An Overview and Cost of Services
There are two broad categories of persons that don't need to concern
themselves with estate planning and asset protection. Those who don't
own anything, and will never own anything; and those who know
precisely when they will die or be named in a lawsuit. If you fall
into either of those categories, you might want to go back to
watching TV, because reading anymore of this, will be wasting your time.
Now, it is a perfectly legitimate estate plan to have your will read,
"being of sound mind, I spent it all." Unfortunately,
unless you fall into that second group of people that know precisely
when they are going to die or be sued, in order to die a pauper, you
must live a pauper; a most unpleasant prospect for most of us.
Indeed, most us dream of basking in the glory of our accumulations
right up to the last moment, and then passing a vast fortune on to
our children, even if they don't deserve it, and would be better off
if they had to earn it as we did.
To choose to die a pauper, is one thing; to die a pauper
because you failed to protect yourself, and your family, is quite another.
Basically, there are three goals at which we aim, when establishing
an asset protection and estate plan. First we try to protect our
estate from lawsuits and creditors; second, we hope to reduce or
eliminate estate taxes; and finally, we try to reduce income taxes
along the way. Fortunately, there are dozens of tools that we can
easily and inexpensively use to protect our estate, depending on our
individual circumstances.
Limited Partnerships
If you are in a high liability situation, and your main concern is in
protecting what you have from lawsuits and creditors, probably the
best all around tool is the family limited partnership. By
transferring the assets you wish to protect into a limited
partnership, you can legally and very inexpensively prevent the
property you have worked all your life to accumulate, from being
taken away from you. But in addition to that, by transferring your
limited partnership interests to your children or other heirs, you
can reduce your estate and estate taxes and still retain 100% control
over all of your assets. Moreover, by splitting income among your
children you can reduce income taxes as well. For more extensive
details on Limited Partnerships, please see, "Limited
Partnerships".
The cost of preparing and implementing a limited partnership is, of
course, a function of individual circumstances and the extent and
nature of the property to be transferred to the Limited Partnership.
However, the typical cost is $1,000.
If you think a limited partnership may be of use to you, but you are
still not sure, you may be interested in my booklet on limited
partnerships. The booklet contains a detailed explanation of how a
limited partnership works, how to set it up, and how to maintain it.
It includes all the agreements, transfer documents, and even tax
forms with instructions. Moreover, I will send you a floppy disk
including all the agreements and transfer documents, so that you
don't even have to retype anything. The price of the booklet is
$59.00. Send check or money order to Ken Sisco, 11252 Arroyo Avenue,
Santa Ana, CA 92702. Tell me what word processor you use, and give me
two weeks for delivery.
If you buy the booklet and establish your own limited partnership, I
will review all of your documents for an extra $200.00, to make sure
you have done it right. If you buy the booklet and then decide you
want me set up the partnership for you, I will give you a $150.00
credit; but you must read the book so that I don't have to spend so
much time educating you.
Revocable Living Trusts
If your primary concern is reducing estate taxes and avoiding probate
when you die, then the tool of choice is the revocable living trust.
Probate is completely public; a trust is completely private, both
before and after the death of the party creating the trust.
A trust will allow you to name a person you trust to help your spouse
with the estate after you are gone. It will allow you to protect your
children by a previous marriage, and it will allow you to protect
your children in case your spouse remarries. And, of course, with a
trust, a married couple will save a great deal in estate tax and/or
administrative fees. For more extensive details on Revocable Trusts,
please see, "Revocable Living Trusts".
The cost of preparing and implementing a Revocable Living Trust is,
of course, a function of individual circumstances and the extent and
nature of the property to be transferred to the Trust. However, the
typical cost of preparing a trust, pourover will and durable power of
attorney, for a single person is $750.00 and for a married couple $850.00.
The conventional wisdom is that practically everyone, should have a
revocable trust. While I won't dispute that proposition, where it is
necessary to choose between a trust and a family limited partnership, particularly
where there is high liability and a concern about lawsuits, in my
opinion the family limited partnership is the best choice.
Private Annuities
If your estate is large and will likely incur a large estate tax, an
excellent tool for favorably reducing your estate, is the Private
Annuity. The Private Annuity will allow you to reduce any potential
estate tax, while keeping the property in the family. For example,
you could give to your children X number of dollars in exchange for
their promise to pay to you for the rest of your life, an annuity
that would be determined according to IRS tables set up for that
purpose. Your estate would be reduced by the cost of the annuity, and
when you pass on, the children's obligation on the annuity will be
terminated. For more extensive details on Private Annuities, please
see, "Private Annuities".
The cost of preparing and implementing a Private Annuity is, of
course, a function of individual circumstances and the extent and
nature of the property to be transferred for the annuity. However,
the typical cost is $500.
Charitable Remainder Trusts
If you have to sell a capital asset, and you are concerned about the
outrageous capital gains taxes you will have to pay, even after the
tax cut, I can show you an almost magical way for you to not only
avoid all these capital gains taxes, but actually take an income tax
deduction, as well. For more extensive details on Charitable
Remainder Trusts please see, "Charitable
Remainder Trusts".
The cost of preparing and implementing a Charitable Remainder Trust
is, of course, a function of individual circumstances and the extent
and nature of the property to be transferred to the Trust. However,
the typical cost is $1,000.
The Ultimate Estate Planning Tool
All of the tools I have just described are wonderful--given the
context of a safe, stable, political and economic environment.
Unfortunately, I am not so sure that is what we have anymore. If you
too are concerned about the stability of our economy and our economic
institutions, and particularly if you are concerned with the erosion
of our right to privacy and our political institutions, you might be
interested in placing some of your assets offshore.
Some might say that moving funds and assets offshore is to become
part of the problem. I believe it is providing the basis for the
ultimate solution. If Clinton is right, and big government results in
jobs and a stable economy; or if the Republicans really can reverse a
one hundred year trend; those who have taken steps to protect what
they have, will have lost very little, if anything. On the other
hand, if Clinton is wrong, and big government and socialism destroy
our economy, and the Republicans are unable to reverse the trend,
then it is those that have the foresight and wisdom to protect a
capital base with which to rebuild civilization, that will provide
the ultimate solution.
The strategy that I propose, amounts to the creation of an
irrevocable foreign trust, which then forms a foreign corporation.
All completely legal. The IRS code itself in section 679 tells us
exactly what hoops to jump through, in order to do it.
Some might say "Yea, but once I have it set up, what do I
do with it? I don't want any of that cloak and dagger stuff. I don't
want to be carrying suitcases full of money through the airport."
Well you don't have to. Remember what I told you about the private
annuity? That is one of my favorite ways of funding the offshore structure.
Instead of buying a private annuity from your children, you buy it
from the foreign corporation. Suppose you send the foreign
corporation $100,000 in exchange for the corporation's promise to pay
you an annuity for the rest of your life; what have you accomplished?
First, you have reduced your estate by $100,000. If you immediately
passed away you would have saved your heirs $37,000 to $50,000 in
estate taxes.
Second, that is $100,000 that a creditor will never get.
Third, if it was income producing property, you will have reduced
income taxes.
And finally, the corporation has $100,000 offshore that it can begin investing.
The cost of preparing and implementing the structure just described
is, of course, a function of individual circumstances and property to
be transferred into the structure. However, the typical cost is
$12,950, or less. For more extensive details on the Ultimate Asset
Protection and Estate Planning Tool, as well as, Scams and Caveats,
Advantages of Moving Assets Offshore, and much more, please see, "The
Ultimate Asset Protection and Estate Planning Tool.".
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