Archive for the ‘Thursday Reports’ Category

The Thursday Report – 10.29.15 – The Best Edition Ever

Posted on: October 29th, 2015

Lawsuits Involving Physician Non-Compete Clauses Must be Decided on a Case-by-Case Basis

The IRA Aggregation Rule and Pro-Rata Taxation of After-Tax IRA Dollars by Michael Kitces

A Life Insurance Interview with Barry Flagg and Alan Gassman, Part I

The 5 Biggest Obstacles to Build a Professional Practice by David Finkel

Richard Connolly’s World – Family Dynamics and Estate Planning

Thoughtful Corner – Trips and Tricks for a Safe Halloween

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Lawsuits Involving Physician Non-Compete Clauses
Must be Decided on a Case-by-Case Basis

by Alan Gassman, Alyssa Eberle, and Travis Arango

The recent Florida Second District court case of AmSurg New Port Richey FL, Inc. v. Vangara involved a contractual obligation by the physician to not compete with the ambulatory surgery center (ASC) of which he was an investor. While physician non-compete provisions are common in Florida, the area of law surrounding them is not uniform. Indeed, the Court in this instance applied Tennessee law, as per the contract between the parties involved. The fact-specific inquiry of whether or not the non-compete is enforceable does not establish precedent for many jurisdictions, and therefore, the lawsuits must be decided on a case-by-case basis.

In the Vangara case, the company brought action against the physician for breach of a non-compete provision after the company learned that the physician was operating a competing ambulatory surgery business. The Court applied Tennessee law and held that the non-compete provision was enforceable because it only prohibited the physician from engaging in a competing business venture, rather than preventing him from engaging in the practice of medicine.[1]

Vangara involved the application of a non-compete clause contained in the parties’ joint venture contract which was governed by the laws of Tennessee. In 2007, Dr. Vangara and his business associates entered into a joint venture with AmSurg. AmSurg paid Dr. Vangara and his associates over $2.4 million in exchange for part ownership in this joint venture. An agreement was signed, which included a provision entitled “Ownership and Investment Restrictions,” which provides in pertinent part:

8.2 Ownership and Investment Restrictions. No Owner nor any Affiliate of any Owner shall have any…ownership interest in, or manage, lease, develop or otherwise have any financial interest in any business or entity competing or planning to compete with the LLC (including but not limited to, any ambulatory surgery center or any physician office in which surgical procedures are performed and for which facility fees or tray fees are charged)…

The foregoing shall not prohibit any Owner, nor any Affiliate of an Owner, from…practicing medicine or performing surgical procedures at any facility…The parties acknowledge and agree that this Section 8.2 does not require physician owners to perform surgical procedures at the Center or to refer patients to the Center, and imposes no restrictions on where such procedures are performed or where referrals are made.

Each Owner acknowledges and agrees that the enforcement of the provisions of this Section 8.2 against him or her would not prevent such person from engaging in his or her profession, the practice of medicine.[2]

In 2010, AmSurg discovered that Dr. Vangara was operating a competing ambulatory surgery center and sent numerous cease and desist letters. When Dr. Vangara continued, AmSurg filed suit against him for breach of contract, among other claims.

Since the contract containing the non-compete clause provided that it is to be governed by the laws of Tennessee, the Florida District Court of Appeals applied Tennessee law to their analysis. The Florida court relied on the Tennessee Supreme Court case of Murfreesboro Medical Clinic, P.A. v. Udom to determine if the non-compete provision was invalid and unenforceable.[3]

In Murfreesboro, a medical clinic entered into an employment contract with a physician, which contained a non-compete clause. The clause provided that: “upon any termination of this Agreement…, the Employee agrees not to engage in the practice of medicine within a twenty-five (25) mile radius…for a period of eighteen (18) months following” termination of his employment.[4]

Later, the medical clinic elected not to renew the physician’s contract and enforced the non-compete clause, even prohibiting the physician from working at a medical center that did not compete for patients with the clinic.[5]

The Supreme Court of Tennessee noted that such non-compete clauses are to be strictly construed in favor of the employee and set forth four factors that are to be utilized in determining whether the non-compete is reasonable:

(1) the consideration supporting the covenant; (2) the threatened danger to the employer in the absence of the covenant; (3) the economic hardship imposed on the employee by the covenant; and (4) whether the covenant is inimical to the public interest.[6]

After surveying those factors and other important public policy considerations, the Tennessee Supreme Court held that “except for restrictions specifically provided for by statute, covenants not to compete are unenforceable against physicians.”[7]

However, the Florida District Court rejected the analysis in Murfreesboro, holding that it cannot be read “so broadly as to invalidate the non-compete clause entered into by the parties here.”[8] The main issue, the Court noted, was the relationship of a physician to his or her patients. Pursuant to Murfreesboro, a non-compete which restricts a physician from practicing medicine is unenforceable except in limited circumstances. The non-compete clause in this instance did not prevent Dr. Vangara from engaging in the practice of medicine. In fact, the Court noted, the provision specifically states that it does “not prevent such person from engaging in his or her profession, the practice of medicine.”[9] It only prohibits him from engagement in a business venture that competes directly against AmSurg. Therefore, the Florida court did not apply the holding in Murfreesboro.

Even though the Florida Court in AmSurg applied Tennessee law and precedent, it is instructive on how courts will analyze non-compete provisions in Florida. Florida statutes specifically permit non-compete provisions, and therefore, if a case factually analogous to AmSurg appeared in Florida courts, the enforcement of this type of non-compete would be even stronger.

Some commentators have been mislead into assuming liquidated damages provisions should be included in employment agreements along with non-competes, but they are entirely different and should not be confused. In Humana Medical Plan v. Jacobson, the court held that a liquidated damages provision was invalid against public policy.[10] The provision stated:

In the event that any Member disenrolls from [Humana’s] health plan to be treated by you…under some other prepaid financial arrangement other than [Humana’s] health plan, then you shall pay to [Humana] the amount of $700 for each such Member who is treated by you…You hereby agree to waive any claim that this amount is a penalty.[11]

The court stated that this clause was added as a deterrent to prevent the doctor from changing HMO affiliations and thus is void under public policy. The court went on to say “this clause needlessly hindered the continuation of his existing and successful doctor/patient relationships by driving a financial wedge between the doctor and his patients.”

The courts have therefore made it very clear that if there is a provision in an employment agreement that would prevent a physician from practicing medicine, the provision is not valid. It is thus important that non-compete provisions comply with public policy as well as with applicable state law.

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[1] 159 So. 3d 260 (Fla. 2nd DCA 2015).
[2] Id.
[3] 166 S.W. 3d 674 (Tenn. 2005).
[4] Id at 676.
[5] Id at 677.
[6] Id at 678.
[7] Id at 684.
[8] 159 So. 3d 260, 263 (Fla. 2nd DCA 2015).
[9] Id.
[10] Humana Medical Plan, Inc. v. Jacobson, 614 So. 2d 520 (1992).
[11] Id.

The IRA Aggregation Rule and Pro-Rata Taxation
of After-Tax IRA Dollars
by Michael E. Kitces

Kitces

Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL, is a nationally recognized speaker and sought-after commentator on financial planning issues. He also writes extensively on a broad range of advanced financial planning topics. He is the co-author of books such as The Advisor’s Guide to Annuities and Tools & Techniques of Retirement Income Planning. He is currently a Director of Planning Research and a Partner at Pinnacle Advisory Group, Inc.

The following article was originally published on the blog Nerd’s Eye View: Commentary on Financial Planning News and Developments by Michael E. Kitces on October 14, 2015. Excerpts from the article are re-produced below.

To see the article in its entirety, please click here.

The IRA aggregation rule was created to limit the ability of taxpayers to take advantage of ‘abusive’ IRA tax strategies by requiring that all IRAs are aggregated together to determine the tax consequences of a distribution from any of them.

The primary impact of the IRA aggregation rule is to determine how much of an IRA’s non-deductible contributions are treated as an after-tax return of principal when a taxable distribution occurs, whether as a withdrawal or a Roth conversion, and by forcing all accounts to be aggregated together, the rule severely limits many individuals from taking advantage of the so-called “backdoor Roth contribution” strategy.

However, the IRA aggregation rule reaches much further than just the taxability of after-tax contributions in existing IRAs. Thanks to the recent Bobrow case, it now also applies to the limitation of no more than one 60-day rollover in any 12-month period. Though on the plus side, the IRA aggregation rules apply to required minimum distribution (RMD) obligations as well, allowing a distribution from any IRA to satisfy the RMD rules for all IRA accounts!

