I was recently speaking with a client that had some very detailed questions about estate planning and asset protection strategies. This client was married with two young children, owned a business that was very successful, and owned several rental properties. In addition, this client owned several properties that had appreciated in value since he first purchased the properties. This allowed me to begin discussing with this client sophisticated estate planning.
First, this type of planning is not for everybody. This type of planning is for clients who have wealth that they want to pass to the next generation, have a concern about capital gains taxes, have a need to shield their personal assets from liability due to owning a business, a high risk profession (such as a physician or surgeon), and/or owns rental properties, and has an extreme concern to keep their financial affairs private during life and after death. These are the normal scenarios that result in a client wanting to come into our office to discuss sophisticated estate planning.
Let me first tell you a story. John owned a restaurant business and some rental properties. In addition, John had healthy retirement accounts, a personal home with his wife and two children, a second home in Florida, and sizeable savings accounts. One day, at one of his rental properties, the ceiling caved in and caused considerable damage to one of his tenant’s personal belongings. Luckily, no one was seriously hurt or killed. However, as a result, the tenant hired a lawyer and sued John. Since John owned the properties personally, he was held personally liable to the tenant. During the lawsuit, it was determined that John was at fault and was ordered to pay $500,000. However, John’s insurance policy only covered $250,000. Therefore, John was forced to pay out $250,000 to this tenant out of his own personal assets!
This is the exact type of client that can benefit from sophisticated estate planning. Had John set up his legal affairs correctly the first time, he wouldn’t have been in a position where he would have had to personally spend $250,000 to cover the loss. He could have had his personal assets shielded from personal liability.
If you have questions about sophisticated estate planning or wonder whether sophisticated estate planning may be right for you and your family, please contact our office to schedule an initial visit with one of our attorneys. If you are not ready to schedule an appointment, that’s ok too. Just go ahead and download one of our many free books and reports. We hope that it answers your questions.
As always, we are here to help.
Daniel A. Perry
Fidelis Law, PLLC