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Wisdom for the Wealthy: Solving the High Net Worth Planning Puzzle By Matsen Voorhees Mintz LLP Edited by Jeri Larsen Cover Design by Melodye Hunter Copyright Š 2015 by Matsen Voorhees Mintz LLP All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, or by any information storage and retrieval system, without the prior written permission of the publisher and author, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law. The information contained herein does not constitute the rendering of legal advice; readers are encouraged to seek counsel as to their specific facts and circumstances. ISBN: 978-0-9964269-6-1 (p) ISBN: 978-0-9964269-7-8 (e) Crescendo Publishing, LLC 300 Carlsbad Village Drive Ste. 108A, #443 Carlsbad, California 92008-2999 www.CrescendoPublishing.com GetPublished@CrescendoPublishing.com
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Table of Contents
INTRODUCTION ................................................................................................................... 7 Chapter 1 .................................................................................................................................. 10 Revocable-Trust-Centered Estate Plans ....................................................................................... 10
Chapter 2 .................................................................................................................................. 20 Advanced Estate Planning Strategies ........................................................................................... 20
Chapter 3 .................................................................................................................................. 34 Income Tax Planning ....................................................................................................................... 34 Part 1: Business Income Tax Planning.......................................................................................... 37 Part 2: Capital Gains Tax Planning ............................................................................................... 45
Chapter 4 .................................................................................................................................. 51 Retirement Planning ........................................................................................................................ 51 Part 1: Wealth Accumulation .......................................................................................................... 52 Part 2: Retirement Distribution Rescue ....................................................................................... 56
Chapter 5 .................................................................................................................................. 62 Business Succession Planning ....................................................................................................... 62 Part 1: Business Succession Agreements ..................................................................................... 62 Part 2: Tax-Advantaged Succession Strategies ........................................................................... 66
Chapter 6 .................................................................................................................................. 72 Asset Protection Planning: An Overview .................................................................................... 72
Chapter 7 .................................................................................................................................. 82 Operating and Liability-Protected Entities ................................................................................. 82
Chapter 8 .................................................................................................................................. 87 Domestic Asset Protection Planning ............................................................................................ 87
Chapter 9 .................................................................................................................................. 95 Offshore Asset Protection Planning ............................................................................................. 95
Chapter 10 .............................................................................................................................. 102 Charitable Planning ....................................................................................................................... 102
Chapter 11 .............................................................................................................................. 116 International Planning .................................................................................................................. 116 5
Conclusion ............................................................................................................................. 126 About the Partners ............................................................................................................... 129 Jeffrey R. Matsen ............................................................................................................................ 129 Tim Voorhees, JD, MBA, AEP速 .................................................................................................. 130 Jonathan A. Mintz .......................................................................................................................... 131
Connect with Matsen Voorhees Mintz LLP .................................................................... 133
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INTRODUCTION What’s in a word? Wisdom is a powerful and dynamic word that conveys the ability to think and act utilizing experience, skill, personal insight, knowledge, common sense and practical application. People of wealth and affluence have exercised wisdom to build up their assets and to obtain some financial security. However, now the challenge is to take the accumulated wealth to a higher level involving preservation, growth, and legacy building. As in baseball, getting on base is important, but coming all the way home and touching home plate is the real measure of success. As the authors of this book, we have a combined total of almost 100 years of advising the wealthy on how to preserve, protect, and transfer their wealth upon death. Our experience and knowledge is founded on the basic and advanced concepts of estate and tax planning—but more importantly on real life situations involving actual case studies and the structuring and design of actual plans. We have written this book with the intent that the reader will acquire the necessary wisdom to create a vision and a desire to make that vision a reality. The authors are partners in a boutique estate planning law firm located in Orange County, California. Because of our experience and expertise, we not only have clients in our local Southern California area, but also nationally and internationally. What sets our firm apart from other estate planning legal firms is the fact that we undertake an integrated wealth planning approach that is unique and result-oriented. We have expertise and experience in the following areas: • • • • • • •
Estate planning, both fundamental and sophisticated Business tax and succession planning Income tax and retirement planning Charitable planning Asset protection planning Probate and trust administration/litigation International tax planning
The chapters in this book cover all of these subjects except probate and trust administration, which is action to be taken after death. The book is concentrated on planning before death. This book is primarily intended for readers who possess some wealth and affluence, 7
though their advisors may also benefit. Obviously, this book is not designed to be a selfhelp treatise. The concepts and strategies presented here are meant to help the reader understand the various structures and planning tools available for preserving, increasing, and passing their estates and legacy on to the next generation and beyond. Professional advisors such as lawyers, CPAs, and financial advisors will be necessary to help design and shape the various strategies involved and, of course, to implement them once the design is finalized. It is not necessary for you to read the book by going through each successive chapter in order; you should treat the book as an information center for your particular needs and interests.
Figure 1. The Net-Worth Puzzle
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Solving the high net worth puzzle requires the process of putting all of the pieces together that fit the vision of one’s goals and objectives. Just as with any challenge, you and your team of advisors should use deductive reasoning to assess all available information for your net worth puzzle—including a complete run down of all of your assets, income and financial situation, but also an integrated approach to legal and tax strategies and structures. Once the deduction and design portion of the process is completed by the right experts, then the pieces can be integrated and the puzzle “solved.” With the right professional assistance, legal documents, and structure, you can make your wise vision a reality. The book is divided into several different sections by chapter. The first three chapters are dedicated to estate planning—which, of course, is absolutely essential for anyone possessing affluence and wealth. The next three chapters deal with income tax planning, which will enable the reader to save taxes and grow and increase your asset base. The next four chapters deal with asset protection planning and the structures and strategies involved in preserving and protecting assets once they are required. Chapter 10 deals with charitable planning. Finally, the last chapter is written especially for those readers who have international tax issues. It was very rewarding for us to be able to write this book. Among the three of us, we have accumulated a “wealth of wisdom” that we wanted to pass on to you. We are interested in legacy building and making sure that our clients achieve their goals and objectives. We stand ready, willing, and able to assist in any way we can to make the design and implementation of your vision a reality for you and your family. These goals and objectives, of course, are not only centered on wealth, but also on family relationships, charitable giving, and asset preservation and growth. Likewise, the strategies and techniques set forth in this book will assist you not only in “catching your vision,” but in planning and implementing the structure to house that vision—thereby solving the high net worth puzzle. Read on!
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