Who Needs an Estate Plan?

If you’re reading this, you need an estate plan.  Why?  The short answer is: Everyone, age 18 and older needs an estate plan. It doesn’t matter if you are old or young, if you have built up considerable wealth or if you are just entering adulthood —you need a written plan to keep you in control and to protect yourself and those you love. 

The Key Takeaways: 

• Every adult, regardless of age or wealth, needs both a lifetime plan and an after-death estate plan.

• Planning for incapacity will keep you in control and let your trusted loved ones care for you without court interference - and without the loss of control and expense of a guardianship or conservatorship proceeding.

• Every adult needs up-to-date health care directives.

• You need to leave written instructions to make sure you are the one who selects who’s in charge of when and how your assets will be distributed.

• We all need the counseling and assistance of an experienced estate planning attorney.

What is an Estate Plan?

Your estate is comprised of the assets you own—your car, home, bank accounts, investments, life insurance, furniture and personal belongings. No matter how large or how small your estate, you can’t take it with you when you die, and you probably want certain people to have certain things you own.

To make sure that happens, you need to provide written instructions stating who you want to receive your assets and belongings, what you want them to receive, and when they are to receive it—that is the essence of an estate plan. If you have young children, you will need to name someone to raise them in your place and to manage their inheritance. 

A properly prepared estate plan also will have instructions for your care (and the management of your assets) if you become incapacitated, even for a short time, due to illness or injury. Without the proper documents in place, your family will have to ask the court for permission to use your assets to take care of you and to oversee your care. That process is out of your control and it takes time and costs money, making an already difficult situation even more difficult for your family.

It might surprise you, but having a plan in place often means more to families with modest means because 1) they can least afford to pay unnecessary court costs and legal fees and 2) state laws, which take over in the absence of planning, often distribute assets in an undesirable way. Here’s an example:

Sam and Meg had two young children. Sam died in a car accident on his way to work. Because he had no estate plan, the laws in his state divided his estate into thirds: one third went to Meg and one third to each of his children. Meg, a stay-at-home mom, was forced to go back to work. The court set up guardianships for each child, which required ongoing court costs, including accounting, guardianship and attorney fees. By the time the children reached 18 and received their inheritances, there was not enough left for them to go to college.

What You Need to Know:

Don’t try to do this yourself. You need the counseling and assistance of an experienced estate planning attorney who knows the laws in your state and has the expertise to guide you in making difficult decisions such as who will raise your children and who will look after your care at incapacity.  That attorney will also know how to carefully craft the appropriate estate planning documents, so that what you think will happen when you become incapacitated or die actually happens.

Actions to Consider:

1. Call or email our office now to set up an estate planning consultation appointment.  We make tough topics manageable to discuss and talk about. 

2. Don’t worry about how life will unfold; the best practice is to have your plan prepared now based on your current situation.

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

How to Minimize the (Voluntary) Federal Estate Tax with Portability

Surprising to most people, the federal estate tax is a voluntary tax.  Estate planning attorneys used to say, “You only pay if you don’t plan.”  Now, portability provides both an alternative and a back up plan to lifetime tax planning.  This means you might be able to minimize or even eliminate federal estate taxes even if you didn’t plan.  Here’s how.

Portability allows married couples to use two estate tax exemptions and save significant amounts in estate taxes without lifetime planning and without the division of assets.  This planning option first appeared in 2010, but, because it was a temporary measure, many estate planners were hesitant to rely on it.  It became permanent law in 2013 and is now considered a viable tool for many married couples.

The Key Takeaways:

• EVERYONE still needs lifetime estate planning to protect themselves, their families, and their assets.  (Estate planning is not just about tax planning and it’s not just about money.)

• The failure to use both federal estate tax exemptions may cause an unnecessarily high tax bill for married couples. 

• Portability lets married couples use both of their exemptions without lifetime tax planning.

• Portability is not automatic—an estate tax return must be filed after the death of the first spouse, generally within nine months.

