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Last week, we discussed the benefits of a unique estate planning vehicle known as a Lifetime Asset Protection Trust (LAPT). We referenced this planning tool in the context of how it could have protected Clare Bronfman, the heiress to the multi-billion-dollar Seagram’s fortune, who was manipulated into blowing much of her $200 million inheritance by financing the cult-like group known as Nxivm.

Yet Clare’s case was quite extreme in terms of both the amount of her inheritance and the circumstances that wiped out her wealth. Though an LAPT would have almost undoubtedly protected both her and her family’s fortune, this planning vehicle can benefit families with far less wealth than Clare’s—and offer asset protection from far less outlandish threats.

Indeed, LAPTs are primarily designed to protect your loved ones and their inheritance from much more common threats, such as divorce, serious debt, devastating illness, and unfortunate accidents. At the same time, LAPTs can provide your heirs with a unique educational opportunity in which they gain valuable experience managing and growing their inheritance, while enjoying airtight asset protection.

To demonstrate how LAPTs can provide protection to families of all asset profiles, here we’ll describe another true story involving a tragic—yet much more relatable—life scenario. While the following events are entirely true, the individual’s name has been changed for privacy protection.

Eric was staying at a friend’s apartment in New York City. The apartment was the penthouse of the building, and Eric decided to run himself a bath. While the bath was running, another friend called and invited Eric to go out with him, which he did.

At about 2 a.m., Eric came back to the apartment and discovered he made a  huge mistake and left the bath running when he left the apartment. The resulting flood caused more than $400,000 in damage to the apartment and the one below it.

While there was insurance to cover the damage, the insurance company sued Eric for what’s known as “subrogation,” meaning the company sought to collect the $400,000 they paid out to repair the damage Eric caused to the property.

Because the flood was due to his negligence in leaving the bath running—a simple, but costly mistake—Eric was responsible for the damage. Now here’s where the inheritance piece comes into play and why it’s so important to leave whatever you’re passing on to your heirs in a protected trust. If Eric had received an inheritance outright in his own name, he would have lost $400,000 of it to this unfortunate mishap.

However, if Eric had received an inheritance in an LAPT, instead of an outright distribution, his inheritance would be completely protected from such a lawsuit—and just about any other threat imaginable.

If you’re like most people, you hope to leave an inheritance for your children. Indeed, it may even be one of the primary motivations driving your life’s work. Yet if you don’t take the proper precautions, the wealth you pass down can easily be lost or squandered. And in certain cases, such as Clare’s, the inheritance can even end up doing more harm than good.

When it comes to leaving an inheritance, most lawyers will advise you to place the money in a trust, which is the right thing to do. However, most lawyers would have you distribute the trust assets outright to your loved ones at specific ages, such as one-third at 25, half of the balance at 35, and the rest at 40. Check your own trust now to see if it does this or something similar.

But giving outright ownership of the trust assets in this way puts everything you’ve worked so hard to leave behind at risk. While a trust may protect your loved ones’ inheritance as long as the assets are held by the trust, once the assets are disbursed to the beneficiary, they can be lost to future creditors, a catastrophic accident or illness, divorce, bankruptcy—or as in Eric’s case, a major lawsuit.

Rather than risking their inheritance by leaving it outright to your children at certain ages or following certain life events, such as graduating college, you can gift your assets to your children at the time of your death using an LAPT. When you gift an inheritance to your kids via an LAPT, the trustee of the trust owns the assets, not your children.

Therefore, if your kids ever get divorced, file bankruptcy, have a major medical issue, or are ordered to pay damages in a lawsuit, they can’t lose their inheritance because they never owned it in the first place. An LAPT can be built into a revocable trust, which becomes irrevocable at the time of your death and holds your loved one’s inheritance in continued trust for their lifetime.

A trustee of your choice owns the trust assets upon your death. Because the LAPT is discretionary, this individual has the power to distribute the assets at their own discretion, instead of being required to release them in a rigid structure. This discretionary power enables the trustee to control when and how your kids can access their inheritance, so they’re not only protected from outside threats like ex-spouses and creditors, but from their own poor judgment as well.

And if you’re afraid that a trustee would keep your beneficiary from using the trust assets, you can build in protections to ensure your beneficiary has flexible use, unless there would be a significant risk of loss if he or she did. You can even allow your beneficiaries to become Co-Trustees and then sole Trustees of their own LAPT.