Fortunately, though, the IRA aggregation rules do not apply when calculating substantially equal periodic payments (SEPP) under Section 72(t), reducing the danger that a withdrawal from one IRA could constitute a “modification” of the ongoing 72(t) distributions from another that would trigger a retroactive penalty. However, even in the case of SEPPs, the IRA aggregation rules will still apply in determining how much of a 72(t) payment constitutes a tax-free return on non-deductible contributions!

What is the IRA Aggregation Rule?

The IRA Aggregation Rule, under IRC Section 408(d)(2), stipulates that when determining the tax consequences of an IRA distribution – particularly the “pro-rata” rule under IRC Section 72(e)(8) and also the early withdrawal penalty under IRC Section 72(t)(1) – the value of all IRA accounts will be aggregated together for the purpose of any tax calculations.

Notably, this IRA aggregation rule under IRC Section 408(d)(2) is explicitly only for IRA accounts; employer retirement plans, like a 401(k), 403(b), or profit-sharing plan, are not included in applying these IRA aggregation rules. In addition, under Treasury Regulation 1.408-8, Q&A-9, an inherited IRA is not aggregated together with an individual’s own IRAs, nor is a Roth IRA. Since the IRA rules are applied individually (even as a married couple, the tax consequences are determined individually before being reported on a joint tax return), an individual’s IRA is never aggregated with a spouse’s own IRA accounts.

Given that the treatment of a traditional IRA is that any distributions are pre-tax funds and 100% fully taxable anyway, the IRA aggregation rule is often a moot point. As when a distribution is already 100% taxable, there’s no pro-rata formula to apply, and if applicable at all, the 10% early withdrawal penalty would apply to the entire account anyway.

However, as soon as an IRA has any non-deductible (i.e. after-tax) contributions included, the IRA aggregation rule is immediately relevant.

The IRA Aggregation Rule and Pro-Rata Distributions of Non-Deductible (After-Tax) IRA Contributions

When an IRA has received any non-deductible contributions, the distribution of those dollars is received tax-free as a return of (after-tax) contributions. The amount of any non-deductible contributions that have been made over time is tracked on IRS Form 8606.

The caveat, as noted earlier, is that when a distribution occurs from an IRA that includes non-deductible contributions, the calculation to determine how much of the distribution will be a return of principal must be done on a pro-rata basis under IRC Section 72(e)(8). (Unlike a Roth IRA, where under IRC Section 408A(d)(4)(B) distributions are presumed to come explicitly from after-tax contributions first.)

Example 1a. Charlie has a $72,000 IRA that includes $5,000 of non-deductible contributions made years ago and tracked as such on Form 8606. If Charlie decides to take a $5,000 withdrawal, though, he can’t just take out the $5,000 of after-tax contributions on a tax-free basis (the way he could receive back his after-tax contributions from a Roth IRA); instead, the pro-rata rule applies. Since Charlie’s account is $5,000/$72,000 = 6.94% after-tax, his $5,000 withdrawal is deemed to be only $347 of after-tax funds (6.9% of the $5,000) and the other $4,653 is taxable. In turn, the remaining $4,653 of after-tax funds remains behind as part of the $67,000 that is still in his IRA account.

Example 1b. Continuing the prior example, assume instead that Charlie had an existing $67,000 IRA that was all pre-tax funds and had more recently made a $5,000 non-deductible contribution to a brand new IRA #2. But Charlie has decided that he needs to use some of the money, so he now wants to distribute the $5,000 non-deductible IRA, hoping to recover the funds tax-free.

Unfortunately, though, even if Charlie withdraws just $5,000 from just IRA #2 that had just after-tax funds in it, the tax consequences are still the same as the preceding example – Charlie’s total IRA accounts are $72,000, his total after-tax funds are $5,000, which means the $5,000 withdrawal will be 6.94% return of after-tax funds with the remainder taxable. Thus, Charlie will end up reporting $4,653 of his withdrawal as taxable, even though he solely converted IRA #2 that originally had only after-tax contributions!

Kitces Chart

Ultimately, example 1b and the associated chart above show how the IRA aggregation rule plays out when multiple IRAs are involved. Even if a distribution comes from an account that was otherwise 100% funded with non-deductible after-tax funds, it still ends up being partially taxable if/when any other IRAs are aggregated into the calculation! And notably, the end result of this strategy in the example above is that the remaining $4,653 of after-tax funds not treated as being part of the withdrawal from IRA #2 have effectively be transmuted into after-tax contributions associated with IRA #1 (even though the contributions were never made to that account in the first place!)

To read the remaining sections of this article, including The IRA Aggregation Rule and Roth Conversion Strategies; Bobrow v. Commissioner, The Once-Per-Year IRA Rollover Rule, and the IRA Aggregation Rule; The IRA Aggregation Rule and Satisfying Required Minimum Distribution (RMD) Obligations; and When the IRA Aggregation Rule Does Not Apply – 72(t) Substantially Equal Periodic Payments (SEPP), please click here to view the article on Nerd’s Eye View.

A Life Insurance Interview with Barry Flagg and Alan Gassman, Part I

Barry Flagg and Alan Gassman recently appeared on a podcast interview on the subject of their article, “Ten Questions to Ask About a Client’s Life Insurance and Planning: What Every Estate Planning or Tax Planning Advisor Should Know.” The interview was conducted by experienced life insurance executive Randy Zipse, and the transcript is as follows:

Randy Zipse: Really, Alan, what was your motivation for the “10 Questions article?”

Alan Gassman: As a tax and estate planning lawyer, whenever I sit down with a client or I sit down with a trustee and I talk about a life insurance policy and I ask them what it is and what they think it is, what I hear them say is never what it actually is. There are almost always a lot of misconceptions, a lot of misunderstandings, and a lot of assumptions that, quite frankly, even the most conscientious life insurance agent or advisor is going to have a hard time laying out straight and making sure that people really understand what the product is, what it does, what it can be expected to do, and what it doesn’t do.

I see such a challenge for your industry in this area, but I also see opportunities in which good agents and conscientious practitioners can make sure that these things are understood and structure policies to be as good as they can be.

I thought it was a really great opportunity to write this article with Barry and learn from Barry, while also brainstorming with Barry as to what the standards of this industry should be and how you would bring a tax lawyer or a trustee up to speed on what we need to know so that our clients can be well-served in this area.

Randy Zipse: Can you talk a little bit about Question One in your article?

Alan Gassman: When I meet with life insurance agents, oftentimes, I’m very impressed with their acumen. I’m very impressed with their training. They commonly have Master’s degrees in finance. A lot of them have actuarial backgrounds like Barry, but then others, quite candidly, have a high school diploma, and then they took the 40-hour state course.

So my question back to you, Randy, and also Barry, is how can a tax and estate planning professional know that the person we are dealing with is going to actually understand his or her own product and the needs of our clients? Because sometimes they seem to really be confused over what the terms of the products are, what the guarantees mean, what illustrated versus guaranteed means, and that type of thing. As a lawyer, I have a fiduciary duty to every single client, and a trustee has a fiduciary duty to every single client, which is much, much higher and much different than the suitability standard that often applies to life insurance agents. Whether the clients possibly need this product, and is this product not the worst one available – that’s a lot different than a fiduciary standard. Barry and I know from experience that lawyers are going to refer clients to agents and agencies who act like fiduciaries.

Randy Zipse: Can you talk a little bit about how an individual life insurance policy ought to be owned and some of the things you look at in the article?

Alan Gassman: That is a very good question. When I started practicing law in the 1980s, almost every life insurance policy for an affluent family went into an irrevocable life insurance trust to avoid federal estate tax. Typically, the husband would buy a life insurance policy. He would make the wife the trustee of a trust that was irrevocable. The wife could get what she needed for health, education, and maintenance, and then, when the husband died, that would not be part of his estate. Back then, we had a $600,000.00 estate tax exemption.

Now, we have a $5,430,000.00 estate tax exemption, and if the client is not going to use their entire $5,430,000.00 exemption on assets when they die, the inclination is to allow the life insurance to fund a credit shelter trust or even to rely upon the portability allowance, which I’m sure most of our listeners understand. So life insurance trusts are used much less often, but I would really think twice about not using an irrevocable life insurance trust.

One reason is that when you die and leave the life insurance to a credit shelter trust or your children, part of your estate tax exemption gets used up, so there’s less portability allowance going to the surviving spouse. That needs to really be considered because you don’t want to have the surviving spouse come up to you and say, “Hey, why did you cost me $1,000,000 of my portability allowance when you could have done an irrevocable life insurance trust?” Secondly, these irrevocable life insurance trusts are creditor protected.