• Trust planning is still highly useful for both tax and non-tax reasons (e.g., asset protection and family line protection) and can be used with or without portability.

How Portability Works:

When portability was made permanent in 2013, Congress also made the $5 million federal estate tax exemption permanent (with annual increases tied to inflation).  As a result, most families don’t have to worry about federal estate taxes.

However, if your net estate is more than $5 million and you are married, portability allows your surviving spouse to use your individual estate tax exemption as well as his or her own, allowing the transfer of up to $10+ million in assets with no estate taxes, saving millions from Uncle Sam’s clutches.

Unlike trust tax planning, which must be done while both spouses are alive, portability is available after the first spouse dies and is a valuable back-up plan for couples that neglected lifetime tax planning.

Note: Portability is not automatic. An estate tax return (Form 706) must be filed within nine months after the death of the first spouse, or within any extension granted. If no timely return is filed, portability and the deceased spouse’s unused exemption (estate planning attorneys call this the “DSUE”) are forever lost, perhaps, causing the estate to pay more in estate taxes than was necessary and leaving less for the family.

Interestingly, remarriage does not change the identity of the most recently deceased spouse, and a surviving spouse can use multiple DSUEs.

Here’s an example:

Bob and Sue were married for many years.  When Bob died, Sue’s attorney filed an estate tax return, thereby “electing” portability. Some time later, Sue married Phil. She decided to use Bob’s DSUE during her lifetime and made gifts to their children.

When Phil died a few years later, Sue’s attorney filed an estate tax return for Phil’s estate, making portability available.  In addition, when Sue died, her estate was able to use both her exemption and Phil’s DSUE.  Sue was able to use three federal estate exemptions and completely avoided the federal estate tax.

Keep in mind that if Sue had not used her first husband’s (Bob’s) DSUE before Phil died, it would have been wasted.  Why is this?  Because Phil would have become her most recently deceased spouse.

What You Need to Know:

Trust planning can be used with or without portability and is still highly relevant for couples with any size of estate.

When there are children involved, especially if they are from a previous marriage or relationship, trust planning can allow the first spouse who dies to provide for the surviving spouse and keep control over who will eventually receive his/her share of the estate.

In addition, trust planning can protect assets from a beneficiary’s irresponsible spending, creditors, medical crises, lawsuits, and divorce proceedings, allowing the assets to remain within the family for generations to come. Trust assets can also provide for a special needs beneficiary without losing valuable government benefits.

Actions to Consider:

1. Ask your estate planning team when you need to be concerned about state estate taxes and state inheritance taxes.  (Some states have their own death/inheritance tax, often with a lower exemption than the federal estate tax. As a result, it is possible that an estate will be subject to state taxes even though it is exempt from federal taxes.)

2. When a spouse dies, ask your estate planning attorney whether using portability is appropriate for you.  (Most married couples can benefit from portability, even if only as a preventive estate planning measure.  The value of assets may increase to more than one exemption before the surviving spouse dies.)

3. If your second (or third) spouse is seriously ill, ask your estate planning attorney you should use any remaining DSUE to make lifetime gifts to beneficiaries.

4. Ask your estate planning attorney whether the generation skipping transfer (GST) tax is a factor for you.  The GST tax is not portable and needs its own planning analysis.

5. When your spouse dies, be sure the estate tax return (Form 706) is prepared and filed by a qualified professional such as an estate planning attorney.

6. Ask your estate planning team about non-tax trust protections such as asset protection and family line protection.

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

The Three-Year Review and The Three-Year Plan

Review your life’s circumstances from three years ago. Think about what you knew and what you didn’t know about managing your wealth. What were the top five lessons you learned? How have your views about money and wealth changed? Given all that, where do you want to be financially in three years? Think about how you will get there and how to do so efficiently.

The Key Takeaways:

1. Taking the time to look back over the last three years will help you see accomplishments you may have missed in various areas of your life.

