Asset Protection Domestic, Foreign, Tax and Estate Planning South Dade FICPA Meeting September 17, 2014

Transcription

1 Asset Protection Domestic, Foreign, Tax and Estate Planning South Dade FICPA Meeting September 17, 2014 Leslie A. Share, Esq. Packman Neuwahl & Rosenberg 1500 San Remo Ave., Suite 125, Coral Gables, Florida Telephone (305) Copyright 2014 by Leslie A. Share

2 Leslie A. Share received his B.A. from Northwestern University, his J.D. from the University of Florida, and his Master of Laws in Taxation from New York University. He served as Chief Tax Editor and Research Editor of the Florida Law Review. Les specializes in the areas of domestic and international tax, estate, and business planning, and wealth preservation. Les has advised clients in numerous and diverse areas such as Broadway theatrical productions, domestic and foreign real estate like-kind exchanges, and Internet tax planning matters. Les speaks at various seminars in the U.S., Europe and the Caribbean on subjects ranging from Florida and offshore trust and tax law, advanced asset protection techniques, U.S. tax treaties, representing a foreign investor in an Internal Revenue Service examination, the role of the Internet in U.S. tax planning, and preferred structures for U.S. persons investing overseas and engaging in foreign business activities. Les has written numerous articles for publications such as the Asset Protection Journal, Entertainment Law & Finance, Estate Planning, the University of Florida Law Review, and an American Bar Association book entitled Foreign Investment in U.S. Real Estate-A Comprehensive Guide. He is AV (highest) rated by Martindale-Hubbell and is listed in Best Lawyers in America and as a Super Lawyer in the Florida and Corporate Counsel editions in the Tax area. Leslie A. Share, Esq. 2

3 Initial Planning Issues Most important plan and protect now, because it may be much more expensive and difficult to do it later, it really IS a worthwhile practice cost Put your client s house in order NOW to plan for death, disability, retirement and buy-outs with buy/sell, employment and shareholder agreements Have your client consult with independent professional advisors you, attorneys, pension plan administrators, financial brokers, etc. to establish the overall strategy IN ADVANCE Use lawyers to draft documents, and use accountants to practice accounting DON T CUT CORNERS Leslie A. Share, Esq. 3

4 Combine Asset Protection With Estate Planning You are seeking tax and estate planning advice asset protection is a value added benefit don t let the proverbial tail wag the dog All documents must be consistent from an estate planning standpoint Coordinate duties among professionals attorney, CPA, asset custodian, insurance agent, etc. Leslie A. Share, Esq. 4

5 Should You Assist a Client with Asset Protection? Ascertain the actual status of any existing or potential litigation, either as a plaintiff or a defendant Have the client prepare a comprehensive estate planning and financial questionnaire Where appropriate, meet with litigation and bankruptcy counsel before proceeding with the trust to determine related issues Don t assist in protecting against the U.S. government Beware of federal aiding and abetting penalties and money laundering statutes Leslie A. Share, Esq. 5

6 Protecting The Florida Home Part I Florida s Homestead law is THE BEST form of asset protection for Florida residents Protection is under the Florida Constitution much stronger than Florida statutory and case law ½ acre within a municipality, 160 acres elsewhere No value limitations Fraudulent transfer and fraudulent conversion laws generally not applicable under Havoco Leslie A. Share, Esq. 6

7 Protecting The Florida Home Part II DON T put the family home in a partnership, LLC, corporation or irrevocable trust Revocable living trust (including a land trust ) is now allowed, but make sure that the trust document includes related language Owner (or resident see De La Mora v. Andonie (Fla. 3d DCA 2010) must be a U.S. citizen or green card holder Leslie A. Share, Esq. 7

8 Protecting The Florida Home Part III Florida homestead ad valorem tax rules differ Consider a mortgage loan to make the homestead your client s bank Thereafter, consider paying off mortgages or making additions or improvements if creditor problems are anticipated Leslie A. Share, Esq. 8

9 Protecting The Florida Home Part IV You can roll over proceeds from the sale of one homestead into another A court may require apportionment if the property exceeds the acreage limitations Under the 2005 federal Bankruptcy Act, 730 days of Florida residence are generally required Consider filing a Declaration of Domicile and applying for Florida Homestead Exemption at the local property assessor s office to establish Florida residence status Leslie A. Share, Esq. 9

