By Lee R. Phillips

I recently handled a case where a successful businessman came in with what appeared to be a fairly comprehensive estate plan.  He wanted to simply ask some questions and look at long range planning.  I looked at the living trust, and at a quick glance it appeared to be reasonable. (Some of the living trusts are just a joke.)  I carefully quizzed him to make sure the living trust did what he wanted, i.e., distributed the property after his death to his family the way he wanted it to.  I also carefully quizzed him on funding the living trust.  Did it own the properties he had told me about?  Did it own the membership interests in his large LLC?  He assured me and the others in the room that it was fully funded.

Within a couple of weeks after our visit, he became very ill.  The family couldn’t find a durable power of attorney in his paperwork, so we quickly did one.  His daughter brought him into the office to sign the durable power of attorney, and on the way out I asked if she liked to read.  She said she loved novels.  I gave her a copy of my book, Guaranteed Millionaire, and assured her it read like a novel.  Yeah sure, was the look on her face.  About three days later she called.  After getting a couple hundred pages into the book, she decided to do some investigating of her own.  She couldn’t find deeds transferring her dad’s properties into the trust.  The book clearly said to look for the deeds.  No deeds!  A check at the county showed all the properties were still in dad’s name, not the trust’s name.  We hurried and got deeds made.  Dad signed the deeds in an intensive care unit. Read more…

Lee R. Phillips

By Lee R. Phillips

We receive lots of queries from people who are struggling with the important issues of asset protection and estate planning. Periodically, we answer some of those questions for everyone to learn from, or at least help you see options that you need to discuss with your own trusted advisors.

Best Way to Pass Your Home

Q.  My girlfriend’s mother is in her early 60’s and has placed her house and another piece of property in her three daughters’ names. Her fear is that she may become ill and have to go in a nursing home and have to sell these. Their current value is approximately $600K. She wants the girls to inherit the properties. I am wondering if a Revocable Trust would accomplish this as well and protect the mother if one of the daughters were to get in trouble financially prior to her death so that the mother could always remain in the home. This situation is in Virginia. Chris Read more…

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A note from Lee R. Phillips

You may be starting to see warnings about your estate planning in 2010.  The estate tax has been repealed.  All Right!!!  It is a great year to die.  NOT SO FAST.  Don’t kill yourself yet.  All is not what it seems to be.

First a little reassurance that what you have done using the LegaLees system is ok.  The warning says that under a lot of estate plans the surviving spouse (spouse that lives after the first one of the couple dies) can be left out in the cold.  That won’t happen with the living trusts and wills in the Accumulation and Preservation of Wealth set.  The warning is for wills and trusts that try to control estate taxes by passing all or part of the estate directly to the children, not the surviving spouse.

My goal is and always has been to protect the surviving spouse.  The trusts are set up so that a shelter trust is created which removes the maximum amount that the deceased spouse could pass to the children without an estate tax (the “exemption equivalent” as the amount is called in the legal industry).  That amount changes.  It has been going up for the last decade, from $1 million to $3.5 million last year.  So if a couple had $4 million in assets and the husband died in 2009, a trust (Trust B) would have been created to “shelter” $3.5 million from estate taxes when the wife died.  This whole thing is explained in detail in my book, Guaranteed Millionaire.  It is a great read (not a boring financial book). Read more…

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By Lee R. Phillips

Brittany Murphy’s death has certainly come as a shock to the world.  In a way, it is even more shocking to learn that the death was “due to natural causes,” according to the Los Angeles coroner.  Her husband, British screenwriter Simon Monjack, is in shock and is quoted as stating, “I am feeling beyond devastated.”  The shock and grief associated with the death of a loved one can never be prepared for or softened.

The death of one as young as Brittany Murphy reminds us all of our fragile mortality and punctuates the uncertainty of life.  As an individual, I see a personal tragedy on several levels.  As an attorney, I hope she had her legal ducks in a row.  Her death reminds us of our obligations that need to be attended to.  It makes a huge difference.

Michael Jackson also died this year.  His death was also a personal tragedy, but he had done his legal homework, and his estate lives on.  You might remember that after his death the media squared off to have a heyday reporting on the financial dealings of his large troubled empire.  After the first week, it was disclosed that the foundation of his empire was a living revocable trust.  The trust had been maintained. (Just having a trust document isn’t enough.  It has to be used and “maintained.”)  I imagine the media gave a great groan, when they learned the trust was in place, because they were shut out of the juicy details of Michael Jackson’s estate. Read more…

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by Lee R. Phillips

Here’s a little PS on the bank rating information previously posted.

Several years ago, I shopped for the best rates on a CD investment I had. I picked a coupe of banks that offered great rates (for the time anyway). Funny thing-both of the banks I picked were the first to go under when the banking crisis came. They were immediately bought out by bigger banks and everybody was happy. However, I got burnt to a small degree.

You need to pay attention. The banks “on the edge” are the ones that offer the higher CD rates. They need to raise capital desperately, and to get money in the door, they offer the best rates. In addition to checking out the bank’s rating (see instructions in my previous blog) you can also see if the bank has had any enforcement actions issued against it by the Feds. Usually, before the bank fails the Feds will try and change its risky behaviors by issuing enforcement actions against it. Go to www.FDIC.gov to find enforcement actions against your bank. Read more…

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By Lee R. Phillips

I have students asking about establishing business credit. It’s a myth. As a small business, real estate investor, or general entrepreneur you don’t have a prayer of establishing “business credit.” You will always sign personally for any “credit” your business gets.

