California Proposition – 13 Urgent Change in the Tax Law Coming: Act Before January 1, 2015 Or Lose a Priceless Planning Opportunity

Dear Clients, Colleagues, and Friends,

Imagine with me for a moment that you have the opportunity to purchase a “trophy” property like the historic and beautiful Fairmont Miramar Resort in Santa Monica. Of course, being the savvy business person you are, and given the $200,000,000 price tag, your legal team is involved in the acquisition, and they properly inform you that you may be able to structure the transaction in such a way that reassessment of the property’s value could be avoided by carefully following the rules exempting taxable assessments under CA Proposition 13. Continue reading

UNITED STATES SUPREME COURT RULES: An Inherited IRA Is Not Protected From Bankruptcy Proceedings Under The Retirement Funds Exemption

Dear Clients, Colleagues, and Friends,

Last week, there was an extremely important case decided by the U.S.Supreme Court in the case of Clark v. Rameker. In Clark, Heidi inherited a traditional IRA from her mother in 2001, when the IRA was worth approximately $450,000. Nine years later, Heidi and her husband filed for Chapter 7 bankruptcy and identified the inherited IRA, then worth approximately $300,000, as exempt from the bankruptcy estate under the retirement funds exemption of the bankruptcy code. The case worked its way up the appellate court system and was in conflict with another case that had a contrary holding. So the Supremes took the case and unanimously decided that funds held within inherited IRAs are not considered “retirement funds,” and thus not protected from creditors in bankruptcy proceedings. As a result, Heidi’s inherited IRA was available to satisfy her debts in the bankruptcy proceeding. Continue reading

#1 Question About Offshore Asset Protection Trusts – Will I Go To Jail?

Dear Clients, Colleagues, and Friends,

“Am I going to jail?”

Andrew’s creditor just asked a court to hold him in contempt for failure to pay a multi-million dollar judgment.

Andrew’s eyes were wide with disbelief. “I’ve done everything they asked, but I can’t pay the judgment if the trustee refuses to release funds.”

“Don’t worry,” explains Andrew’s lawyer, “this is how the trust is supposed to work.” Continue reading

Lawsuit, Interrupted

Dear Clients, Colleagues, and Friends,

In 2012, Dr. Brenda severed ties with her problematic business partner, Dr. Smith. Two years later, when Dr. Smith was sued for medical malpractice by eleven former patients on extremely damaging charges, Dr. Brenda was named as co-defendant solely by virtue of her former partnership.

Because Dr. Smith was bankrupt and had no personal assets, naming Dr. Brenda as co-defendant was a ploy to dig for deeper pockets. Although nine of the patients suing were never actually patients of her practice, they refused to dismiss Dr. Brenda from the case. Demanding millions in damages, Dr. Brenda discovered that the lawsuit was essentially a vehicle for legal extortion in the hope she would nevertheless settle to protect her name and reputation. Continue reading

A Word of Caution…

Not So Bad Acts That May Trigger Recourse Liability in Bad-Boy Guaranties

Dear Clients, Colleagues, and Friends,

Non-recourse loans have become more popular and desirable as a means for commercial real estate financing in recent years. There is a definite appeal in these types of loans due to the fact they do not require personal guaranties by the key principals of borrowers and their sponsors, limiting the liability for the loan to the real property collateral securing the loan, and not the personal assets of the principal. Continue reading

Never Judge a Book by Its Cover

“He has offshore bank accounts.”

When you hear this phrase, what is your gut reaction?

For those of us who consume the news, read John Grisham novels or watch TV, when we hear “offshore bank accounts,” our guts scream “tax evader!” or worse. We think a bad guy is hiding assets. We think mafia, drug running, embezzlement, assassins, Ponzi schemes, white collar criminals, lengthy trials, and jail time. The media tells us that if someone has an offshore bank account, they have to be guilty, guilty, guilty!

Ok, that’s our gut reaction, which is often based on assumption, instinct and innuendo borne of rumor and half-truth. Continue reading

No Good Deed Goes Unpunished

Larry and Harold, best friends and business partners for the past 20 years, operate their successful company as an S corporation. They started with nothing and built their business from the ground up, working hard to increase profits through the economy’s ups and downs. Their partnership is truly an American Success Story.


Four years ago, Larry’s younger brother announced he was getting married. Larry was ecstatic with his brother’s new wife and asked what he could give the happy couple for their wedding gift. When his brother asked if Larry would be willing to co-sign a loan for a house, Larry didn’t hesitate. That’s what a good big brother does, right?

Unfortunately, four years of recession left Larry’s little brother unemployed and struggling to pay his bills. Larry had no idea how dire his brother’s situation had become until he received a notice in the mail that the bank was foreclosing on his brother’s house, which was now only worth half its mortgage. Continue reading

Tony Soprano’s Estate Gets “Whacked”

The cost of being penny wise and pound foolish…

Actor James Gandolfini, who made the mobster Tony Soprano a household name, suddenly died in June of a heart attack at the age of 51. News quickly morphed from sadness over his untimely death to shock over his seemingly ill-conceived estate plan, namely, his will, which was so poorly drafted that up to 80% of his assets are rumored to be subject to a 43% estate tax.

Here’s irony for you: While Gandolfini’s iconic Soprano’s character spent his life running from the government, the actor who played him on TV made the government his primary beneficiary.

I don’t think he did it on purpose.

According to news reports, Gandolfini had an estate worth an estimated $70 million at the time of his death. Looking at the way he bequeathed his assets, Gandolfini’s estate will pay about $30 million in taxes, most of which will come from the shares he left his wife and newborn child, due in cash within nine months of Gandolfini’s death. Continue reading

Bad Things Happen to Good People

I know, I know. Such a cliché.

We go through life hearing terrible stories about horrific things that happen to other people. Many think, “Well, that’s awful, but it could never happen to me.” After all, you could never do anything bad enough to get sued for so much money that you could lose personal assets like your car or your house.

Could you?

This is a true story about two really smart, very nice people who thought the same thing… and were wrong. Continue reading

The Use of Small Captive Insurance Companies for Efficient Risk Management, Tax Benefits, and Asset Protection

Ever since the 1930s, large companies in the United States have been forming their own property and casualty insurance companies in order to reduce the premium costs charged by commercial companies and insure risks otherwise not covered by commercial companies. During the past 20 years, the costs of establishing one’s own small captive business liability insurance company have come down so that middle market companies have been able to afford to use captive insurance companies to reduce their premium costs and insure risks not otherwise obtainable in the commercial markets. For example, owners of real estate use captive insurance companies to insure gaps in their existing coverage. Real estate owners have insured their deductibles, casualties that are too expensive in the commercial markets, risks where no commercial coverage is available, such as toxic mold, and non-traditional risks such as a change in zoning. Continue reading