10 Protecting Personal Assets Part I Tenancy by the entireties is an alternative, but it won t last forever, it doesn t help for joint H/W debts, and may hurt estate planning efforts to use both spouse s unified estate/gift tax credits Also note that T by E is broken by death or divorce POD and IFT accounts may avoid probate, but provide no asset protection Consider holding through a LLC Leslie A. Share, Esq. 10

11 Protecting Personal Assets Part II Don t simply put all assets in the other spouse s name you could get sued! If possible, consider leasing assets such as cars rather than owning them Creditors will use insurance policies and storage facility bills to trace ownership of personal assets Leslie A. Share, Esq. 11

12 Life Insurance Florida Exemption The proceeds of life insurance policies on a Florida resident are generally exempt from the claims of creditors of the insured Fla. Stat This exemption does not apply when the insurance policy or a valid assignment provides otherwise, or if the beneficiary designation provides that the proceeds are payable to the insured, his estate, his executors, administrators, or assigns Leslie A. Share, Esq. 12

13 Life Insurance Florida Exemption The cash surrender value of life insurance policies issued upon the life of a Florida resident are generally exempt from any creditor of the person whose life is so insured if the owner is the insured under the policy Fla. Stat Irrevocable Florida life insurance trusts can combine excellent asset protection and tax benefits but don t make proceeds payable to the insured s estate Leslie A. Share, Esq. 13

14 Annuities Florida Exemption Fla. Stat provides that the proceeds of annuity contracts issued to a Florida resident shall not be subject to attachment, garnishment or legal process in favor of any creditor of the person who is the beneficiary of such annuity contract, unless the annuity contract was effected for the benefit of such creditor The statutory exemption for annuity contracts is unlimited in amount, and it should apply whether the annuity contract is fixed or variable, deferred or immediate, or whether it provides for a flexible or single premium Single payment annuity with surrender penalty (accrues interest until maturity) upheld in Goldenberg v. Sawczak (Fla. 2001) Leslie A. Share, Esq. 14

15 Education Accounts Florida Prepaid and 529 Plans Under Fla. Stat (1), moneys paid into or out of, the assets of, and the income of any IRC 529 qualified tuition program (e.g., the Florida Prepaid College Trust Fund) are not liable to attachment, levy, garnishment, or legal process in the state in favor of any creditor of or claimant against any program participant, purchaser, owner or contributor, or program beneficiary Potentially, the best of all worlds revocable, income tax deferral, transferrable and protected Leslie A. Share, Esq. 15

16 Wages Florida Exemption All of the disposable earnings of a head of a family whose disposable earnings are less than or equal to $750 a week are exempt from attachment or garnishment Disposable earnings of a head of a family which are greater than $750 a week may not be attached or garnished unless such person otherwise approves through a written agreement Leslie A. Share, Esq. 16

17 Wages Florida Exemption Part II Earnings include compensation paid or payable, in money of a sum certain, for personal services or labor whether denominated as wages, salary, commission, or bonus Disposable earnings are that part of the earnings of any head of family remaining after the deduction from those earnings of any amounts required by law to be withheld Head of family includes any natural person who is providing more than one-half of the support for a child or other dependent Leslie A. Share, Esq. 17

18 Wages Florida Exemption Part III Wages generally remain exempt for six months after being deposited into an account at a financial institution Where other funds are deposited into the bank account and commingled with wages income, the account will not lose its exempt status if the funds in question can be properly traced and identified as wages A money market account, checking account, or savings account at a financial institution would qualify for this exemption Leslie A. Share, Esq. 18

19 Wages Florida Exemption Part IV Uncertain whether a wage earner avoids the six-month limitation by endorsing the wage check to his spouse, or transferring the funds into an account held by the wage earner and his spouse as tenants by the entirety Similarly, it is also unclear if the six-month limitation could be avoided if the wage earner receives the funds in cash and never deposits them into a bank account Problem practice entities may be paying non-qualifying profit distributions rather than wages for this purpose support with employment agreements, patterns of payments to practitioner/employees, etc. Leslie A. Share, Esq. 19

20 Protecting Practice Receivables Factor or pledge accounts receivable to a bank or other lender to protect them and produce cash flow as necessary Key is to greatly dilute the value of a valuable practice asset as a potential creditor target Potential U.S. income taxes if funds distributed some planners try to avoid this through more complex transactions but with untested tax results Leslie A. Share, Esq. 20

21 Protecting Other Practice Assets Intellectual property (patents, trademarks) should not be owned by the practice entity Real estate should be owned by a separate limited partnership or LLC and then leased to the practice entity Valuable equipment should also be owned by a separate limited partnership or LLC and then leased to the practice entity Use qualified deferred compensation/retirement plans to stash and protect as many dollars as possible Use UCC filings and debt as advance security against pledged practice assets as collateral Leslie A. Share, Esq. 21