The major competitor I had in do-it-yourself asset protection packages went bankrupt a couple years ago. (Beware!  His products are still out there being sold by a half dozen groups. The products are out of date and there is no support – in spite of what you are told.) His company was a ton bigger than mine. It was doing tons of seminars, and the back end sales were huge (ruthless). He had signed personally for all of the company credit cards. That’s the only way you will ever get a business credit card. When his company went bankrupt, he was on the hook for over $10 million. NOT HAPPY! (Not a good asset protection technique either.)

You actually shouldn’t have a business credit card. They are dangerous. Just use a personal card for everything and then pay it each month the way the IRS wants you to.

Your personal credit card is governed by the Credit Cardholders Bill of Rights, but those laws don’t apply to business credit cards. BIG RED FLAG! Read more…

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By Lee R. Phillips

One of my million dollar questions today is where do I put my little bit of extra cash.  The market scares my pants off.  I haven’t invested in the market for years.  The good news is, I didn’t lose much in the crash the past couple of years.  My record is well established; when I buy a stock, the stock doesn’t go down — the company goes under.  Real estate is a good idea, and I have done well, but I think it is time to have some cash in reserve, so I don’t want to dump every dime I have into more real estate.  I’m becoming paranoid enough that I don’t love banks anymore. (Not that I ever had a love affair with banks.) Keeping your “dime” in the bank can be risky today, and I’m not sure we’ve seen the bottom of the banking crisis.  You need to evaluate your bank, but how?

Banks are the place you keep “secure money,” but with the interest rates they are paying, the mattress looks tempting.  Inflation scares me to death.  M2 (basically the amount of US money in print) has doubled and tripled in the past year.  We’ve gone from about a trillion dollars in circulation to almost 3 trillion in the past year.  I am sure there is a shortage of green ink in the world, because the US government is using it by the ship load to print more money.  The money has been printed, but it isn’t “floating around” yet, because people are now actually saving money.  The U.S. savings rate has gone from the negative to the way positive.  Everybody is hanging onto any extra cash they have.  Inflation won’t hit until people start to circulate their cash.  It’s a concept known as the “velocity of money.”  There is now no way major inflation can be avoided. Click “Read More” Link for Bank Rating Instructions—–> Read more…

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Lee R. Phillips

Sorry you missed my September Money Making and Economic Survival Boot Camp. It wasn’t your normal boot camp. There were only 10 couples there with me and the other experts. (I like small groups so I can work closely with the people one-on-one.)

The atmosphere in the room was electric, because for the first time ever, I showed ALL of the new tax and asset protection ideas I have been working on. Attendees were thrilled to have one-on-one time to put their asset protection and money making legal structures in place. Read more…

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Here are some more great questions from some of my students.

Q. I have a home with equity of $400,000. Should this be in a trust?

A. No matter the value of your home, holding it in a trust will let you avoid probate and if you have the correct trust, let you avoid estate taxes. Guaranteed Millionaire will explain this in detail.

Q. I am interested in protecting my dad’s assets from a woman he is not 100% sure of. I would appreciate any information you can give me on transferring the assets into my name (only child) and giving him a life estate.

A. You asked if I had any info on transferring your dad’s assets into your name and giving him a life estate. Yes, you can have your dad transfer the property into your name with a life estate, but you will probably get better tax treatment if you inherit the property, because you will get a step-up in the basis of his property at his death. You may be able to accomplish the same thing by having him form a trust. That way he still “owns” his property, but he can tell his girlfriend it is in trust for you.

Q. I owe $100,000 in credit card debt. How do I protect myself and my wife from having our bank accounts attached or having a lien put on our real estate holdings?

A. You asked how to protect yourself from the $100,000 you owe the bank in credit card debt. Unfortunately the time to protect yourself is before you get in trouble. Property that is transferred in anticipation of bankruptcy or litigation will be brought back by the court using fraudulent conveyance statutes. You remember how the court brought back the property Bernie Madoff transferred? If you have three years before everything caves in, then you will want to get Accumulation and Preservation of Wealth and structure your assets accordingly.

Q. How do I protect an estate from being scammed by probate lawyers?

A. Unfortunately, I know where you are coming from, because I have seen this happen in my own family. In Guaranteed Millionaire, I write about my wife’s uncle who flew his plane into the ground and how the lawyers litigated the estate until the money ran out leaving the children penniless. The best way to avoid that type of lawyer is to avoid probate. Having a trust is not enough. A trust will only avoid probate if it is properly funded and used. Guaranteed Millionaire discusses how to fund your trust.

Q. I want to put all my assets (home, vehicles, etc.) into one entity name where that entity is owned/controlled by myself and my children and thus cannot be divided by death, divorce or otherwise. Thus all assets belong to the entity. How do we do that?

A. Unfortunately, I don’t know why you want to move all your assets, so it is hard to advise you what entity to use. There really isn’t anything that can do what I think you want to do. You will own the entity, whichever one you use, and as one of your assets, it will be subject to all the issues any other property you own is exposed to. You will want to use a trust to avoid probate and probably an LLC to hold assets. I discuss and describe the different entities and how to use them in Accumulation and Preservation of Wealth. Read more…

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Did you know that the third week in October is National Estate Planning Awareness Week? It is a good idea because:

• 70% of Americans do not have a basic will – those that have a will fail to keep it updated.
• 79% do not have a living trust
• 69% do not have a living will or advance healthcare directive

Have you completed your estate plan? Is up to date? Why not celebrate National Estate Planning Awareness Week and get it done.

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