Now, in many states like Florida, where I practice, and New York and others, the cash value of a life policy will be creditor protected, but not in all states. For example, in Colorado, it’s limited to $100,000, so that would be another reason to use an irrevocable life insurance trust.

What you typically don’t want to do is have the life insurance policy owned by the person who will be the surviving spouse, primarily because, if I die with a life insurance policy, and I leave it to a trust on my death for my wife, her creditors can’t reach it, and it’s not going to be subject to federal estate tax when she dies. On the other hand, if she owns the policy, her creditors can reach the death benefit in most states, and it can’t go into a life insurance trust. It has to go into her estate when I die, so there are a lot of considerations there.

Another consideration is that people are not using split-dollar enough because they just don’t understand it. It got too darn complicated. In a nut shell, you can make a low interest loan at the applicable federal rate that applies to the life expectancy of the client and advance it to the trust. You don’t have to be repaid until the insured dies, and that’s a great economic deal that most advisors, quite frankly, just don’t understand because it got so complicated. So Barry how would you help me on this?

Barry Flagg: I’m not sure I can add much more to the above answer than compliments. You know, we were working on this question, and I was a victim of the thinking that you were talking about earlier that too many people thought that with the IRS codifying split-dollar regulations and the exemption going up to $5,000,000 plus…so I talked to a number of tax advisors, and there was a lot less conversation around it, and then we talked about what you just described, and I thought, “Wow, what a great idea to go talk to tax advisors about something that, for whatever reason, just kind of fell off their radar screen.” I thought that was great thinking.

Alan Gassman: Thanks, Barry. These concepts would certainly be a very good communications tool for an insurance agent. Many of my colleagues in the tax law area are not looking at these issues. A nudge in the right direction should be very much appreciated.

Stay tuned for more with Alan Gassman and Barry Flagg in subsequent editions of The Thursday Report.

The 5 Biggest Obstacles to Build a Professional Practice
by David Finkel

Finkel

David Finkel is the Wall Street Journal bestselling author of SCALE: Seven Proven Principles to Grow Your Business and Get Your Life Back, which can be viewed by clicking here. As the CEO of Maui Mastermind, he has worked with 100,000+ business coaching clients and community members to buy, build, and sell over $5 billion worth of businesses.

Whether you are building a medical practice, accounting, or law firm, engineering or consulting practice, or financial services firm, here are concrete insights to sidestep the five biggest obstacles that trip up most business owners who run professional service firms.

Obstacle #1: Growing beyond the personal production of the owner (partners) in the professional practice.

8 of 10 professional practices never grow beyond the personal production of the owner of the practice. This means that with the exception of a few support staff, these businesses are limited to the personal sales and production capacity of just the prime owners of the business.

At my business coaching company Maui Mastermind, we call this the “Self-Employment Trap.” This is where you, the owner of the business, are so consumed by your day-to-day production for the business that you don’t have the time or space to step back and focus on growing your professional practice as a business. In essence, you have built a self-employed job, not a business.

Take the case of Patricia, a successful doctor. For years, Patricia was the main point of treatment for all her patients. She had staff who leveraged her, but they did just that – circled her and helped her produce more.

To scale, Patricia needed to bring in other team members who could both treat and sell (which, in her case, was doing the initial diagnostic evaluation.) During our two years working together, she did this growing significantly. Best of all, she lowered the practice’s reliance on her and gained over 300 hours of freed-up time per year in the process.

Yet this isn’t how most professional practices do things. Typically, the owner is too scared or convinced he or she can’t bring in other talent to replicate the core service offering that the owner stays stuck as the core producer for the business.

Click here to continue reading this article on inc.com. You can also follow David on Twitter: @DavidFinkel.

Richard Connolly’s World
Family Dynamics and Estate Planning

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Family Feud! 6 Stories of Problematic Estate Planning” by Kristin Appenbrink. This article appeared on Forbes.com on February 19, 2015.

Richard’s description is as follows:

We won’t sugarcoat it: Estate planning can be tricky business.

Without a document detailing how you want your estate divided and distributed, your assets could end up in the hands of a relative you haven’t spoken to in years, or your teenager could have access to a fat bank account before he or she has even the first clue about how to manage money wisely.

To illustrate just how important it is to stay on top of your estate planning game, this article asks six legal pros from across the country to recount their clients’ most egregious estate planning mistakes and share advice for how you can sidestep the same land mines.

The six mistakes discussed in this article are as follows:

  1. Naming an Executor Who Doesn’t Play Fair
  2. Failing to Maintain a Valid Will
  3. Making Heirs Duke it Out Over Coveted Items
  4. Neglecting to Update Beneficiaries Following Big Life Changes
  5. Forgetting About Valuable Personal Effects
  6. Gifting Money to Minors with No Rules

Please click here to read this article in its entirety.

The second article of interest this week is “Sibling Rivalry Complicates Estate Planning” by Veronica Dagher. This article was featured in The Wall Street Journal on September 9, 2015.

Richard’s description is as follows:

When a parent dies, siblings may battle for years over their inheritance.

Inheritances can bring out the worst in quarrelsome family members, especially when the inheritance distribution is seen as unfair. Fortunately, there are ways for estate planners to prepare for that.

This article details how many sibling battles can be avoided, using the estate of guitarist Jimi Hendrix as an example.

Please click here to read this article in its entirety.

Thoughtful Corner
Tips and Tricks for a Safe Halloween

Going out trick-or-treating this weekend? The CDC (Centers for Disease Control and Prevention) published the following to help keep trick-or-treaters and their families safe:

S – Swords, knives, and other costume accessories should be short, soft, and flexible.
A – Avoid trick-or-treating alone. Kids should walk in groups or with a trusted adult.
F – Fasten reflective tape to costumes and bags to help drivers see you.
E – Examine all treats for choking hazards and tampering before eating them.

H – Hold a flashlight while trick-or-treating to help you see and to help others see you.
A – Always test make-up in small areas first to prevent possible skin and eye irritation.
L – Look both ways before crossing streets. Use crosswalks whenever possible.
L – Lower your risk for serious eye injury by avoiding decorative costume contact lenses.
O – Only walk on sidewalks when possible. If not, stay on the far edge of the road. Face traffic.
W – Wear well-fitting masks, costumes, and shoes to avoid blocked vision, trips, and falls.
E – Eat only factory-wrapped treats. Avoid homemade treats made by strangers.
E – Enter homes only if with a trusted adult. Only visit well-lit houses.
N – Never walk near lit candles or luminaries. Wear flame-resistant costumes.

If you are expecting trick-or-treaters and their families at your house, be sure walking areas, stairs, and pathways to your front door are well-lit and free of obstacles that could cause someone to fall. Jack o’ lanterns, luminaries, and other decorations should be kept away from doorsteps, walkways, landings, and curtains. Never leave anything with an open flame unattended, and keep such items out of reach of pets and small children. It is best to keep pets away from trick-or-treaters and the frequently-opening front door, but make sure your pet has the proper identification before Halloween, just in case an escape does occur.

If you are planning to be out driving on Halloween night, take the following safety tips into consideration:

  • Slow down and be alert in residential neighborhoods. Children may move in unpredictable ways.
  • Enter and exit driveways and alleys slowly and carefully.
  • Don’t immediately pass stopped drivers. They may be dropping off children.
  • Anticipate heavy pedestrian traffic in residential areas. Take extra time to look for kids at intersections and on curbs.
  • Turn your headlights on earlier in the day to spot children from greater distances. This will also help the children see you.
  • Trick-or-treating often occurs between 5:30 PM and 9:30 PM. Be especially alert during those hours.

You can download a Halloween Safety Fact Sheet from the US Consumer Product Safety Commission by clicking here.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Signoween

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Alitigator Final

Upcoming Seminars and Webinars

Calendar of Events

LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free webinar on the topic of ASSET PROTECTION CHECKLIST ITEMS YOU HAVE NOT THOUGHT ABOUT.

There will be two opportunities to attend this presentation.

Date: Tuesday, November 17, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of CREATIVE BUSINESS SECURITY.

Company espionage is big business, and it’s not just limited to biggies. When a new business is in its early stages or before it has its operational system laid out in concrete, establishing the right security concepts can carry through as it grows. It minimizes unwanted exposure and unneeded expense of later changing how it operates. Preventing vulnerability to hackers, for example, would be one consideration. Making sure cell and office phones can’t be bugged and keeping competitors and governments from spying on the operation should also be an upfront consideration.

A business doesn’t have to be the NSA to make all of these things a reality. Conventional methods of information security, no matter how effective they profess to be, just end up with an organization being the eventual loser. Every day, you hear of a new intrusion. This webinar will look at the problem from a non-conventional perspective to obtain a more secure system.