22 Corporations Traditionally, the most basic and effective form of asset protection planning Limited liability inside-out attacks Problem outside-in attacks Seizure of minority shareholder s stock may not help a creditor Transferee liability may apply for distributed corporate assets where debts unpaid Leslie A. Share, Esq. 22

23 Protecting Corporate Stock Part I Corporate assets may be subject to being reached by a creditor of a shareholder through an outside-in attack, through attaching the stock certificate and (if then the majority owner) liquidating the corporation A shareholder may also be attacked through an inside-out creditor action, where a creditor of the corporation attempts to pierce the corporate veil Leslie A. Share, Esq. 23

24 Protecting Corporate Stock Part II Use an irrevocable trust, with a completed gift, preferably in advance of stock value appreciation, which may provide huge asset protection and estate planning benefits Trust generally must qualify as a grantor trust, ESBT or QSST to hold stock of a Subchapter S corporation Foreign trusts cannot be a Subchapter S corporation shareholder Leslie A. Share, Esq. 24

25 Limited Partnerships (LPs) Part I General partnerships provide no asset protection all partners are completely liable for partnership debts Limited partnerships general partners have unlimited liability to third parties, the partnership and other partners, but in general, a limited partner is not liable for the debts of the LP Leslie A. Share, Esq. 25

26 Limited Partnerships (LPs) Part II Allow keeping control over assets for as long as possible through the general partner, while at the same time removing up to 99% or more of the underlying partnership assets from the gross estate Despite recent IRS attacks, valuation discounts likely remain available when gifting LP interests in appropriate circumstances Excellent planning vehicle for owning many business and passive assets but not Sub S corporation stock Leslie A. Share, Esq. 26

27 Limited Partnerships Asset Protection Issues General partner has unlimited liability use a corporation or an LLC for a business or real estate operations partnership Charging order restrictions generally prevent a creditor from taking over partner-related rights other than distributions Stalemate can be created, with accompanying U.S. income tax issues, which can encourage a settlement Leslie A. Share, Esq. 27

28 Florida Limited Liability Limited Partnerships (LLLPs) An obligation of an LLLP, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership Unlike LPs, no partner is personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner of an LLLP In effect, as with LLCs, there is no general partner with unlimited liability Leslie A. Share, Esq. 28

29 Limited Partnership Structure Example H and W as T by E 100% S Corp or LLC 1% GP Irr. Trust 99% LP Limited Partnership/Limited Liability LP LLC 1 Liquid Assets LLC 2 Real Estate Leslie A. Share, Esq. 29

30 Limited Partnerships Tax Planning Possibilities LPs provide an excellent opportunity to leverage both the annual exclusion amount (currently $14,000/per person/per year) and the applicable credit amount (currently $5.34 million for lifetime and/or testamentary transfers) to make gifts of LP interests Leslie A. Share, Esq. 30

31 Limited Liability Companies (LLCs) Part I Single-member LLCs may be taxed either as tax-nothings or corporations Multiple member LLCs taxed either as partnerships or corporations Special rules for foreign entities Use IRS Form 8832 to check-the-box All LLCs should have a detailed Operating Agreement for best asset protection potential Leslie A. Share, Esq. 31

32 LLCs Part II Block the exposure of their members to losses beyond the amount of their capital investment in the entity In general, the members and the managers of an LLC enjoy complete protection from personal liability for any underlying company debt or obligation, regardless of whether it arises through contract, tort, or otherwise of an LLC are liable for any debt, obligation, or liability of the LLC Leslie A. Share, Esq. 32

33 LLCs Part III Limited liability companies often provide a larger degree of outside-in asset protection than do corporations Even if a member involuntary or voluntary assigns his interest in the entity to a creditor, the assignee generally cannot be admitted as a member without the written consent of all other members or as spelled out in the operating agreement Leslie A. Share, Esq. 33

34 LLCs Part IV The assignee s rights to participate in the LLC s management may be substantially restricted in the entity s articles of organizations operating agreement or under applicable state law Charging order restrictions generally apply in Florida, except that Florida law does not adequately protect single-member LLCs use multiple members or go elsewhere in the U.S. or offshore Leslie A. Share, Esq. 34

35 Protecting Real Estate One property per holding entity Always own business property through a separate LLC or other entity Arm s-length lease to professional practice entity be aware of any related Florida sales tax issues Leslie A. Share, Esq. 35

