What Your CPA & Attorney Dont Know Can Leave You Hanging! - - PowerPoint PPT Presentation

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What Your CPA & Attorney Don’t Know Can Leave You Hanging!

Speaker:

Dan McNeff

United States: 5% World Population

94% of all Lawsuits Worldwide

Lawsuits

A Lawsuit is Born

Cause

You Cannot Control

Motivation

You Can and Must Control

Asset Definitions

High Risk Asset: Can Create a Lawsuit Safe Asset: Cannot Create a Lawsuit Inside Asset: Everything owned in One Entity Outside Asset: Owned by Individual or by Separate Entities

What About an L.L.C.

Will Protect Assets Inside of The Entity From an Outside Lawsuit

L.L.C L.L.C.

SOLE PROP SUB – S C-CORP PARTNERSHIP

*** Properly Drafted ***

Family Limited Partnership

The Beginning of Lawsuit Protection

Liability ?

GP: LP: Total None

Limited Partners General Partner 1%

99%

Home Real Estate

$ $

Personal Property

Family Limited Partnership

1) 2)

General Partner(s) Limited Partners

s-Corp -

children, grandchildren, elderly parents H - W - 1% 49 1/2% 49 1/2%

100%

Income

$100,000

Types of Assets

Business Purpose?

“Any Legal Purpose” “Any Legal Asset”

CONTROL Own / Not Control

Trial Attorney’s Answer:

Passed in each individual state Would not allow ownership transfer from defendant to plaintiff Gave a judge the right to force a distribution and order the defendants share of the income to the plaintiff

The Charging Order

The Charging Order

Asset protection attorneys changed the wording so that

• nly the general partner could
• rder a distribution

Also gave the general partner the option to take income for management or to loan money from the FLP

The Charging Order

IRS Ruling 77-137 States:

A plaintiff using the charging order will have to pay income taxes on any monetary judgment even if there is no distribution from the defendant.

The Charging Order

Nearly all limited liability companies created in America today use the wording that allows a judge to order a distribution

WARNING WARNING!!! !!!

The Limited Liability Company

• r

LLC

Modeled after the Family Limited Partnership but is less complicated and intended for business purposes.

The Remedy for Getting ASSETS Out of an L.L.C. is: The Charging Order

The Charging Order

Nearly all limited liability companies created in America today use the wording that allows a judge to order a distribution

WARNING WARNING!!! !!!

Typical Structures

S, C (or P) Corporation / LLC Owns:

Practice/Business (goodwill) Equipment Building

Joint / Individual Ownership / Sole Proprietor:

Personal Property Rental Property Vacation Home Home

$$$

What does this structure protect?

Closely Held Corporation Officer of the Corporation

Asset Protection Structure Rock Solid Asset Protection

Living Trust

Business

Practice/ Business

Owns: Goodwill

FLP

Holds all “safe” assets

$$$

LLC

Owns: Building

LLC

Owns: Rental Property

LLC

Owns: Home

LLC

Owns: Vacation Home

LLC

Owns: Equipment

• 1. Place all assets of significant value in

asset protection entities and all high risk assets in separate entities.

• 2. Make sure that all entities are written on a

Non Pro-Rata basis and that they give the sole distribution authority to the general or managing partner.

 Prior to 1960 Highest Individual Tax Rate was 90%  From 1960 to 1982 Highest Tax Rate was 70%  Since 1982 Highest Tax Rates dropped to 40% or

less

 Why did revenue increase after 1982?  Tax Shelters and Credits were almost all

eliminated with some exceptions such as home loan interest deductions.

Administrative Entities

• 1. C/P – Corporation – Tax Advantage with

Corporate Resolution

• 2. S – Corporation – Helps Reduce FICA
• 3. Sole Proprietor – Easiest to use
• 4. Partnership

IRS Section 280a Rent Home To Business

The IRS allows you to charge rent that is equal to a Hotel in your area decorated similarly to your home, times the square footage of your home. 280a provides for rental of $1,500 per day x 14 days per year = $21,000

200,000 - $21,000 = $179,000

Where did the $21,000 go?

You personally 280a says it is not taxable income

$200,000 X 35% $70,000 $179,000 X 35% $62,650 $7,350

Actual Cash Saved

Home Real Estate

$ $

Personal Property

Family Limited Partnership

1) 2)

General Partner(s) Limited Partners

s-Corp -

children, grandchildren, elderly parents H - W - 1% 49 1/2% 49 1/2%

100%

Income

$100,000

Types of Assets

Business Purpose?

“Any Legal Purpose” “Any Legal Asset”

CONTROL Own / Not Control

Living Trust

Does NOT Protect Your Assets Does Protect Against Probate

Probate Problems

Time Consuming Expensive No Privacy

Two Ways to Avoid Probate

• 1. Don’t Die
• 2. Living Trust

How to implement these Tools and Strategies?

Concerns for Consideration

• 1. Most Attorneys know very little

about lawsuit prevention.

The BIG Problem

#1 There are very few Asset Protection Attorneys

The American Bar Association reports that LESS than .05% of Attorneys in the U.S. specialize in Asset Protection.

Concerns for Consideration

• 1. Most Attorneys know very little

about lawsuit prevention.