And contrary to what some might think, LAPTs are not just for the mega wealthy. In fact, the asset protection they provide is even more valuable for those leaving behind a modest inheritance. With less money to pass on, it’s much more likely that the inheritance could be totally wiped out by a single unfortunate event, as opposed to a much larger inheritance, which might survive even multiple mishaps.

Additionally, you can use an LAPT as a unique way to educate your children about investing, charitable giving, and even running a business. This is done by adding provisions into the trust allowing the beneficiary to become co-trustee of the trust with a person you’ve chosen and trust to support their education.

In this way, the beneficiary would become co-trustee at a predetermined age or stage of life and be able to use and control the trust assets under the supervision of the other co-trustee you’ve named to guide them. You can even allow the beneficiary to become sole trustee later in life, once he or she has been properly educated and is ready to assume full control. As sole trustee, the beneficiary would be able to resign and replace themselves with an independent trustee, if necessary, to provide the ultimate asset protection.

There are several different ways we can structure the trust to meet your family’s unique needs, so be sure to ask us what options might be best for your particular situation.

If you wish to protect your child’s inheritance from all possible threats, while incentivizing them to invest and grow the money rather than squander and waste it, consider including a Lifetime Asset Protection Trust in your plan for the ones you love. Indeed, the trust’s highly flexible structure, combined with its bulletproof asset protection make it one of the most valuable gifts you can give your loved ones.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

Because we spend so much of our lives working, it’s practically guaranteed that you’re going to develop close bonds with your employees. And this is a good thing. Having a friendly relationship with your team members based on mutual respect, care, and concern can make the job more enjoyable for everyone—and even boost performance and productivity.

But there’s a huge difference between being friendly with your employees and developing a genuine friendship. When it comes to things like spending lots of time together outside of work, introducing them to your family, and sharing intimate details about your life with one another, that’s a whole different ball game.

Indeed, these relationships can be so challenging that many people—both bosses and employees alike—will tell you that such friendships simply aren’t possible. And more will tell you that while they may be possible, they’re not worth the potential risks.

Since real friendship involves such deep aspects of human nature—emotional stability, power dynamics, and personal integrity—whether true employer-employee friendships are possible really depends on the individuals involved. But regardless of who we’re talking about, these friendships are sure to test your ability to maintain strong boundaries like almost nothing else.

If you’re considering developing a genuine friendship with any of your employees, you may want to proceed with caution and first consider the following seven issues.

One uncomfortable fact of employer-employee friendships is that not everyone can handle them. This goes for both you and the employee. It takes an incredible level of self-awareness, honesty, and emotional maturity to make any friendship work, even without the added complication of doing business together.

You’ll first need to be brutally honest with yourself. If you have any self-esteem issues, problems with boundaries, or find that your judgment is easily clouded by emotion, you may want to keep things purely professional. For example, would you be comfortable firing your best friend? Could you remain truly impartial when deciding whether to promote your friend versus another employee? Could you give your friend honest feedback in areas that he or she needs to grow?

If those questions gave you any pause at all, that’s a red flag that you might not be ready.

The person you befriend should possess the same stable character traits as well. Indeed, given the power imbalance, he or she might need to be even more mature than you.

Since you can’t gauge the full range of someone’s personality right away, consider taking the friendship slowly and get to know one another on a professional level first. If the potential friend has a habit of being overly sensitive about criticism, seems emotionally needy, or likes to gossip, it may be best to steer clear.

With so many potential pitfalls surrounding friendship, it’s essential to establish clear ground rules right off the bat. Some people find it’s easiest to simply not talk about work outside the office at all, keeping the professional and personal aspects of the relationship totally separate.

That said, it’s inevitable that work-related issues will come up at some point, so you might want to  clearly note that some topics must be off limits. Obviously, all matters related to compensation—pay, raises, promotions, bonuses, performance reviews—should be a no go.

The same goes for talking about other employees or colleagues. Such gossip hinders your ability to remain an impartial leader, and at the same time, it can jeopardize the employee’s ability to effectively work with colleagues. Depending on your operation, you should carefully consider exactly what things you should and should not share, always erring on the side of caution.

Don’t be surprised if laying things out in such a frank matter scares a few people off from developing a true friendship. But that just means they probably weren’t in it for the right reasons in the first place.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

Because dealing with cryptocurrency can be a complex affair, online scammers have developed complicated cons similar to traditional pyramid and ponzi schemes. People have lost a lot of money in such scams, and unless you’re well-versed in the technology, they can be difficult to spot.

One giant red flag to watch for is giving your money to others who invest/trade for you, or if you only get paid when you recruit new members.

