1. Asset Protection & Estate Management By N. Richard Grassano CPA OUTLINE: 1) Estate Gift Limits 2) Trusts (Revocable & Irrevocable) 3) FLP 4) Advanced Asset Protection Vehicles 5/15/2015

2. 2015 Estate & Gift Tax Exclusions $5,430,000 Estates per person $14,000 Gifts (form 709) Tax Rate = 40% * Form 706 Required upon first death to achieve exclusion portability ** There are ways of gifting above $14,000 without a tax effect. (i.e. 529 Plans) * Complicated Calculations of Exemptions / Credits / Exclusions ** Necessary to use the remaining $10,860.00 for a couple Direct Educational Gifts Too

3. Typical Simple A/B Trusts I.After splitting ownership of jointly owned assets reversible trusts are created II.When 1 st spouse passes, trust becomes irrevocable with income rights to surviving spouse III.Avoids most probate, but 706 still required (portability) IV.Eventually both trusts pass to beneficiaries A C C B Often times obvious & overlooked No Creditor Protection w/ Revocable Trusts (NORMALLY) HOWEVER simple isn’t always safest “TRUST” NEEDS – 1. Grantor 2. Trustee 3. Beneficiary

4. Revocable / Irrevocable Trusts Revocable Trust Designed to eliminate probate DOES NOT eliminate estate taxes Extension of your will Irrevocable trust Selected assets are transferred to an INDEPENDENT Trustee NOT part of your estate, and therefore are NOT subject to estate taxes Probate is eliminated Protection from creditors Grantor can be named a beneficiary

5. Family Limited Partnership G.P. (normally) 1% Limited 99% Can be used to spread income to family and reduce some lawsuit expense G.P. controls entity L.P. possess discounted estate values Can be used for professional practices for “safe assets” Issue: Most FLPs are organized so judges can force distributions Definition: “Safe Assets” are assets that cannot create a lawsuit on its own OWNERHEIRS FAMILY PARTNERSHIP or LLCNON FAMILY PARTNER COMPANIES / ASSETS GENERAL PARTNER Control Companies / AssetsControls Partnership Contributes: - Property & Other Assets Receives: - Limited Partnership Units - General Partnership Units Useful for gifting also!

6. We Are A Litigious Society Our system allows anyone to sue anyone for anything It has become a way of life for some groups… How to protect yourself I.Taint your assets II.Create extreme expense for discovery III.Create a “team” plan – the sooner the better  (Attorney, Accountant, Fin. Advisor) IV.Never be the aggressor Utilizing the proper “ownership” of assets can eliminate 98% of the problem.

7. The “Deal” Living Trust (A or B) LLC / S-Corp Holding Co. S-Corp Goodwill of Practice LLC 2 Owns Building & Equip. LLC Owns Home LLC Other Real Estate Inv. FLP Safe Assets FLP High Risk NOTES: Since living trust owns holding corp, it owns every asset represented beneath. Hint: May have Foreign Components!

8. Other “Protected” Assets I.Pension Assets II.Life Insurance Policies III.Annuities IV.Jointly Owned Assets

9. Take Home Message There are no one-size-fit-all plans in estate planning (that work…) Countless mechanisms exist to help steer the outcome YOU desire Make yourself an unappealing target to your rivals, creditors, and the IRS…