• 2. The entities they use are not

designed for asset protection

Concerns for Consideration

• 1. Most Attorneys know very little

about lawsuit prevention.

• 2. The entities they use are not

designed for asset protection

• 3. The Cost of entity structuring

can be outrageous.

The Solution

Legally Mine has been around for over 40 years, and educated hundreds of thousands of professionals Legally Mine is affiliated with: Bank of America Harding Financial Services ABA Accounting Legally Mine has over 20,000 happy clients Legally Mine has an “A” rating from the BBB

PREMIUM+ Program

Cost of $100/mo. (12 months) DOCUMENT REVIEW & ASSESMENT

Most existing documents are NOT asset protective. We can/will amend these documents & file the amendment(s) with your state.

CREATING BLUEPRINT

Our team of paralegals will set appointments to get you started. After a questionnaire, your Blueprint will be created by one of our Asset Protection Attorneys Within 10 days you will have a Blueprint Review with an attorney or senior legal advisor. This plan will address Asset Protection, Tax Reduction and Estate Planning

DEVELOP A TAX-REDUCTION PLAN

Most accountants do tax returns NOT Tax Reduction Plans. We make sure that the entities you use have a tax reduction purpose. We Will Develop a Tax Reduction Plan for you EACH YEAR. We make sure not to use questionable deductions.

STEP ONE: PREMIUM+

Sample Blueprint

“S” Corp

Practice/ Business

Owns: Goodwill

FLP

Holds all “safe” assets

$$$

Living Trust

LLC

Owns: Equipment

LLC

Owns: Building

LLC

Owns: Rental Property

LLC

Owns: Home

LLC

Owns: Vacation Home

Holding

Company (LLC Taxed as “ “S” Corp.

FLP

Holds a “High Risk” asset

ASSET PROTECTION BLUEPRINT

DEF, PC (MA) (S-corp) Ownership: Spouse 1 - 100% Asset Management, LLC (AK & MA) (Owns SMLLC interests and 1% GP in FLPs) (Tax as Partnership) Ownership: Spouse 1 - 50% Spouse 2 - 50%

Lawsuit Prevention Estate Protection Tax Management

Existing Entity

Note: Private retirement plans are

exempt except under special garnishment rules regarding child and spousal support.

Spouse 1

LLC/FLP Interests, Corp Stock, IRA, Life Insurance

Spouse 2

LLC/FLP Interests, Corp Stock, IRA, Life Insurance

Joint

Bank Accounts, Vehicles

Family Living Trust

Trust Package Includes: Durable Powers of Attorney Living Will Last Will & Testament ABC, LLC (MA) 100% owned by Family Living Trust NOP Land Trust Mgmt LLC as sole beneficiary Safe Asset, FLP (UT) (Holds Bank Accounts, investment accounts, and other “safe” assets) Ownership: GP: Mgmt LLC 1% LP: Spouse 48.5% LP: Spouse 48.5% LP: Kids 2%

Future Entity

2/11/2013

Homestead Act: Massachusetts $500,000 and $500,000 for each age 62+ or disabled person. -- Mass. Gen. L.

• Ch. 188 §§ 1, 1A

QRS Land Trust Amend to make Mgmt LLC the sole beneficiary HIJ Land Trust Mgmt LLC as sole beneficiary KLM Land Trust Mgmt LLC as sole beneficiary TUV, LLC (NV) (amend owner and dist. Auth.) 100% owned by Asset Mgmt, LLC Single Member Disregarded LLC WXY, LLC (NH) (amend owner and dist. Auth.) 100% owned by Asset Mgmt, LLC Single Member Disregarded LLC

PREMIUM+ Program

Cost of $100/mo. (12 months) DOCUMENT REVIEW & ASSESMENT CREATING BLUEPRINT DEVELOP A TAX-REDUCTION PLAN

Most accountants do tax returns NOT Tax Reduction Plans. We make sure that the entities you use have a tax reduction purpose. We Will Develop a Tax Reduction Plan for you EACH YEAR. We make sure not to use questionable deductions.

OBSERVE LEGAL FORMALITIES

Conduct annual meetings. We will create your Meeting Minutes. We help ensure there are no Co-Mingling of Funds or Representation of Corporate Assets as Personal Assets

Additional Benefits of PREMIUM+:

Annual Blueprints and Tax-Reduction Plans Continual Legal Document Software Updates Continual Legal Consultant Access Initial Trust Consultation Continued Trust Modifications (after creation) Physically Created Documents Prepared and Delivered Continued Observance of Corporate Formalities

• Reg. Agent Fees Waived*

STEP TWO ENTITY CREATION

Living Trust

“C” Corp

Practice/ Business

Owns: Goodwill

FLP

Holds all “safe” assets

$$$

LLC

Owns: Building

LLC

Owns: Rental Property

LLC

Owns: Home

LLC

Owns: Vacation Home

LLC

Owns: Equipment

Standard Asset Protection Fees

$14,500 - $17,000

$3,500 to $5,000 $3,500 to $5,000

The Solution

Price Per Entity $1,000.00 Life Time Package Today $5,000.00 Life Time Package Anytime $7,000.00

FAQ’S

On Average we spend 60 hours per client Clients time involved on average is 3-4 hours Should be completed in 6 – 8 weeks 99% of initial purchasers use the services

Q & A

Thank You