Questions to be answered during this presentation include:

  • Why don’t conventional security measures work for small to medium sized businesses?
  • Who makes a company less secure?
  • What steps can be taken to make companies more secure?
  • How vulnerable are you and your company to spying from competitors and others?

There will be two opportunities to attend this presentation.

Date: Wednesday, November 18, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of THE SUGAR DADDY HUSTLE.

The classic “Sugar Daddy” situation is usually a win-win for both the male and the female involved. Both understand the situation and are willing participants. But for an older man who has undergone a traumatic life experience, is lonely, and may have somewhat diminished mental capacity, there are certain types of women who will use this to their advantage and make him their unknowing “Sugar Daddy.”

These women have researched the legal aspects of their operation and identified loop holes in the law which they can exploit. They take over the man’s life, make decisions, allow his health to deteriorate, and place him in financial tenuous situations for their own benefit. Within the USA, it amounts to a con of over $3 billion annually.

This webinar will discuss what proactive preventive steps to take when an emotional episode has occurred in an elderly person’s life. If a con has already begun, we’ll look at the signs delineating financial and non-financial abuse. Once in progress, there are steps which should be taken to minimize the impact.

Questions to be answered during this presentation include:

  • For elderly men, what is the difference between the conventional Sugar Daddy and the Sugar Daddy Hustle?
  • Why are older men more susceptible to being scammed?
  • Are there preventive steps which should be taken when a man has recently undergone a traumatic life experience?
  • How can you recognize a con?
  • What should be done after a scam has begun?

There will be two opportunities to attend this presentation.

Date: Wednesday, December 9, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of WHY OUR GOVERNMENT REJECTS PUBLIC IDEAS AND KEEPS PEOPLE IN THE DARK ABOUT SERIOUS ISSUES.

In the area of rejecting ideas, consider this country has won more Nobel prizes than any other country, yet getting new ideas into the government from the general public is almost impossible. Yes, pulling the gems from the pile and evaluating them can be a problem. Unfortunately, it really doesn’t matter whether the potential ideas save lives, money, or time. The government generally ignores them.

Questions to be answered during this presentation include:

  • Why are ideas often ignored by politicians and government agencies?
  • What drives the motivations of politicians and government agencies?
  • Why does the government try to keep the public in the dark about certain subjects?
  • Does the government classify things that shouldn’t be marked as classified? Is that against the law?

There will be two opportunities to attend this presentation.

Date: Wednesday, January 6, 2016

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

To download the brochure, or for a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM and 10:50 AM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning (January 30th: 10:10 AM – 11:10 AM)
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You (January 30th: 11:10 AM – 12:10 PM)
  • 50 Ways to Leave Your Overhead (January 31st: 8:00 AM – 9:00 AM)
  • Essential Creditor Protection and Retirement Planning Considerations (January 31st: 9:00 AM – 10:00 AM)

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30, from 10:10 AM to 12:10 PM and Sunday, January 31 from 8:00 AM to 10:00 AM

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ST. PETERSBURG PRESENTATION:

ST. PETERSBURG COLLEGE FOUNDATION PRESENTS THE WOZNIAK PROJECT

Apple co-founder Steve Wozniak will be the first featured speaker in the new St. Petersburg College Foundation Distinguished Speakers series.

Wozniak is a Silicon Valley icon and philanthropist who helped shape the computing industry with his design of Apple’s first line of products. In 1976, he and Steve Jobs founded Apple Computer, Inc. In 1985, for his achievements with Apple, Wozniak was awarded the National Medal of Technology, the highest honor bestowed on America’s leading technological innovators. He was inducted into the Inventors Hall of Fame in 2000.

Join Steve Wozniak and the Foundation for a lively, interactive discussion. Charitable proceeds will benefit the St. Petersburg College Foundation. Tickets range from $85 to $95.

Thanks to the Bank of Tampa, Merrill Lynch Wealth Management, Raymond James, and the CPA firm of Gregory Sharer and Stuart for being sponsors of this event.

Date: Monday, November 2, 2015 | 7:00 PM

Location: The Palladium Theater | 253 Fifth Avenue North, St. Petersburg, FL 33701

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 10.22.15 – Thriving on Thursdays

Posted on: October 22nd, 2015

No Need to Pay Rent to Take Interest and Depreciation Deductions When the Landlord is a Related Party Confirmed by Recent Appellate Court Decision

Avoiding the Carnage Caused by Pay-on-Death Accounts, Part II

An Esteemed Father and Son Team Share Their Love for the Law and Helping Others, Part II

Richard Connolly’s World – Debt and Senior Citizens

Thoughtful Corner – How to Change Your Mailing Address

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“We believe in truly listening to the customer, taking the customer’s view as more important than our own. We believe in truly listening to our people, taking their views as more important than our own. But the whole edifice tumbles if one doesn’t deal off a base of integrity.”

– Tom Peters

Tom Peters

Tom Peters is the author of several books on business management practices. He is best known for the books Thriving on Chaos and In Search of Excellence, which he co-authored with Robert H. Waterman, Jr. In Search of Excellence was released in 1982 and quickly became a national best-seller. It can be viewed by clicking here. Today, Tom Peters continues to write and speak about personal and business empowerment and problem-solving methodologies.

No Need to Pay Rent to Take Interest and Depreciation
Deductions When the Landlord is a Related Party Confirmed by
Recent Appellate Court Decision

by Alan S. Gassman and Seaver Brown

Tax Court Confirms that Rent Does Not Need to be Paid to Certain Related Entities to Permit Depreciation and Interest Deductions Under the Passive Loss Rules

We have written before in the Thursday Report and in less significant periodicals that Treasury Regulation Section 1.469(a) and (f)(6) may permit the landlord of a professional practice, company, or business corporation to receive no rent or minimal rent and still be able to deduct its interest and depreciation expenses, notwithstanding the passive loss rules.

The reason for this is that the regulations provide, without great clarity, that an actively conducted business or professional practice that makes use of real estate owned by a related entity will cause the real estate entity to not be subject to the passive loss rules where there is a commonality of ownership. In those instances, the activity of the business or profession are deemed to have been conducted at the individual landlord level.

We now have a Fifth Circuit Court of Appeals case that reviews and upholds this regulation, where a husband and wife owned 100% of a real estate S-corporation and 100% of a medical practice C-corporation.[1] The real estate corporation leased commercial property to the medical corporation where the husband worked full-time and materially participated in its day-to-day business activities. It is important to note here that the husband and wife did not materially participate in the business activities of the real estate S-corporation, nor were they engaged in a real property trade or business.[2]

The taxpayer tried to claim that the passive loss rules did apply because they had losses from other activities that they wanted to have the passive rent income from the real estate corporation offset by. The IRS came to the rescue to all of us who do not want the passive loss rules to apply in this situation by correctly arguing this point.

The Tax Court agreed with the IRS that the passive loss rules did not apply, and the Fifth Circuit Court of Appeals agreed with the Tax Court. It is not often that we are pleased when the Tax Court and the Court of Appeals agree with the IRS, but this one certainly brought a smile to our faces.

It is also noteworthy that Florida law does not require the payment of fair market value rent between related parties. Although, the Department of Revenue has been known to claim that there is some sort of obligation to pay fair market value rent and sales tax thereon.

We thank Tax Court Judge Joseph Nega and the Fifth Circuit Court of Appeals for showing in their opinion that they actually understand and respect federal tax law.

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[1] Williams v. C.I.R., 109 T.C.M. (CCH) 1398 (T.C. 2015).
[2] See, I.R.C. § 469(c)(7)(B) and (C).

Avoiding the Carnage Caused by
Pay-on-Death Accounts, Part II
by Alan S. Gassman & Christopher J. Denicolo

Do not let pay-on-death accounts be the death of your estate plan.

Last week, we discussed distortion or obliteration of an estate plan by pay-on-death accounts and possible ways to manage this risk. To read Part One again, please click here. Part Two below will discuss the creditor protection advantages of using pay-on-death accounts.

The creditors of a decedent probably cannot reach the assets held in a pay-on-death account that would pass to a desired beneficiary on the decedent’s death. This is different from assets held under a revocable trust, where if the assets are not otherwise protected by Florida Statute (such as life insurance proceeds, IRAs and other qualified plans, or annuity contracts), then such non-exempt revocable trust assets would be available for a decedent’s creditor. Because pay-on-death accounts pass by operation of law upon the death of the account owner to the designated beneficiary, the assets immediately become the property of the beneficiary and are not available for the satisfaction of valid claims of a decedent’s creditors.

One planning tip is to provide that an account is payable on death to an irrevocable sub-trust under a revocable trust, and this type of structuring probably would cause the assets in the pay-on-death account to be removed from the reach of the decedent’s creditors.