36 Protecting Real Estate Separate liquid assets from real estate holdings don t leave large amounts of cash in the same entity Consider using equity stripping with a trust or other vehicle and a mortgage loan securing the property Leslie A. Share, Esq. 36

37 Protecting Assets Airplanes, Cars and and Boats Many assets are portable Note various foreign ownership and registration restrictions and rules Perhaps best to own through asset protection jurisdiction LLCs Leslie A. Share, Esq. 37

38 Revocable Trusts v. Irrevocable Trusts Revocable living trusts avoid probate, but generally provide no asset protection during the settlor s lifetime Revocable trusts can be valuable for NRAD estate and tax planning Settlor s Letter of Wishes must be precatory An irrevocable, completely discretionary trust can still effectively be revoked at any time by the trustee by distributing out all of the trust assets Leslie A. Share, Esq. 38

39 Irrevocable Discretionary Trusts Delaware, Alaska and certain other states permit self-settled spendthrift trusts whose assets are intended to be shielded from creditors of the settlor/beneficiaries Problem although domestic APTs are strongly promoted, and avoid the foreign trust tax and compliance tax rules, no one knows if they will ultimately work, and they face numerous legal and practical issues Consider going offshore Leslie A. Share, Esq. 39

40 APT Structure U.S. Settlor/Independent Trustee/Protector Irrevocable Trust LLC LLC U.S. and Offshore Accounts Life Insurance/Annuity Policy Income-Producing Real Property Leslie A. Share, Esq. 40

41 Weighing the Pros and Cons of Creating an Offshore Trust Foreign asset protection trusts (APTs) do work, but only if the structure in question is properly and timely formed, funded, administered and terminated Carefully planned APT structures are intended to be creditor settlement devices, and no structure is forever bulletproof If an offshore APT is too complex for you or the client to understand or implement, don t use one, because it will probably fail if tested by a creditor Leslie A. Share, Esq. 41

42 Is the Entity a Trust? Carefully distinguish between different foreign entities as trusts, associations, and foundations each have their own unique characteristics and U.S. tax and compliance issues A trust is a common law legal entity that is now gaining accepted status in certain traditional civil law jurisdictions Compare the fideicomiso used in many Latin American countries is it a trust or a custodial relationship? Is a foundation, anstalt or stifung a trust, corporation or something else? Leslie A. Share, Esq. 42

43 Is the Entity a Foreign Trust? The entity must be a trust under IRS classification rules Reg , some questions remain as to certain foreign entities Generally governed by a foreign law with a foreign trustee Domestic or foreign status has an enormous effect upon the applicable U.S. tax and compliance rules Reg Careful drafting is essential, but uncertainties remain due to lack of interpretive case law and rulings A trust will be deemed a foreign trust unless it satisfies both the court test and the control test Leslie A. Share, Esq. 43

44 Is It Ever Too Late To Form or Fund an APT? Part I Generally, so long as it s legal, it s better to take a shot at asset protection than just to give up Grupo Mexicano De Desarrollo (S.Ct. 1999) confirmed that in the absence of a judgment, you can generally pick and choose your creditors, but it did not consider fraudulent transfer issues, and some appellate courts have bent over backwards to distinguish this decision Leslie A. Share, Esq. 44

45 Is It Ever Too Late To Form or Fund an APT? Part II Be very careful in certain public policy situations you may have problems if transferor is about to enter or is in divorce proceedings Don t do last minute (or any other) planning to avoid governmental creditors Don t lie to or try an 11th hour move against a bankruptcy judge you won t be discharged, and you may go to jail Leslie A. Share, Esq. 45

46 Creating the Trust Generally, no need for the settlor to execute the trust deed in the trust jurisdiction Trust must be executed and witnessed in accordance with local law requirements An Affidavit of Solvency is generally required to show that no fraudulent transfer occurred, backed up with a litigation specialist s opinion Trust is likely useless if not properly funded through written assignments, deeds, or other appropriate documents Leslie A. Share, Esq. 46

47 Selecting The Trustee Appoint a corporate trustee that will act quickly and properly, and will provide necessary U.S. tax documents Due diligence is important for the trustee, you and your client get references from financial institutions and other professionals Make certain that the trustee is familiar with the asset protection routine Don t under any circumstances use the trustee s one size fits all form trust document, which is primarily designed to protect the trustee Some trustee functions can be delegated if handled carefully e.g., through an investment advisor agreement Leslie A. Share, Esq. 47