Also avoid buying upfront “packages” (The Gold Package) promising varying returns. And if you see the words “This isn’t a pyramid scheme” in the marketing materials, you may want to look a little more closely!

Unless you get to hold the keys to your private wallet containing your crypto directly or trade via a reputable exchange like Coinbase, you very well could be dealing with a scammer. And while plenty of people will make money in cryptocurrency pyramid/ponzi schemes, many will lose. That could include you or people you care about, if you get involved in crypto this way.

While new cryptocurrency can be created without any public investment or offering, many use an Initial Coin Offering (ICO) to fund their startup initiative. ICOs are basically IPOs (Initial Public Offerings) for cryptocurrency and a highly effective way to crowdfund vast sums of money extremely quickly. In fact, recent ICOs have raised millions of dollars in mere minutes.

This speed comes from the fact that ICOs are barely regulated—a good thing if you’re looking to raise money quickly and avoid the rigorous and time-consuming regulations involved with traditional capital raising. But it can bad, too, as the lack of regulation is a big neon welcome sign to scammers.

The lack of legal oversight has resulted in numerous fake ICOs being created by crypto con men, who go to great lengths to convince potential investors of their fake coin’s legitimacy. If you’re just getting started with cryptocurrency, it’s probably best to avoid ICOs until you really understand what you are investing in. In fact, that’s a good rule of thumb with any crypto investment, if you don’t understand the technology beneath it, start by learning that—and understand “what this crypto actually does”—before you invest. Contact us if you’d like help with that.

Of course, not all ICOs are fake, and if you’re tech-savvy, they can be quite lucrative. In fact, many tout  ICOs as the future of venture capitalism and fundraising.

But no venture capitalist would ever fund a startup without proper vetting, and the same applies to altcoins. Check the background of the people directly involved with the project and those serving as advisors. Use Google and social media like LinkedIn to verify these are real people with stellar reputations, and their advertised skills and knowledge match those found on online resumes and CVs. And make sure you understand what the cryptocurrency proposes to do and that you believe the team behind it can accomplish that goal, as with any business investment you would make.

And as with any investment, beware of deals that promise unrealistically high returns and/or just sound way too good to be true—that’s sign they likely are.

If you’re serious about adding cryptocurrency to your family’s investment portfolio, take the next step in your education by contacting your Personal Family Lawyer®. As your trusted advisor, we’ll help you incorporate cryptocurrency into your family’s financial and estate planning, so you can get the most bang for your crypto buck. Schedule online.

Since you’ll be discussing topics like death, incapacity, and other frightening life events, hiring an estate planning lawyer may feel intimidating or morbid. But it definitely doesn’t have to be that way.

Instead, it can be the most empowering decision you ever make for yourself and your loved ones. The key to transforming the experience of hiring a lawyer from one that you dread into one that empowers you is to educate yourself first. This is the person who is going to be there for your family when you can’t be, so you want to really understand who the lawyer is as a human, not just an attorney. Of course, you’ll also want to find out the kind of services the lawyer offers and how they run their business.

To gather this information and get a better feel for who the individual is at the human level, we suggest you ask the prospective lawyer five key questions. Last week in part one we listed the first two of these questions, and here, we cover the final three.

The sad truth is most lawyers do a terrible job of staying in regular communication with their clients. Unfortunately, most lawyers don’t have their business systems set up for ongoing, proactive communication, and they don’t have the time to really get to know you or your family.

If you work with a lawyer who doesn’t have systems in place to keep your plan updated, ensure your assets are owned in the right way (throughout your life), and communicate with you regularly, your estate plan will be worth little more than one you could create for yourself online—and it’s likely to fail when your family needs it most.

Think of it this way: Yes, your estate plan is a set of documents. But more importantly, it’s who and what your family will turn to when something happens to you. You want to work with a lawyer who has systems in place to keep your documents up to date and to ensure your assets are owned in the right way throughout your lifetime. Ideally, the lawyer should get to know you and your family over time, so when something happens, your lawyer can be there for the people you love, and there will already be an underlying relationship and trust.

Your lawyer should proactively communicate with you and keep you and your family educated on an ongoing basis. We think sending out a weekly (at least) email is best. I prefer to hear from the professionals with whom I work on a monthly basis by regular mail and on a weekly basis by email, but depending on the relationship, it could be even more frequent than that.