Nevertheless, clients and their advisors need to take great care in utilizing pay-on-death accounts as part of estate plans and need to assure that such accounts are coordinated with the client’s other estate planning documents.

A durable power of attorney given to a trusted individual can help assure that the account assets would be available and transferrable to the revocable trust in the event of incapacity.

While ethics may dictate consideration of whether the client intends that their bills and debts be paid before primary beneficiaries, given that an unexpected accident not even caused by a client could cause loss of life (and also loss of assets because of a runaway jury award against the estate of a deceased client), the pay-on-death account structuring decision may be worthy of at least a small amount of conversation, especially if you are the intended beneficiary!

An Esteemed Father and Son Team Share Their Love
for the Law and Helping Others, Part II

Paynes

The following interview of attorneys L. Howard and David Payne of the Payne Law Group took place on Wednesday, September 8, 2015 at the Community Foundation Building of Sarasota County. The interview was conducted shortly after a Distinguished Speakers Presentation on Asset Protection by Alan Gassman, which was hosted by the Foundation. The interview was conducted by Jennifer Hammond.

L. Howard Payne has been practicing law for over 50 years, first in New York and now in Southwest Florida. David has been practicing for over 20 years. The Payne Law Group is an Estate Planning boutique firm. Part I of the interview can be viewed by clicking here.

Jennifer Hammond: Where do you see the profession headed? What do you think is going to be really important?

L. Howard Payne: I am concerned about, in the future, the type of legal work that we do because of all the authorizations that are being handed out for document prep – things like Legal Zoom and We the People and that sort of stuff. There seems to be a resistance on the part of the Florida Bar to prosecute for the unauthorized practice of law for reasons I don’t understand. Maybe they just don’t have the funding; I don’t know what it is, but I’m concerned that we may see a lot of inroads for people who are not licensed lawyers, at least for the type of work David and I do.

I am also very concerned about the idea that Florida may open up its ability to practice in Florida to anybody who is a qualified member of another state’s Bar [presuming they have been a member in good standing for so many years, and the attorney is qualified under whatever rules the state requires.] I practiced in New York before I came down here, and New York is one of those states, but very few people come into New York to do that because you either like New York as a place to live and work, or you don’t. Most people that don’t like it detest it! So New York didn’t have that problem, but everybody wants to come to Florida. I just see nothing but inroads in that area, and it concerns me.

I think that also, we’re going to find that what we do right now – estate planning and asset protection and things like that – yes, that will continue, but really, where the money is going to be made in the administration of estate is in litigation. This, to me, is very sad. I don’t know whether you agree with that, David.

David Payne: I think that’s true. I was just talking to Alan [Gassman] at lunch regarding the duties we have, and I think one of the things that probably has changed in the practice is that so few people are willing to take responsibility for anything, and they’re always looking for a way to dodge it if it can become the lawyer’s fault because he was somewhere in the vicinity of the plan, whatever it was, a life insurance product or an annuity product or whatever else was done. “Well, the lawyer was nearby, so therefore, the lawyer should be responsible.” That kind of takes a lot of the fun out of practicing.

I think the Legal Zoom environment increases this. I’ve only had two clients who’ve come to me with Legal Zoom documents. Both of those clients had paid more than they would have paid me, ended up with a product that wasn’t very good, and they didn’t know what they had. I don’t think of that in terms of real competition. Well, it’s not that competitive because the quality is not great; however, you know the belief system is that software will be considered and will continue to improve, and it will end up replacing our thought process. I don’t really think that’s true, but unfortunately, if the buying public thinks it’s true, then you know who’s going to have to educate them otherwise?

It might create a lot of work in litigation as people fight about those documents. I think, too, what we’ve found is that the thing that really matters the most to the client is not at all related to the document. They really are looking for someone they can trust, and they’re looking for someone who they feel comfortable with advising them and someone that they know will, when they pass away and their spouse is left or their children are left…that their family has some place to go, and they’re not going to be sold some “product.”

Clients want to know they’re not going to be cheated. They’re not going to be fleeced in some way, and someone’s going to help them through the difficulties without making mole hills into mountains. They’re going to be able to get the help they need to navigate what they need to do. So I honestly don’t think that there’s going to be any lack of work. What’s interesting, though, is there may very well be a lack of people providing the services required because if I look out here at our estate planning council, there aren’t many young people in it.

That’s one of the trends that we’ve been wondering about. There’s so much taught at the law school level. I think Jeff Pennell talked about this when he was down here recently. No one goes into estate planning out of law school because they all think that we’re going to be replaced by software, and there’s no estate tax, so where’s the work? So it’s been interesting to see that long-term trend.

J. Hammond: That is interesting because with the statistics on the Baby Boomers aging and population growing and aging in general, combined with the needs they are going to have, it is such an obvious area of growth, and for businesses that are small or family-owned and doing well, they are going to need all the types of services that we offer, so I find that really interesting. I didn’t realize that it was an area that people didn’t want to go into. I just came out of an LL.M. program in Estate Planning where some students had focused on estate planning during their J.D. program. As far as I’m concerned, it’s a no brainer!

L. H. Payne: When I first started practicing, I did so with a relatively large Wall Street law firm. Much to my excitement, when I started, they moved me around in every aspect of their practices. I was there a little over two years, so I didn’t get into every one of them, but I worked in most of them, and it gave me a real feel for what the practice of law is like. I think, unfortunately, most firms can’t do that now.

Now, we hire somebody, and we need them in a particular area, so that’s what we put them in, and if they like it, great. If they don’t like it, they may find they don’t want to practice law anymore at all, which is sad. I only worked slightly in the estate planning practice in New York City, but I really found that I enjoyed it very much. I came down here to Sarasota at the very tail end of 1961, and I didn’t do estate planning work right away. I did litigation. I found out that the rules of how you practice law in front of the judge in Florida were a lot different than they are in New York, and so you know, everybody’s scared of the judges up there.

In fact, just a little side note, one of the trial lawyers in the firm I was with said he always went to trial with at least $20,000 in cash in his pocket because he might say something or do something, be found in contempt by the judge and sent to jail on the spot, and he would have to bail himself out and continue the trial. I kid you not.

J. Hammond: Well, I think we’ve covered everything I wanted to cover, but let me ask this question. If you were the ones asking the questions, what’s the question you would have asked about the nature of the practice and where we’re going? What didn’t I ask you that I should have?

L. H. Payne: The best thing that I can suggest is that lawyers need to not only be ethical, but they need to be gracious to one another and treat one another properly and with respect. The fact that doesn’t happen grieves me greatly. Now I realize that I’m not a trial lawyer, and maybe trial lawyers have to act that way, but I don’t think so. It bothers me more than I can tell you to see the lack of respect, not so much in the areas that we work in, but in other parts of the practice of law in this community.

D. Payne: I think maybe one of the most important things that we do is perhaps an example from what Alan [talked about in his presentation.] He mentioned that he has a marital counselor that comes in to his office and enables a client to see a marital counselor without it showing up as a bill from a marital counselor. For instance, I think that we style our firm as attorneys and counselors at law, and I find that maybe 10% of the value that I bring to the table is actually legal knowledge, and 90% of it is just general wisdom, listening to the client, helping them figure out what they really need to do, helping them come to the right decision and do the right thing.

To maybe ignore all of the noise that they’ve heard from whomever, whether it’s somebody selling them something – you need to buy this product or that product or whatever else it is – but rather, I can help them navigate the path. Not that we necessarily have the perfect navigation rules or anything like that, but we do have a lot of advice to bring to the table to help people pick out what are real issues and what are just smoke and mirror issues. We’ve been through a lot of this before with a lot of clients.

I think that the client really benefits from this greatly, and frankly, I think that’s one of the most enjoyable parts about what we do, when the client actually comes back and says, “I did just what you said, and it worked really well.” I told my wife it would always shock me when the client would say, “I actually did what you said.” I was like, “Really?!?”

L. H. Payne:  That’s rare.

J. Hammond: Do you find that when you are able to be that trusted advisor, you really do have a client for life?

D. Payne: I think so, and I think that’s really what they’re looking for. They’re looking for a trusted advisor, and you can’t become trustworthy when you’re only motivated by economics, nor can you only become trustworthy when you’re only motivated by the ethical rules of the Florida Bar. You know you need to have something much deeper motivating you to be trustworthy, and I think that, unfortunately, that’s kind of lacking in an awful lot of people these days.

I remember going to an ethics seminar one time where they tried to come up with the seven pillars of ethical behavior. They had no basis for any of these things other than it feels good, so I think we should do it. You know, that’s a pretty sad place to find yourself, building your ethical foundation from there.