2. Taking the time also to look forward three years will help you to set goals and determine how to achieve them.

3. Working toward incremental achievements instead of the “big fix” sets the stage for lasting and meaningful change.

Ben Franklin wrote: “Without continual growth and progress, such words as improvement, achievement and success have no meaning.” 

We achieve because we learn new things, apply them and see results. But too often, we get caught up in the busyness of our lives and fail to see the progress we’ve actually made—in careers, family, finances, education, spirituality and health. While one area in this list may not be what you want it to be, make sure you give yourself credit for the changes that did occur. For most important things in life, we do not change overnight or, if we do, the results take time to settle in. You will be encouraged in marking your life’s progress by looking back at regular three-year intervals. 

Why three years? If looking back just one year, we may be in the middle of big progress but not yet see enough results; five years often dulls the details. Three years is soon enough that we can recall with vivid memories “how things used to be” while having a long enough runway to see real progress as our changes take flight.

In the same way, set important goals with a three-year future horizon. The reasons for this time period mirror those when looking back. We have time to make changes that are hard, and we can work on accumulating incremental results instead of feeling the pressure to get it all done in a short period (i.e., a year).

What You Need to Know:

Just as you set financial priorities in spending and saving, you can set priorities in other areas of your life. Remember to have realistic goals with incremental benchmarks, so you will be able to measure your growth and see the progress you are making. Don’t expect huge changes overnight; you have a lifetime to make yours work the way you want.

Actions to Consider:

• Keep a journal or log of your progress to remind yourself of your achievements.  Setting incremental and achievable goals is vastly more productive than trying to do it all at once. A key part of our wealth legacy is imparting to our loved ones the lessons we learned, both good and bad.  Share these life lessons that you learn as you implement a three-year review and three-year plan program.

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Learning from Your Mistakes Can Become Your Teaching Moment

Everyone makes financial mistakes. The key is to learn from them, try not to repeat them and then pass on this hard-earned wisdom to your loved ones as an element of your financial legacy.

The Key Takeaways:

• We can learn not only from our own mistakes but also from those of others. 

• Sharing the wisdom gained from these errors can help others avoid them—and the pain and regret that usually accompany them.

One part of advancing as people is learning from our own mistakes. Another part is learning from the mistakes of others. The latter is decidedly less painful to us than the former! As Eleanor Roosevelt said, “Learn from the mistakes of others. You can’t live long enough to make them all yourself.”

Even the savviest investors make mistakes or have regrets. Learning from others’ mistakes can help us to gain wisdom without the pain of having to go through the experience ourselves.

In many ways the key to long-term investing is learning our lessons well. For your loved ones, identify the top mistakes you’ve made in your financial life and explain why the lessons you’ve learned are important to pass along.

What You Need to Know:

Imparting the wisdom you have gained over the years is part of your financial and family legacy. Being candid about your mistakes and regrets also can provide your loved ones a glimpse of the person you once were and have become because of these experiences. 

Actions to Consider:

1. Think about the things you’ve learned over the years related to money. Create a list of your lessons, principles and practices. Don’t worry about the wording or order at this point.

2. Next, consider the items on the list based on the impact they had on you. Impact is not just financial loss but also anxiety, strife and confusion. One way to judge impact is to read the item and see what thoughts flood your mind or how much your stomach churns; you can be certain that these impact you measurably.

3. Now, group your list by greatest impact to least impact.

4. Set a schedule, say, each month or quarter, to write out your lessons and how you’ve applied them, and share this with your loved ones.

 If you want to ensure that your family is cared for after you have passed away, please call our office at 415-625-0773, to schedule your free consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Three Social Security Traps

What you don’t know about Social Security benefits can hurt you and your spouse for the rest of your lives. Here are three traps to avoid when taking your benefits.

The Key Takeaways:

• The longer you can postpone taking your Social Security benefits, the larger the amount you and your spouse will receive over your lifetimes.

• Continuing to work after you start receiving benefits early can temporarily reduce the amount of your benefits.