If you are considering hiring a lawyer who doesn’t take the time to proactively communicate with his or her clients, this should be a red flag. That’s a sign that the lawyer may be stuck in an old, outdated mindset that won’t address your ongoing needs in the way you deserve.

Given the complexity of today’s legal world, lawyers must have specialized training in one or more specific practice areas, such as divorce, bankruptcy, wills and trusts, personal injury, business, criminal matters, or employment law. You definitely do NOT want to work with a lawyer who professes to be an expert in whatever random legal issue walks through the door.

That said, you do want your personal lawyer to have broad enough expertise that you can consult with him or her about all sorts of different legal and financial issues that may come up in your life—and trust he or she will be able to offer you sound guidance. Moreover, while your lawyer may not be able to advise you on all legal matters, he or she should at least be able to refer to you to another trusted professional who can help you.

Trust me, you wouldn’t want the lawyer who designed your estate plan to also handle your personal injury claim, settle a dispute with your landlord, and advise you on your divorce. But you do want him or her to be there to hear your story, refer you to a highly qualified lawyer who specializes in that area, and overall, serve as your go-to legal consultant.

In this capacity, you can call your personal lawyer before you sign any legal documents, any time you have a legal or financial issue arise, or whenever anything that might adversely affect your family or business comes up, and know that you’ll get excellent guidance.

With this in mind, look for a lawyer who has an ongoing service program or membership program, in which you can pay a low monthly fee and be able to call with all of your legal and financial questions, without being charged hourly for the consultation. And be sure that when you call, you get to schedule time to talk with your own lawyer, who you know and trust. We love the idea of legal insurance plans, but we don’t love that you don’t get your own personal lawyer with them. You need to know your lawyer, and know that your lawyer has your back.

This is a critically important—and often overlooked—question to ask not only your lawyer, but any service professional before beginning a relationship. Sure, it may be uncomfortable to ask, but a truly excellent, client-centered professional will have a plan in place to ensure their clients are taken care of no matter what happens to the individual lawyer managing your plan.

Look for a lawyer who has their own detailed plan in place that will ensure that someone warm and caring will take over your planning without any interruption of service. If your lawyer prepared a will, trust, and other estate planning documents for you, or if you are in the middle of a divorce or lawsuit, you want to make certain your lawyer has such a contingency plan in place, so you won’t be forced to start over from scratch should your lawyer die, retire, or become otherwise unavailable.

Finally, if your lawyer offers a membership program, you’ll want to make sure he or she has a relationship with another lawyer or a network of lawyers who can continue to service you under that program.

Although hiring the right estate planning lawyer may not seem like a super important decision, it’s actually one of the most critical choices you can make for both yourself and your family. After all, this is the individual you are trusting to serve on your behalf to protect and provide for your loved ones in the event of life’s most traumatic experiences.

Should you choose the wrong person for the job, your family could potentially face all manner of unnecessary conflicts, expenses, and legal entanglements during a time when they are at their most vulnerable. In the end, estate planning is about far more than having a lawyer create a set of documents for you, and then never seeing you again, or only seeing you when something goes wrong.

With us as your Personal Family Lawyer®, we develop a relationship with you and with your family that lasts not only for your lifetime, but for the lifetime of your children and their children, if that’s your wish. Our unique, family-centered legal services are specifically tailored to provide our clients with the kind of love, attention, and trust we’d want for our own loved ones.

To learn more about our one-of-a-kind systems and services, schedule a Family Wealth Planning Session™ today.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

If you’ve always dreamed of starting your own business, but find the idea of building an entire operation from scratch too daunting, you might consider investing in a franchise.

Since you’re getting an already proven business model and brand, purchasing a franchise can make the start-up phase quite a bit easier. In addition to getting a well-known brand name, most franchises also come with turnkey operating systems, extensive training programs, and ongoing support from the franchisor.

Though franchises have a lot of advantages, they also come with their own unique drawbacks, and they aren’t a good fit for everyone. It’s vital to do your homework and thoroughly research the franchise before finalizing the deal.

Before buying a franchise, you should answer the following four questions to ensure the business arrangement is worth the investment and is a suitable fit for your particular needs and temperament.

Unlike starting your own business, where all of the capital you invest goes directly to support your operations, a major portion of your initial investment in a franchise goes to the franchisor for licensing rights, training, and equipment. To determine the true cost of the franchise, carefully review the Franchise Disclosure Document (FDD), which franchisors are required to provide you with before signing the franchise agreement.