Here’s another example: One of the many list feeds that I get, they were describing the new employer/employee dynamic, and they ran down this list of eight points. They were describing how employers and employees should interact with one another, and it was all about the money. I was thinking to myself, “Our firm runs totally differently than that.” We operate with respect and dignity for our employees. That’s why they enjoy working with us. It’s not because, well, today, you’re profitable. As soon as you’re not, you’re out the door. Clients are no different. They come to you because they like you, and they trust you.

You’ve risen to the place where they hold you in high esteem, and the main reason they hold you in high esteem is because you hold them in high esteem. You would not mistreat them, even if there weren’t any ethical rules. You just do the right thing, and so I’m hoping that the practice of law doesn’t lose its soul.

J. Hammond: Thank you both for your time. This was fantastic, and I really appreciate your insight and words of wisdom.

The Thursday Report would like to thank Jennifer, Howard, and David for conducting and participating in this interview!

Richard Connolly’s World
Debt and Senior Citizens

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Bankruptcy Can Help Seniors Protect Assets” by Constance Gustke. This article was featured in The New York Times on May 13, 2015.

Richard’s description is as follows:

For some older Americans, bankruptcy can bring much-needed relief from debt brought on by medical expenses or helping needy children, and experts say it can be a valuable tool to protect retirement assets after negotiating with creditors. But with reliable statistics on current bankruptcies hard to come by, anecdotal evidence suggests that shame at being in financial turmoil frequently prevents retirees from getting help early.

“People usually postpone bankruptcy for several years before filing,” said Deborah Thorne, an associate professor of sociology at Ohio University who has studied older Americans and bankruptcy. “When finances head south, they should file right away.”

By spending retirement assets, Ms. Thorne said, retirees risk a downward financial spiral from which they are less likely to recover than younger people. A better strategy is to defend assets at all costs, she said.

Why? Retirement income and savings are usually untouchable during bankruptcies under federal law. Pensions, 401(k)’s, and qualified profit-sharing plans are exempt from creditors, as are individual retirement accounts worth up to $1.245 million. Social Security payments are also exempt.

Please click here to read this article in its entirety.

The second article of interest this week is “To Collect Debts, Nursing Homes are Seizing Control Over Patients” by Nina Bernstein. This article was featured in The New York Times on January 25, 2015.

Richard’s description is as follows:

An increasing number of guardianship petitions are being filed by nursing homes over their elderly occupants. Although courts may find these practices abusive, nursing homes nonetheless resort to guardianship petitions because it is effective to collect debts as patients fear futile legal battle. Guardianship will transfer the patient’s legal rights to a person appointed by the court, and it is better than suing the patients directly, say lawyers representing nursing homes.

Lawyers and others versed in the guardianship process agree that nursing homes primarily use such petitions as a means of bill collection – a purpose never intended by the New York Legislatures when it enacted the guardianship statute in 1993. At least one judge has ruled that the tactic by nursing homes is an abuse of the law, but the petitions, even if they are ultimately unsuccessful, force families into costly legal ordeals.

New York’s guardianship statute was part of a national movement to limit guardianships to the least restrictive alternatives necessary to prevent harm. A petition is supposed to be brought only by someone with the person’s welfare at heart, and guardianship is to be tailored to individual needs, taking into account the person’s wishes. Instead, it’s become a system that’s very focused on finances.

Please click here to read this article in its entirety.

Thoughtful Corner
How to Change Your Mailing Address

For many individuals, moving is rarely a simple process. There is often more to it than carefully packing up your prized possessions and throwing away all of those old magazines you swore to read. One of the most common tasks that will likely appear on your moving to-do lists includes calling your cable and internet provider to cancel or transfer your current subscription. You may also need to call your local electric company and inform them that you will be changing addresses. Each of these tasks can be done with relative ease these days.

Before you can really settle in to your new place, however, you will need to make sure your bills, packages, and love letters all continue to reach you and not end up in the hands of some unsuspecting stranger moving into your old home. In the past, this process required you to take a trip to your closest US Post Office and fill out a change of address form, also known as Form 3575. Remember, for those of you that still use the Post Office for this task, you should have your form completed before you even think about stepping in line.

For those that are unaware you can still visit the post office, the entire process can now be done in the comfort of your old or new home. First, you must visit the official US Postal Service change of address website at moversguide.usps.com. Select whether your move will be permanent or temporary, and fill in the date in which they should begin forwarding your mail. Then, provide your old and new mailing addresses.

At this point, you are probably wondering how the Post Office ensures you are actually changing your address as opposed to attempting to play a prank on someone else. The USPS will charge a $1.05 fee to verify your identity. All they require is that the billing address on the debit or credit card you provide matches your old or new address. To lighten the blow of such a steep $1.05 fee, the USPS will send a variety of coupons for local stores and businesses valued at around $500 to your new address.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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In the News
by Ron Ross

The Secretary of Education reports that American students still score below students of other Western nations in standardized tests. This year, language scores are up slightly, but math scores are somewhat down. So it’s seven of one, a half dozen of the other.

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Inspired by the success of leading Republican candidates with no previous government experience, the US airline industry is opening up pilot seats to those with no flying experience. They’re looking for people with an inspiring personal story or the ability to make short, pithy statements over the intercom. An airline spokesman is not worried about amateur captains, saying, “It worked so well for Carnival Cruise Lines.”

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Scientists warn that mass deaths in honey bee populations threaten the future of US agriculture. Donald Trump blames the decline in bees on socialism. He says, “Of course the bees are dying! They collect the nectar, and then they have to give it all to the bee government. If it was me, I’d take that stinger in my tail and ram it right between my multifaceted compound eyes!” Trump’s proposed solution: Fire the b*****ds.

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The American Bar Association is putting out its own version of the Bible. Noticably absent is Matthew 5:40 from the sermon on the mount: “And if anyone should sue you at the law and take away your coat, let him have your cloak also.” The ABA downplays this change and describes this revision as “a failure to stipulate.”

Upcoming Seminars and Webinars

Calendar of Events

LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24, 2015

Location: Hyatt Regency Sarasota | 1000 Boulevard of the Arts, Sarasota, FL, 34236

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE WEBINAR:

Steve Gorin will join Alan Gassman for a free, informative webinar on the topic of INCOME TAX EXIT STRATEGIES.

There will be two opportunities to attend this presentation.

Date: Thursday, October 29, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free webinar on the topic of ASSET PROTECTION CHECKLIST ITEMS YOU HAVE NOT THOUGHT ABOUT.

There will be two opportunities to attend this presentation.

Date: Tuesday, November 17, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of CREATIVE BUSINESS SECURITY.

Company espionage is big business, and it’s not just limited to biggies. When a new business is in its early stages or before it has its operational system laid out in concrete, establishing the right security concepts can carry through as it grows. It minimizes unwanted exposure and unneeded expense of later changing how it operates. Preventing vulnerability to hackers, for example, would be one consideration. Making sure cell and office phones can’t be bugged and keeping competitors and governments from spying on the operation should also be an upfront consideration.

A business doesn’t have to be the NSA to make all of these things a reality. Conventional methods of information security, no matter how effective they profess to be, just end up with an organization being the eventual loser. Every day, you hear of a new intrusion. This webinar will look at the problem from a non-conventional perspective to obtain a more secure system.

Questions to be answered during this presentation include:

  • Why don’t conventional security measures work for small to medium sized businesses?
  • Who makes a company less secure?
  • What steps can be taken to make companies more secure?
  • How vulnerable are you and your company to spying from competitors and others?

There will be two opportunities to attend this presentation.

Date: Wednesday, November 18, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of THE SUGAR DADDY HUSTLE.

The classic “Sugar Daddy” situation is usually a win-win for both the male and the female involved. Both understand the situation and are willing participants. But for an older man who has undergone a traumatic life experience, is lonely, and may have somewhat diminished mental capacity, there are certain types of women who will use this to their advantage and make him their unknowing “Sugar Daddy.”

These women have researched the legal aspects of their operation and identified loop holes in the law which they can exploit. They take over the man’s life, make decisions, allow his health to deteriorate, and place him in financial tenuous situations for their own benefit. Within the USA, it amounts to a con of over $3 billion annually.

This webinar will discuss what proactive preventive steps to take when an emotional episode has occurred in an elderly person’s life. If a con has already begun, we’ll look at the signs delineating financial and non-financial abuse. Once in progress, there are steps which should be taken to minimize the impact.