• It is important to seek the advice of a retirement specialist who can help you navigate the rules of Social Security to your best benefit.

 Three Traps to Avoid:

1. Taking Money Too Early. It can be tempting to start taking your benefits as soon as you become eligible at age 62. But the longer you can wait, the higher your monthly benefit will be—and the more you will receive over your lifetime. Also, cost of living adjustments (COLA) are calculated on the amount of your monthly benefit, so if you take benefits at age 62, your COLA adjustments will be calculated on a lower amount.

2. Working Income. If you elect to take benefits early and you keep working, the amount of your benefit can be reduced. This reduction will continue until the year you reach full retirement age (66).

3. Spousal Benefits. Your decision when to start taking your benefit affects your spouse too. After you die, your spouse is eligible to receive your monthly benefit if his/her own benefit is less than yours. If you elect to receive your benefit earlier rather than later, your spouse’s benefit will also be lower. If you wait until you reach full retirement age (66), you can claim your Social Security benefits but delay taking them. This lets your spouse draw spousal benefits immediately, while you continue working and increasing the value of your future benefits.

What You Need to Know:

Ideally, you will want to evaluate when to take your benefits based on your retirement savings and other sources of retirement income, your and your spouse’s health, your family’s history of longevity, and if you plan to continue working. While most people would benefit from waiting until a later age to start their retirement benefits, some may risk running out of money and will need to take their benefits as soon as they are eligible. A retirement planning specialist can help you decide what is best for you.

Actions to Consider:

• If you are concerned about the future of Social Security, you could take your benefits at 62 and invest them. By the time you need to start taking the money, you may be able to make up any loss you incur by taking them early. But, of course, this is dependent on your portfolio allocation and market performance.

• If you keep working beyond age 62, your Social Security benefit will increase each year up to age 70.

• While you are eligible for Social Security at age 62, you are not eligible for Medicare until age 65. If you stop working, you will have to pay for private insurance with your own money.

• If you wait until your full retirement age (66), another spousal benefit option is available. If you both want to retire at the same time and your spouse will receive a lower benefit, you can claim spousal benefits now from your spouse, let your benefits continue to grow and then switch to your (higher) benefit later.

If you want to ensure that your family is cared for after you have passed away, please call our office at 415-625-0773, to schedule your free consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Five Tips to Remove Financial Hassle from Your Life

Everyone faces hassles in life. We can’t escape them completely, but if we can minimize them, our quality of life improves. There are hassles in managing your finances and wealth, too. Here are five tips that will help you get financial aggravation under control.

The Key Takeaways:

• Minimizing hassles helps reduce stress and improves the quality of your life.

• Managing your finances and wealth in a simpler way can alleviate unnecessary annoyance.

The Five Tips:

1. Consolidate banking, debt, investment and insurance providers. The fewer people and institutions you have to deal with, the more productive you will be.

2. Instead of working with individual professionals, work with a group that operates as a team. Individual professionals have to make recommendations without knowing what others are advising you to do, so you are likely to have either inadequate or overlapping planning. A team approach—where members bring their own areas of expertise and resources and work together on the “big picture”—is more efficient (fewer meetings, reports and explanations), saves time and money, and provides more complete solutions.

3. Organize your financial documents in a logical way, especially your life-planning documents. Think about the information your family will need if something happens to you. Obvious documents include your will or trust, health care power of attorney, health and long-term care insurance policies, life insurance policies, bank and investment accounts, loan documents, titles and safe deposit box. Organizing this information, and showing your family where to find it, will greatly reduce their hassle when the time comes to implement the plan.

4. Evaluate new investment opportunities once each quarter. This is often enough to stay current without getting distracted. If you read or hear about something that interests you, make a note to discuss it with your investment advisor at the next quarterly meeting.

