* Review the current structure of
asset ownership. If you are in a high risk business,
you may want to place an increased emphasis on trust
ownership of assets or at least a reallocation of asset
ownership within the family. If your business interests
have involved personal guarantees or other personal
exposure to entity-level obligations, you should give
careful consideration to the ownership structure of
your non-business assets.
* Consider taking some "chips off
the table". Look at ways to convert some of the value
of your businesses into personal wealth. In addition
to reducing exposure to business liabilities, this
may also provide the opportunity to diversify.
* Review the current diversification
of your investment property to ensure that it properly
reflects your personal investment objectives, risk tolerance,
and wealth preservation objectives.
* The present estate tax structure
is extremely complex and is in a state of flux. Make
sure your estate plan: (1) reflects the current state
of the law, (2) provides for the most tax-efficient
transfer of your estate, (3) provides for ongoing trust
management of assets passing to a spouse or children,
(4) addresses disability and incapacity issues, (5)
reflects your personal wishes, and (6) includes documents
that "keep pace" with the constantly changing estate
tax laws.
* Take advantage of the basic tools
at your disposal to reduce the size of your taxable
estate. These tools include: establishing an irrevocable
life insurance trust; making annual exclusion gifts
to your children and grandchildren; or setting up Section
529 education accounts for your children or grandchildren.
The 529 plans allow you to gift up to 5 times your
annual exclusion amount.
* Consider using trusts to make gifts
to your children during your lifetime or at death.
Your children can enjoy the benefits of such assets
without exposing the assets to certain claims of creditors
or ex-spouses.
* Use a family limited partnership
(FLP) to make tax-advantaged gifts to family members.
A FLP allows the transfer of the beneficial enjoyment
of the assets to the family members while allowing
you to retain control of the assets and protect the
assets from claims of potential creditors.
* Take advantage of this low interest
rate environment by utilizing estate planning concepts
that are interest rate sensitive. For example, this
is a particularly good time to implement a grantor
retained annuity trust (GRAT) which can provide tax-free
transfers to your children.
* Determine whether you should incorporate
an asset protection trust into your estate plan. Offshore
asset protection trusts are generally considered to
be the most effective and have generated the most publicity.
However, for clients that are not as comfortable with
the offshore concept, many states have recently enacted
legislation providing for domestic asset protection
trusts.
* Review any areas in which you may
have personal liability exposure and consider whether
such risks are insurable. If insurance is available
and makes sense economically, it can be an effective
tool in your personal asset protection plan.
You have worked hard to build your
wealth. During a strong economy most of your efforts
are directed at participating in growth. During a slow
economy, however, it is critical to shift your focus
to preserving, at least in part, the wealth you have
built. In many respects, protecting your current assets
today will determine your ability to participate in the
growth provided by the next strong economic cycle.
Please call us with any questions you
have about the strategies recommended here. We would
welcome the opportunity to discuss your situation and
show how we can help you develop and implement a plan
for you.