Questions to be answered during this presentation include:

  • For elderly men, what is the difference between the conventional Sugar Daddy and the Sugar Daddy Hustle?
  • Why are older men more susceptible to being scammed?
  • Are there preventive steps which should be taken when a man has recently undergone a traumatic life experience?
  • How can you recognize a con?
  • What should be done after a scam has begun?

There will be two opportunities to attend this presentation.

Date: Wednesday, December 9, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Bill Kahn will join Alan Gassman for a free webinar on the topic of WHY OUR GOVERNMENT REJECTS PUBLIC IDEAS AND KEEPS PEOPLE IN THE DARK ABOUT SERIOUS ISSUES.

In the area of rejecting ideas, consider this country has won more Nobel prizes than any other country, yet getting new ideas into the government from the general public is almost impossible. Yes, pulling the gems from the pile and evaluating them can be a problem. Unfortunately, it really doesn’t matter whether the potential ideas save lives, money, or time. The government generally ignores them.

Questions to be answered during this presentation include:

  • Why are ideas often ignored by politicians and government agencies?
  • What drives the motivations of politicians and government agencies?
  • Why does the government try to keep the public in the dark about certain subjects?
  • Does the government classify things that shouldn’t be marked as classified? Is that against the law?

There will be two opportunities to attend this presentation.

Date: Wednesday, January 6, 2016

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

To download the brochure, or for a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM and 10:50 AM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning (January 30th: 10:10 AM – 11:10 AM)
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You (January 30th: 11:10 AM – 12:10 PM)
  • 50 Ways to Leave Your Overhead (January 31st: 8:00 AM – 9:00 AM)
  • Essential Creditor Protection and Retirement Planning Considerations (January 31st: 9:00 AM – 10:00 AM)

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30, from 10:10 AM to 12:10 PM and Sunday, January 31 from 8:00 AM to 10:00 AM

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ST. PETERSBURG PRESENTATION:

ST. PETERSBURG COLLEGE FOUNDATION PRESENTS THE WOZNIAK PROJECT

Apple co-founder Steve Wozniak will be the first featured speaker in the new St. Petersburg College Foundation Distinguished Speakers series.

Wozniak is a Silicon Valley icon and philanthropist who helped shape the computing industry with his design of Apple’s first line of products. In 1976, he and Steve Jobs founded Apple Computer, Inc. In 1985, for his achievements with Apple, Wozniak was awarded the National Medal of Technology, the highest honor bestowed on America’s leading technological innovators. He was inducted into the Inventors Hall of Fame in 2000.

Join Steve Wozniak and the Foundation for a lively, interactive discussion. Charitable proceeds will benefit the St. Petersburg College Foundation. Tickets range from $85 to $95.

Thanks to the Bank of Tampa, Merrill Lynch Wealth Management, Raymond James, and the CPA firm of Gregory Sharer and Stuart for being sponsors of this event.

Date: Monday, November 2, 2015 | 7:00 PM

Location: The Palladium Theater | 253 Fifth Avenue North, St. Petersburg, FL 33701

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information. 

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 10.15.15 – What the Heck is Scaling?

Posted on: October 15th, 2015

Avoiding the Carnage Caused by Pay-on-Death Accounts, Part I

An Esteemed Father and Son Team Share Their Love for the Law and Helping Others, Part I

Scaling a Medical Practice: 10 Lessons in the Art of Scaling by Dr. Pariksith Singh

Making Systems Part of Your Company Culture by David Finkel

Richard Connolly’s World – Keeping Up with Recent IRS Rulings

Thoughtful Corner – Responsibility to the Public and Public Service

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“We just concentrated on being silly, and the rest happened naturally.”

– John Cleese, when reflecting upon the success of Monty Python’s Flying Circus

For more on John Cleese, Eric Idle, and the fantastic show they’ve brought to Clearwater this week, check out our Humor section below!

Avoiding the Carnage Caused by Pay-on-Death Accounts, Part I
by Alan S. Gassman & Christopher J. Denicolo

Do not let pay-on-death accounts be the death of your estate plan.

This is Part One of a two-part series on pay-on-death accounts. Part One below will discuss distortion or obliteration of an estate plan by pay-on-death accounts and possible ways to manage this risk. Part Two will discuss the creditor protection advantages of using pay-on-death accounts.

Well-meaning banks and other financial institution personnel will often encourage customers to use a pay-on-death account so that an account will pass directly to a certain person or persons on the death of the account owner or upon the death of the survivor of joint account owners.

This can wreak havoc in an estate plan where will and trust documents provide for assets to pass into trusts for individuals or otherwise and the pay-on-death designation says something else completely. Pay-on-death designations for accounts can frustrate and render carefully thought out and drafted will and trust provisions ineffectual, and many individuals are not aware of the importance of coordinating account titling and beneficiary designations with will and trust documents.

No matter how many times we warn clients and even bankers and financial advisors about this, the problems are going to happen.

One idea is to have clients sign a document that will purport to neutralize or change any existing pay-on-death account beneficiary designation by saying something like the following:

I do hereby cancel and annul any pay-on-death account beneficiary designation now in place that will cause any financial account or accounts to pass other than as directed under my Last Will and Testament and/or the revocable trust agreement that I am signing or amending as of the date of execution hereof. I request that a court of competent jurisdiction issue an order, if and when requested by any personal representative or trustee appointed under my planning documents in order to cancel or annul any such pay-on-death account designation that would cause a payment on death or passage of assets contrary to my intent, as evidenced under my then applicable valid Last Will and Testament and/or revocable trust agreement in effect upon the date of my death.

[OPTIONAL CLAUSE] Any future pay-on-death account designation shall also be treated accordingly.

It is unclear whether a bank or other financial institute will recognize such document, but at the very least, it expresses the intent of the decedent and provides grounds for negating contrary pay-on-death account designations.

In addition, or in substitution of the above, the following language can be used to ensure that the client is made aware of the issue:

THE UNDERSIGNED, with reference to our estate planning, have been informed that the bank, brokerage and other accounts will often be payable by beneficiary designation or “pay-on-death” designation and not according to our estate planning documents. We understand that bank and financial accounts may pass on death based upon ownership, such as with right of survivorship, or based upon pay-on-death instructions, which can often distort an estate plan. We recognize that it is our responsibility to request that GASSMAN, CROTTY & DENICOLO, P.A. receive verification from any specific bank, brokerage and other financial institutions to determine whether our accounts would pass under any trust we might be establishing, under our estate, or by beneficiary designation.

GASSMAN, CROTTY & DENICOLO, P.A. has not and will not undertake to check any such accounts or to provide any communications or confirmations thereof, except as explicitly requested by us in writing or undertaken by them.

The same issues can arise under life insurance, annuities, pension plans, IRAs, safe deposit boxes, and otherwise.

Will and trust language can also be tailored to take this risk into account. The following language can be placed in wills and/or trusts.

Notwithstanding any specific devise of monies directly to any individuals set forth herein, if upon my death, or at the time a specific devise would apply under this instrument, if there are pay-on-death account designations or other similar arrangements that provide specific amounts of monies to be paid to individuals who receive specific devises herein, then the specific devises set forth under this instrument shall be reduced to the extent of monies so received as to each individual.

The same considerations can apply with respect to 529 Plans, which will pass by ownership/whoever is given the right to direct those accounts upon the death of the owner. The following language may apply for 529 Plans:

I recognize that I have or may have established one or more 529 Plans for my descendants. It is my intention that any such 529 Plans will be used for educational purposes for one or more of my descendants and that a plan set up for one of my descendants may be used for other descendants if and as when appropriate. I therefore request, but cannot require, that anyone designated as the successor owner of a 529 Plan for me will coordinate with the trustee of this trust, and the trustee of this trust shall have the right to reduce specific devises and to adjust the shares of trusts or dispositions as between my children to take into account 529 Plan balances and the use thereof.

In light of the above, pay-on-death accounts do have some merit in certain situations for clients. Where the beneficiary under the will or trust is the same as the beneficiary under a bank account, a pay-on-death account might be warranted to avoid probate and to keep things simple.

Part Two of this article will discuss creditor advantages and issues associated with pay-on-death accounts. Stay tuned!

An Esteemed Father and Son Team Share Their Love for the Law and Helping Others, Part I

Paynes

The following interview of attorneys L. Howard and David Payne of the Payne Law Group took place on Wednesday, September 8, 2015 at the Community Foundation Building of Sarasota County. The interview was conducted shortly after a Distinguished Speakers Presentation on Asset Protection by Alan Gassman, which was hosted by the Foundation. The interview was conducted by Jennifer Hammond.

L. Howard Payne has been practicing law for over 50 years, first in New York and now in Southwest Florida. David has been practicing for over 20 years. The Payne Law Group is an Estate Planning boutique firm.