5. Use just one or two research sources. While I realize that we all live in the information age, where we are constantly bombarded by a plethora of stimuli almost constantly, it is hard to tune out the noise. However, this author believes that multitasking is a great way to get a large amount of tasks started, which results in nothing getting done—at least not well. I do not know about you, but when I turn on the TV and there are ticker tapes and flashing messages running across the screen, I find it hard to focus on anything I am being shown. Because of these factors, we recommend finding a couple of reputable research sources and stick with them. You do not want to waste hours researching sources that may be contradictory and, worse, are not reliable.

What You Need to Know:

Simplifying your financial life may take some time and concentrated effort. Every six months, take the time to assess how you’re doing in making your financial life more efficient and consider areas that could be improved. For example, if you are working with different professionals, schedule the various update meetings close together so your attention will be focused for a known amount of time. If you are working with a coordinated team, set your update meetings ahead of time so you can know the schedule and not worry about finding dates at the last minute.

Other Actions to Consider:

• When organizing information for your family, remember to provide access to computer files and online accounts. Clean off your computer desktop and make it easy for someone you trust to find your accounting files and other important records.

• Make a list of your professional advisors, friends and associates who should be contacted in the event of your illness, injury or death. A list of your doctors and any medications you take can also be helpful.

 If you want to ensure that your family is cared for after you have passed away, please call our office at 415-625-0773, to schedule your free consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Taking Care of a Valuable Asset (You)

The combination of your talents, experience and skills represents an asset. Like any asset, it should be managed and protected. This includes keeping staying healthy, having sufficient insurance, planning for both the near term and the future, investing in you, and having contingency plans if a sudden turn occurs.

The Key Takeaways

• You—your talents, experience and skills—are your most valuable asset.

• Properly managing and protecting this asset can make you more valuable and prepare you for future changes and opportunities.

Caring for Yourself as an Asset

Too often, we let ourselves slip to the bottom of the priority list. But when you start to think of yourself as your most valuable asset and begin to nourish and protect this asset, you will perform at your best and increase your value. For example:

Keep yourself healthy. You can’t perform at your best if you don’t take care of yourself. Start with the simple things you already know you should do: eat the right foods, drink water, exercise regularly, get enough restful sleep, etc. See your doctor and take care of small issues before they become big problems. In addition to keeping your body healthy, it is equally important to keep your mind healthy. Since we live in a digital age, we are inundated with stimulants. Most likely, you work all day in front of a computer screen. When you get home, you may watch TV, get on a home computer or iPad and surf the Internet or watch a movie, etc.

With this barrage of stimulating content constantly around, our minds can easily get overwhelmed. Anthropologically, this was never the case. In this author’s opinion, this does not lead to a healthy mind. To counteract this overstimulation, which is now prevalent in our society in which we all live, it is important to get some mental space. This can be achieved in a variety of ways, depending on your preferences. Some suggested ways to give your mind that space are to go out into nature, read a book, meditate, or engage in some other spiritual or creative endeavor. While technology helps us achieve more in a shorter amount of time, it seems as if we are busier than ever before. While I am not sure what precisely causes this phenomena, it is clear that we must find a way to give our mind some rest from this never ending doing.

Have sufficient insurance to manage risk. Coverage usually includes health insurance; long-term care insurance; life insurance; property and casualty insurance; liability insurance; and professional insurance.

Invest in yourself to stay valuable, both for the short and long term. Work on ways to be consistently productive in your work. Learn new skills or take training that will help in your current job/career or that will prepare you for a future one. Consider additional education or an advanced degree to help expand your abilities and potential.

Have contingency plans. Plan for the unexpected. Start paying off debts and building an emergency fund. Keep your resume updated. Expand your professional contacts in your current industry or one you would like to pursue by attending networking functions and using social media like LinkedIn.

What You Need to Know

When you take care of yourself, protect yourself and invest in yourself, you will perform better, become more valuable, and will be more prepared if your future takes an unexpected turn or a golden opportunity comes your way.

Other Actions to Consider

1. Stress can affect you physically, mentally and emotionally. Having a comprehensive plan, and a team of professionals looking after its execution, brings far greater value in financial benefits, peace of mind, and confidence in the future than the upfront costs. 