48 Selecting The Protector Key engage a Protector that should act quickly, intelligently and decisively Protectors have great powers, so choose carefully If available, utilize an offshore Protector outside of U.S. court jurisdiction Try to avoid family members of the settlor, and it should never be the settlor or his spouse Corporate Protectors generally don t die, and have multiple individuals that can act on their Have a backup Protector in place at all times Leslie A. Share, Esq. 48

49 Choosing the Trust s Foreign Asset Custodian Meet their representatives if possible, and understand their investment philosophy Ideally, choose a custodian with no U.S. branches or affiliates Will the custodian act quickly if necessary? Make certain that the client will be provided with comprehensible and comprehensive U.S. tax-related statements Leslie A. Share, Esq. 49

50 APT Planning Part I Foreign APTs most likely remain the best method of shielding assets from creditors of the settlor and other trust beneficiaries, notwithstanding recent U.S. court attacks A grantor trust for U.S. income tax purposes a total flow-through to the settlor Must provide for discretionary, not mandatory distributions, because if a beneficiary can t touch the trust assets, it s difficult for his or her creditor Leslie A. Share, Esq. 50

51 APT Planning Part II Choose a jurisdiction with advantageous fraudulent transfer laws the applicable period ranges from zero to forever The use of a trust protector acts as a check and balance veto powers, co-signature authority and the right to remove and replace the trustee Use a foreign protector to avoid U.S. court jurisdiction issue, or at least have one as a backup successor Leslie A. Share, Esq. 51

52 APT Planning Part III Choose jurisdiction, asset custodian(s) and trustee carefully how will they react to an event of duress? Be prepared for significant administrative costs Make certain the client is fully aware of how offshore trusts operate Only use Play Money the trust must only be your nest egg, not your checkbook! Paying U.S. taxes and professional, custodial and fiduciary fees and costs is better than losing your assets Always require annual trust accountings prepared under applicable law standards Leslie A. Share, Esq. 52

53 APT Planning Part IV Be prepared to be taxed on APT income even where no distributions are made Warn the client in advance in writing of the worst case scenario the possibility of jail for contempt for the failure to repatriate trust assets, even when arguably impossible In a worst case scenario, how long are you willing to sit in jail to keep your money? (the Lawrence story) Leslie A. Share, Esq. 53

54 APT Planning Part V Don t give the settlor the right to remove or replace the trust protector, even pursuant to an ascertainable standard or limited by an event of duress clause Use an independent, unrelated person or entity as a trustee Paying trust creation and maintenance fees and costs is better than losing 100% of the client s nest egg Leslie A. Share, Esq. 54

55 APT Provisions Part I Income and principal distributions must be entirely discretionary, to or for the benefit of a beneficiary or a trust for his or her benefit Spendthrift clauses protect a beneficiary from creditors and himself Event of duress clauses prevent non-voluntary actions by the settlor, a beneficiary, the protector, and the trustee Flee clauses allow trusts and trustees to move elsewhere if necessary Leslie A. Share, Esq. 55

56 APT Provisions Part II Trustee may be given power to amend the trust with the consent of the protector Protector may have powers to remove and replace trustee, and thus to effectively change the trust jurisdiction Protector may be given selected veto powers over trustee actions distributions, investments, etc. Protector may be given co-signatory power over trust accounts with trustee Leslie A. Share, Esq. 56

57 Trust Funding Considerations Part I Contribute as much as you can to the trust at the beginning, as the applicable fraudulent transfer laws generally separately look to each individual contribution Use liquid, non-esoteric assets that can be quickly sold and converted to cash if possible Subchapter S corporations can t be owned by foreign trusts Leslie A. Share, Esq. 57

58 Trust Funding Considerations Part II U.S. real estate is difficult to protect, but equity stripping and other techniques may reduce risks Other assets kept in the U.S. (e.g., boats, airplanes) have similar concerns, but are portable Domestic liquid asset accounts are fine so long as there are no immediate smoke signals on the horizon Always create and fund (at least nominally) a foreign liquid asset account at inception Proper written asset transfers and assignments are imperative sham contributions don t work Leslie A. Share, Esq. 58

59 Liquid Assets Location Part I Any offshore location works, but some look better than others Be certain that there are no or minimal local taxes imposed upon capital or income Ascertain local money laundering, suspicious activity and other legal issues Leslie A. Share, Esq. 59

60 Liquid Assets Location Part II Use an entity that will not cause problems and has legal certainty from a local law standpoint Financial institution due diligence requirements are now very onerous Life insurance policy may be the best and safest method to hold liquid assets Leslie A. Share, Esq. 60

