking here.

Will doctor’s offices be next?

Indeed no good deed goes unpunished. One can still be held liable even when their heart is in the right place, and that is why asset protection planning is so important. Protecting you from the things you don’t expect as well as those that are foreseeable is our business. If you don’t yet have an action plan, contact us.

Jeffrey M. Verdon, Esq.

You’ve Prepared Your Assets for Your Heirs… Have You Prepared Your Heirs for Your Assets?

Dear Clients, Colleagues, and Friends,

The Loaded Question

“Dad, are we rich?”

Ethan’s father drops his fork mid-bite. “That’s an unusual question,” Roger carefully responds.

Ethan, who just turned 16 and still fears his father’s disapproval, hesitates before continuing. He knows there is an unspoken rule in his family to never speak about money. Despite his nerves, he plows on, determined to get to the bottom of the wild claims his classmates made.

“So, the guys said I didn’t need to get a summer job, and I was like, ‘yeah, right,’ and then they asked if I had ever Googled you – I mean us – as a family…which I hadn’t…so I did.”

“Ah,” responds Roger, “You want to know if it’s true.”

Ethan shrugs, embarrassed. “I guess,” he mumbles, eyes locked onto his plate.

Roger sets down his fork, gently folds his large hands and looks Ethan in the eyes. “Yes, it’s true, son. But that changes nothing. You are to work, you are to study hard and you are to go to college. You are to find a career – any career – and you are to live a productive life. An inheritance changes nothing. I know from experience, understand?”

Ethan nods.

“Now that this nonsense is cleared up, we will never speak of it again,” and true to Roger’s word, he didn’t.

Continue reading

“Puerto Rico’s Tax Benefits Are Too Good To Be True” – Want to Bet?

Dear Clients, Colleagues, and Friends: It has been a bit over 2 years since my esteemed colleague, Fernando Goyco, and I wrote an article about the Puerto Rico tax law Act 20 & 22 for Steve Leimberg’s Income Tax Planning Letter —

(Steve Leimberg’s Income Tax Planning Email Newsletter – Archive Message #44
Date: 23-Apr-13 From: Steve Leimberg’s Income Tax Planning Newsletter
Subject: Jeffrey M. Verdon & Fernando Goyco-Covas: Consider Moving to Puerto Rico to Eliminate Tax on Passive Income Exposure)

— extolling the virtues of the amazing new opportunities presented in Puerto Rico for both personal and business income tax planning. To refresh readers of the Client Alert, Act 20 eliminates capital gains tax on all Puerto Rico sourced income until the year 2034 provided you meet certain residency requirements, and Act 20 effectively reduces the tax on corporate profits to 4% (or 3% in certain special instances).

Since this article was published, we have received numerous telephone calls from U.S. taxpayers interested in determining if the new Puerto Rico tax laws will work for them. Answering their questions and sending them off to speak to their CPA’s, I would often get a message from the taxpayer that their CPA would discourage them from moving forward. The primary reason given by the CPA is that “Puerto Rico’s tax benefits are a ‘hype’ or too good to be true.”

Continue reading


A Man’s Home Is His Castle…Or Is It?

Homemade Homestead Protection

Dear Clients, Colleagues, and Friends,

Saul can’t sleep.

He has a reputation for attention to detail, but he forgot something, he just knows it. Saul probes his memories, thinking back over the past several months to parse out what could possibly be bothering him…

Saul sold his company for a huge pile of cash two years ago. A smart guy, he knows how to protect his assets. That’s why, on the advice of counsel, he put most of the cash he received from the sale of his company into an offshore asset protection trust (APT). He understood that if anyone ever came after the cash, it would be out of play inside an APT. Then, he decided to splurge on one extravagant, lifelong goal: to build his very own dream beach house. Continue reading

The Best Little Asset Protection Vehicle No One Has Ever Heard Of — Securing Retirement

Dear Clients, Colleagues, and Friends,

Life is full of little surprises. Wondering if you have enough money for retirement should not be one of them.

Imagine this…

You’ve worked your entire life to build a successful business, investing every spare penny back into your company. Your long-term plan? To sell the company when you turn 60 so you can live a life of leisure on the proceeds. Then, disaster strikes. You and your company get sued, and after a devastating multi-million dollar judgment, there aren’t enough assets to pay off the debt. Next step… bankruptcy. It’s going to wipe you and your company out, and because you never saved for retirement, you don’t have enough protectable assets, such as a healthy IRA, with which to start over. And that “sell the company” retirement plan you worked so hard for? Gone without a net.

Luckily, there is something you can do to avoid this fate. Continue reading

The Sky is Falling!

Dear Clients, Colleagues, and Friends,

Client Alert was created to educate and inform. The importance of acting now cannot be overstated. Failing to do so is at your peril…

One of the greatest estate tax reduction strategies used by estate planners is about to go away – forever. Act Now!

Ok, while Client Alert’s Chicken Little act is over, it can say with a high degree of certainty that the sky really is falling.

What is the single most important goal of effective estate planning?

Maximizing wealth transfer, as your heirs should be better stewards of your wealth than some bureaucrat back in Washington, D.C

New government regulations, of course! Continue reading

Marriage and money

The Most Expensive Divorce in History… Averted!

Dear Clients, Colleagues, and Friends,

Life is unpredictable.

For instance, the financial pitfalls of a catastrophic divorce can throw devastating curveballs to even the wealthiest titans of industry.

Here is one such story:

Russian oligarch and French soccer club AS Monaco owner Dmitry Rybolovlev met his wife almost 30 years ago when they were both students in the Ural Mountains. Continue reading