2. Don’t expect to make all the changes at one time. Take small but consistent steps. Set some goals and start working toward them.

3. Everyone has different talents and abilities. Consider what you do well and work on being as good as you can be in those areas. At the same time, be conscious of things you could do better and work on some improvement in those areas.

If you want to ensure that your family is cared for after you have passed away, please call our office at 415-625-0773, to schedule your free consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Aligning Insurance Products within a Planning Structure

Aligning Insurance Products within a Planning Structure:

We use a variety of insurance products to manage risk in different areas of our lives in order to protect our wealth from losses that can come from property damage, businesses we own, disability, retirement and death. Instead of considering these products as separate items, make them part of an integrated, overall risk management plan.

The Key Takeaways:

• A variety of insurance products can be utilized to help manage risk and protect wealth.

• The best results occur when separate insurance products are part of an integrated plan.

 Different Kinds of Insurance for Different Risks:

Most insurance can be grouped in these general categories.

Property:

This would include insurance on automobiles and other vehicles, home, furnishings, jewelry and artwork, and personal liability insurance.

Business:

Business owners need insurance on a building they own, office equipment and computers, as well as liability, worker compensation, errors and omissions insurance, and so on.

Health and Disability:

Disability income insurance replaces part of your income for a certain length of time if you should become ill or injured and unable to work. Health insurance helps to pay for medical services received. Long-term care insurance helps to pay for extended care that is not covered by most health insurance or Medicare.

Retirement:

Annuities and other insurance products can help replace income after retirement.

Estate Planning:

Life insurance is often used to replace an earner’s income; to pay funeral expenses, debts and taxes; to fund family and charitable trusts; to fund a business buyout and compensate the surviving owner’s family; and to provide an inheritance to family members who do not work in a family business.

What You Need to Know:

Remember, insurance is for risk management—to protect your wealth from potential areas of loss. If a risk is no longer there (the exposure ends or you are able to self-insure and cover the risk yourself), then the insurance coverage for that risk can be eliminated.

Actions to Consider:

1. Trying to coordinate your insurance and manage your risk yourself is a daunting task. Instead, work with a team of advisors who have the knowledge and experience to help you make sure your risks are covered at the appropriate levels, without duplication and unnecessary costs.

2. An advisory team will usually include your financial investment advisor, estate planning attorney, and life, health and property/casualty insurance agent(s). Other members may be added to this team as needed. You will probably find that your advisors will welcome the opportunity to work on your team, because they want to provide you and your family with the best possible service and solutions.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Understanding Losses: Liability Exposure

We live in a litigious society. Lawsuits abound, whether deserved or not. If you own property or stock that was purchased at a low price and has had high appreciation, it is at risk to litigation and creditors—even if you are not in a high-risk profession. Others may be in a private business such as medicine or law that bring with it additional exposures to monitor. 

The Key Takeaways:

• Assets that have high appreciation are at risk of litigation and creditors.

• There are steps you can and should take now to protect your assets, especially if you have considerable wealth in these assets.

We Are All at Risk:

The wealthy, celebrities and sports figures are easy targets for lawsuits, as are those in high-risk professions, such as the medical field (doctors, dentists, other health care professionals), lawyers, accountants, architects and those in construction (builders, developers).

Note: As a general rule, you can’t limit your professional liability through legal means. If you are concerned about a professional claim, the best first step is to have adequate malpractice insurance. However, additional protective steps should still be taken to secure your private practice or business from creditors and non-malpractice litigants.

But, really, we are all at risk of liability claims. These can include business deals that have gone wrong, car accidents, sexual harassment claims and slip-and-fall claims. Even the behavior of children, their spouses and ex-spouses can lead to loss of family wealth.