These agreements often contain hidden costs in addition to the start-up costs and royalty payments, such as fees for training, marketing, and special promotions you’ll be required to offer. Because FDDs can be hundreds of pages long and include confusing terms and legalease, allow us to review it with you to ensure the deal is sound, worth the investment, and that you understand all the fine print.

One of the biggest benefits of investing in a franchise is that you’re buying a proven business concept. But not all franchises are equal, so make sure your franchise comes with sound systems for everything needed to run the operation on a daily basis, from inventory and equipment to marketing and payroll.

What’s more, the franchise should come with ample training and ongoing support to ensure you’ll be able to master these systems with minimal headaches. With the proper systems, training, and support, your chances for business success can be greatly increased.

One of the major drawbacks of franchises are the level of control and restrictions imposed by the franchisor. Most require franchisees to follow strict guidelines and standards for things like pricing, product offerings, operational hours, and store design.

Oftentimes, you won’t be allowed to veer from these rules and do things your own way, such as trying new marketing strategies or varying product offerings. Even though you may be the boss of your franchise, the franchisor typically maintains a significant level of control. Given this, you’ll need to determine if you’re comfortable abiding by such a restrictive arrangement.

Before choosing a franchise, consider the local market and customer demographic. Determine what the local clientele and market will support both now and in the future. Also research any potential competitors already doing business in the area.

You may find that there are already fellow franchisees operating in the vicinity. Some franchisors offer exclusive territory, while others don’t. And don’t just consider your geographic competition. Also determine whether the franchisor is allowed to sell products on its own to local stores or via other distribution channels, setting itself up as your potential competitor.

Some of the most reputable franchisors will help buyers do market research and select the best location for their store, while others will even assist with lease negotiations. Although owning a franchise will provide you with some built-in product recognition and customer loyalty during the start-up phase, it’s vital that you research the market to ensure demand for your product or service will survive the long haul.

Investing in a well-known franchise can seem like a sure-fire way to own a wildly successful company. But no business opportunity is without its risks and downsides. Don’t let your lofty expectations and excitement keep you from doing the proper research and planning.

We can help you review the franchise agreement to make sure you’re getting the best deal possible and are aware of all hidden costs and restrictions. We can also help you review the franchisor’s legal terms related to contract termination, contract renewal, and conflict resolution to ensure you’re not setting yourself up for a raw deal.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

Due to its highly touted “business friendly” nature, the new Republican tax bill—which recently passed both the House and Senate—has been highly anticipated by many business owners. Known as the “Tax Cuts and Jobs Act,” both the House and Senate versions reduce tax rates, adjust tax structures, and revamp tax benefits for businesses to stimulate economic growth.

While it’s uncertain what the final bill will include, or if it will even pass, both versions include common elements, which prudent business owners should be aware of when planning 2017’s year-end taxes. For example, you can adopt tax-saving strategies like deferring income to 2018 or accelerating deductions into 2017 if your business’s marginal tax rate is likely to be lower in 2018, or do the exact opposite if your rate will be increased or if certain tax deductions will not be available to you in 2018. Just keep in mind—nothing is set in stone, yet.

One thing is clear though, proactive planning with a trusted advisor can help you navigate the changes, once they are set. Those who are educated and plan ahead can make the most of whatever the tax law does become through re-structuring or structuring new entities. So even if you are reading this and it’s “too late” for 2017, contact us now so we can begin planning for 2018 early in the year.

Both the House and Senate versions of the tax bill reduce the top corporate tax rate from 35% to 20%. According to the bills, the new rate is actually “below the 22.5% average of the industrial world.” The current top rate is 35%, although the effective tax rate after deductions and expenses is 23%.

The corporate alternative minimum tax (AMT) is aimed at ensuring business owners pay at least some federal income tax. Currently, they pay the AMT only if their income tax liability is less than the current 20% AMT rate, in which case the corporation pays the difference. The House eliminates the AMT entirely, while the Senate keeps it, but expands exemption amounts at which the provision takes effect.

The bills retain tax credits for research and low-income housing, but they limit the net interest expense deduction for C corporations. The proposals also repeal the Section 199 deduction for domestic production activities, along with most industry-specific deductions, business credits, and special exclusions.

The bills offer 100% bonus depreciation—for at least five years—for new investments in depreciable assets (except buildings constructed after September 27, 2017). Existing tax law allows 50% bonus depreciation for such assets, but this drops to 40% in 2018, 30% in 2019, after which it will be eliminated. So if you are considering investing in an otherwise depreciable asset, consider waiting until next year, when you may get a 100% deduction right away.