61 Emergency Funds Trusts The Most Bang For Your Buck Private Letter Ruling (October 30, 2009) Grantor creates an irrevocable trust for the benefit of Grantor, his spouse and descendants (Independent) Trust Company will serve as trustee. The trustee will pay over the income and principal of Trust in such amounts as trustee in its sole and absolute discretion may determine for the benefit of one or more members of the class consisting of Grantor, Grantor's spouse and Grantor's descendants Any income not paid will be accumulated and added to principal Upon the termination of the trust, no part of the income or principal of Trust may be transferred or paid to Grantor, Grantor's estate, Grantor's creditors or the creditors of Grantor's estate Upon the death of Grantor and Grantor's spouse, the entire principal together with any accrued income shall be distributed to any descendant of Grantor then living to be held in separate trusts; or if there is no descendant then living, to one or more qualified charitable organizations Leslie A. Share, Esq. 61

62 Emergency Funds Trusts The Most Bang For Your Buck The following persons may not be a trustee of Trust or any other trust created under trust: (1) Grantor; (2) the spouse or former spouse of Grantor; (3) any individual beneficiary of Trust or a trust created under Trust; (4) the spouse or a former spouse of a trust beneficiary; (5) anyone who is related or subordinate to Grantor under 672(c) Grantor has the power, exercisable in a nonfiduciary capacity, without the approval or consent of any person in a fiduciary capacity, to acquire property held in the trust by substituting other property of an equivalent value Before completing the property substitution, the trustee must be satisfied that the acquired and substituted properties are of equivalent value The power can not be exercised in a manner that can shift benefits among the trust beneficiaries Leslie A. Share, Esq. 62

63 Emergency Funds Trusts The Most Bang For Your Buck Grantor is a resident of State and the situs of Trust is State (apparently Alaska) State Statute provides that a person who in writing transfers property in trust may provide that the interest of a beneficiary of the trust, including a beneficiary who is the settlor of the trust, may not be either voluntarily or involuntarily transferred before payment or delivery of the interest to the beneficiary by the trustee Leslie A. Share, Esq. 63

64 Emergency Funds Trusts The Most Bang For Your Buck Under State Statute, if the trust instrument contains this transfer restriction, it prevents a creditor existing when the trust is created or a person who subsequently becomes a creditor, from satisfying a claim out of the beneficiary's interest in the trust unless: (1) the settlor may revoke or terminate all or part of the trust without the consent of a person who has a substantial beneficial interest in the trust and the interest would be adversely affected by the exercise of the power held by the settlor to revoke or terminate all or part of the trust; (2) the settlor intends to defraud a creditor by transferring the assets to the trust; (3) the settlor is currently in default of a child support obligation by more than 30 days; or (4) the trust requires that all or a part of the trust's income or principal, or both, must be distributed to the settlor Leslie A. Share, Esq. 64

65 Emergency Funds Trust for All Family Members Irrevocable US or Foreign Trust Asset Protection Jurisdiction Independent Corporate Trustee Del. or Nevis LLC Del. or Nevis LLC Foreign financial account U.S. financial account, no PFICs Note the timing of potential U.S. tax check-thebox elections for each holding company will need to be determined, along with the trust jurisdiction, trustee and the protector or advisory committee. Leslie A. Share, Esq. 65

66 Alternative 1 Settlor/Spouse Not Beneficiaries Irrevocable Trust Non-U.S. State or Foreign Asset Protection Jurisdiction Independent Corporate Trustee BVI Co. or Nevis LLC BVI Co. or Nevis LLC Foreign financial account U.S. financial account, no PFICs Note the timing of potential U.S. tax check-thebox elections for each holding company will need to be determined, along with the trust jurisdiction, trustee and the protector or advisory committee. Leslie A. Share, Esq. 66

67 Alternative 2 Beneficiaries Include Settlor/Spouse Irrevocable Trust Asset Protection Jurisdiction Independent Corporate Trustee Delaware or Nevis LLC Delaware or Nevis LLC U.S./foreign financial account U.S. real estate Leslie A. Share, Esq. 67

68 Planning For The Future You are seeking tax and estate planning advice asset protection is a value added benefit don t let the proverbial tail wag the dog All documents must be consistent from an estate planning standpoint Coordinate duties among your attorney, CPA, asset custodian(s), insurance agent, and other professionals You ve wasted your time and money if you set up the structure without proper ongoing operations and maintenance Leslie A. Share, Esq. 68