What You Need to Know:

The best time to do asset protection planning is before a claim arises, when there are only unknown potential future creditors. While there are some options even with an existing claim (such as an ERISA qualified plan), it is highly important to avoid fraudulent transfers. (A fraudulent transfer, also known as fraudulent conveyance, is a transfer of wealth to another person or company to swindle, delay or hinder a creditor, or to put the wealth beyond the creditor’s reach.)

Actions to Consider:

1. Asset protection planning must be accomplished under the guidance and planning of qualified professionals. A misstep or unintended error can negate the entire process and fully expose your assets.

2. Everyone should have personal liability insurance, which is quite inexpensive.

3. Existing state and federal exemptions should be maximized. State exemptions can include personal property, life insurance, annuities, IRAs, homestead and joint tenancy. Federal exemptions include ERISA, which covers 401(k) plans, pensions and profit sharing plans.

4. Sometimes it is possible to convert non-exempt assets into exempt assets. For example, cash can be invested to pay down a mortgage to increase home equity, or an unprotected IRA can be transferred into an ERISA plan.

5. Sometimes assets can be transferred to the spouse who is not at risk. However, should a divorce occur, these assets would be owned by that spouse.

6. Limited liability companies (LLCs) can be formed to remove expensive equipment from a business or practice, which is then leased back to the business or practice.

7. Family limited partnerships (FLPs) can be formed to own non-practice assets (personal and investment real estate, investment accounts, bank accounts, collectibles), which can be leased back to the individual.

8. Domestic asset protection trusts (formed in certain states) and offshore asset protection trusts are also options that can be used.

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Wealth Protection: Avoiding Losses

Wealth Protection: Avoiding Losses:

You can’t create wealth until you preserve it first. Each dollar lost unnecessarily isn’t just a single dollar lost, but a compounded dollar lost. A dollar not lost allows wealth to compound from a higher floor. Losses can occur from many places beyond investments: property, income, taxes and fees. It is well worth paying for the expertise of professional advisors who are able to prevent or reduce losses in all of these areas.

The Key Takeaways:

1. Protecting your wealth from losses allows you to build more wealth, as compounding growth is able to build on a larger base.

2. Losses can occur from many sources you may not have considered.

3. Experts can help you identify where these risks are hiding and provide solutions to protect you.

Prevent/Reduce Losses to Grow Wealth:

Any time you can prevent or reduce a loss, you preserve wealth. Here are five areas in which losses may occur.

1. Investments: Choose your investment manager carefully. Ask how losses can be avoided. Look at past performance history of each investment, but be aware that one with the highest returns may also have the highest losses and a volatile historical record. Take the time to review your asset allocations, investment manager’s performance, and level of risk, and make changes when necessary.

2. Property: If you have a loss on property that is not insured for its full replacement value, you will pay for the uninsured part of that loss out of your own wealth. Periodically review the full replacement values of your property and maintain adequate insurance.

3. Income: You may lose income due to a layoff, illness or injury. Having adequate health insurance, disability income insurance and an emergency fund that will cover at least six months of lost income will help to preserve the rest of your wealth until you recover or find other income.

4. Taxes: Most people think about income taxes when considering tax management.  However, other taxes are also important to manage, like capital gains taxes or matching gains and losses when selling investments or property. An experienced estate planner can help you with estate tax planning and income tax planning for wealth transfers during your lifetime and after death, including the sale or transfer of a business.

5. Fees: Many fees, such as investment product fees, trading expenses, and insurance product surrender charges, can be avoided or lessened with a comprehensive financial plan.

What You Need to Know:

An experienced estate planning attorney can also help you shield your family and your assets from probate court interference at incapacity and death, unintended heirs, unnecessary legal fees and taxes, and lawsuits.

Additional Actions to Consider:

• If you need an advisor who specializes in a certain area, ask for referrals from other advisors, your banker, friends and business acquaintances. If you start hearing the same name several times, you’re probably on the right track.

• Take the time to research and understand any strategies that are being recommended to you. An educated consumer is a smart consumer.

 If you want to ensure that your family is cared for after you have passed away, please call our office at 415-625-0773, to schedule your free consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.