Jennifer Hammond: Thank you both very much for agreeing to speak with me. I really appreciate it. Alan was telling me what a great practice you have, and he really wanted to profile you in his Thursday Report. I looked on your website, and it looks like you do a lot of amazing work. Tell me a little bit about your practice. How would you describe it?

L. Howard Payne: Probably 85% of our practice deals with estate planning, estate administration, tax planning, and anything to do with transfers as a result of somebody dying or planning to die. Obviously, no one plans to die, but what I mean is that we’ve got to face up to the fact that someday, we’re not going to be around anymore. The rest of the practice, I would say, is devoted to transactional work. We do work for corporations and partnerships and LLCs and asset protection. We don’t do this to the degree that [Gassman, Crotty & Denicolo, P.A.] does it, but we do it.

In fact, we know a lot of what [Alan] taught us today [about asset protection] and we try to implement that. I think the biggest positive for why we have the success we do in our practice is that we try to treat the clients as though they are part of our family, and we get the work out rapidly, and we feel we charge a fair price.

We’re always appalled at the number of cases where we have totally dysfunctional families, and we just have to end up being umpires. We don’t enjoy that position at all.

J. Hammond: How do you think the practice has changed over the years that you’ve been practicing? Because, Howard, you’ve been doing this for a while.

L. H. Payne: Well, yes, I have. Back when I first started to practice, I don’t think anybody really thought about asset protection. That’s one thing that’s changed a lot. I think that we now have more of an emphasis on income tax planning at death rather than estate tax concerns. We have probably more use of LLCs versus S-corps.

Family limited partnerships are really complex, and, frankly, most of our clients kind of have some problem trying to understand what we’re doing. Then we have these references to Code Sections and words that are used in the Code that they don’t understand, and I, frankly, am not sure we understand all the length and breadth of some of these terms we use, but as Alan specified today, complex matters involve complex solutions. You can’t really do a job for a client in a simple manner anymore.

I know I constantly have to deal with clients asking, “Why can’t you write this document so I can understand it?” and I say, “Unfortunately, you are not hiring me to write a document that you can understand. You’re hiring me to write a document that other lawyers and judges understand, so we’ve got to use their code.” They all say, “Fine, yeah,” but they still don’t like it. Every once in a while, I think, ‘What kind of problem would I create for a client if I wrote it in plain, ordinary English?’

David Payne: Not that I’ve been practicing anywhere near as long as my dad here, but in my 20 plus years of experience, I think one of the other challenges we face is that the focus is much more on things that are often not tax-related for a lot of our clients. I mean, asset protection is definitely one of them. Undue influence protection is probably an even bigger area that interests a lot of them.

There’s also a lot more Medicaid planning out there. We don’t actually focus on that. Most of our clients are not in a position where they’ll ever qualify for Medicaid, and we’re not in a position to tell them how, nor do they want to, but in terms of focusing on non-tax aspects, I think what’s nice about the tax code changing is that now we can really help clients deal with issues that matter more to them.

People care about whether the family is actually going to stay together after they’re dead. Are their children going to get along? Are they going to continue to act as a family, or are they going to be in a feeding frenzy at the trough and walk away hating each other for the rest of their lives? I think for most of our clients, leaving their family intact is really their primary goal.

J. Hammond: Where are most of your clients geographically located?

L. H. Payne: I have clients that live in Manatee County, and I have some that live in the extreme southern edge of Sarasota County, in Englewood and Venice. Mostly, our clients are in Sarasota.

D. Payne: Obviously, we work with clients who live outside of Florida, primarily in the estate and trust settlement area, so we’re working with the kids who can live anywhere, but we’re licensed in Florida. Dad’s licensed in New York, but for what we really focus on, it’s more local activity, but we end up with clients who like dealing with us, and I still have a favorite client who lives out in California. We don’t do his estate planning, but he’s still administering his mom’s trust, which is a Florida trust, so 10 years later, he’s still calling me up and asking me about distributions and things like that, so they could be anywhere [while still having] Florida law issues.

J. Hammond: Do you think there’s anything that you deal with in this marketplace that’s unique that maybe other practices in Florida don’t necessarily have to deal with or haven’t seen or been exposed to?

L. H. Payne: I wouldn’t necessarily think so. Sarasota is a very Arts-centered community. We have the Circus Museum and the Ringling School of Arts and the College of Art. We have New College, and we have USF Sarasota/Bradenton. This is a very academic community.

That has attracted a lot of people who are very philanthropic and who really are supporting all the Arts here, and so I would say, if anything was different, we may have a greater number of people benefitting charities in this area. Just listening to the comments today about the Community Foundation of Sarasota, it is probably one of the larger ones in the state, and I think that’s just because of this particular community.

D. Payne: I think, too, if you went down the West Coast of Florida, Sarasota and Naples are the two high spots for estate planning in terms of where there is a high concentration of wealth. It also seems that compared to, say, the East Coast, we attract an awful lot of Midwesterners as opposed to Northeasterners, and I think that brings a Midwestern flavor to the family dynamic.

I’ll tell you, just dealing with the probate, the probate court here and the judiciary compared to our experiences when we do probate elsewhere in the state, it’s so much easier here. Frankly, it’s even easier here than Pinellas when we venture up there. We’ve run into some bumps up there.

Stay tuned for the conclusion of our interview with L. Howard and David Payne, where they will discuss where they see the estate planning profession going in the future.

Scaling a Medical Practice: 10 Lessons in the Art of Scaling
by Pariksith Singh, M.D.

Singh

Pariksith Singh, M.D. is a board-certified internal medicine physician who received his medical education at Sawai Man Singh Medical College in Rajasthan, India (where he was awarded honors in internal medicine and physiology).  His residency training occurred at All India Institute of Medical Services (New Delhi, India) and Mount Sinai Elmhurst Services, (Elmhurst, New York).  Upon completion of his residency, Dr. Singh relocated to Florida and worked for several years before establishing Access Health Care, LLC in 2001.

Over the last two decades in private practice and being part of the leadership of a practice that could scale from a couple of providers to a couple of hundred, I have often been asked by interesting providers and businessmen how we did it. This is often followed by the question of how they can do it, too.

I prefer to take the negative position, at least initially. How not to do it, or, as I sometimes call it, “Lessons Unlearnt in the Art of Scaling.” These are the suggestions I would make using the ancient Indian principle of “neti neti,” or “not this, not this”:

Do not scale after others. Just because others did it or are trying to do it, you do not have to do it, too. Scaling is a hard decision and is not meant for everyone. Many (most) physicians are not inclined or trained to be good managers or leaders. Often, scaling means leaving medicine and moving to administration or management. This may not be a good fit.

A lot of what is taught in management schools is only theory, imparted by arm-chair professors with no relevance to the real world of management, let alone medicine. It is often difficult for a physician to let go of a respected position as the leader in the office and suddenly become a student under someone else. It is also extremely difficult for a physician to be both a practitioner and a manager at the same time.

The key point here is the ancient Socratic injunction, “Know thyself.” Scaling may be for others and not for you. Do not ape blindly. Know your own heart and your own passion. Some physicians or specialties do very well as solo practitioners and are best left alone. You might be one.

Become dispensable, but not too soon! I have seen this all too often in my career. Smart physicians, far smarter than I, failed to scale even from one practice to two. Realizing early that they need to hire another physician or partner to free themselves up to be able to manage the growth, they start giving up their patients to the new provider in their practice. This makes them vulnerable to the vagaries of the new doctor in the practice who may not share their abilities or understanding or may have other ideas about his or her future rather than being part of the growth model. The key is to not compromise the core.

Measure scaling by the growth in the business. Success in scaling must be measured by the sanctity and strength of the core operations, infrastructure, and the integrity of the original entity in face of growth. Any other measure misses the point of scaling. Quantity is not relevant, quality is. It is quality and the core one should wish to scale.

Loss leaders are acceptable as long as there is growth. Warren Buffet’s first axiom comes to mind: “Lose no money.” Growth with profit is always preferable, and a clear plan for return on investment should be nailed.

Great managers would be great health care leaders. The laws of health care are complex and can be a minefield for the unwary. It is not that Health Care does not need great management. The difference is in the specifics which could be fatal to a medical corporation if missed. For example, the rules of compliance including Stark Law or Anti-Kickback Statutes are unlike other businesses. Even marketing or promotion could be misconstrued as inducement if not appropriately monitored and addressed. Often, the safe and constant review by a wise and experienced counsel is needed.

Great doctors would be great health care leaders. There is much in the training and practice of a medicine that may prepare a doctor to be an excellent manager. There is much that is not. The doctor has to develop a new skill set to succeed. How to begin to think strategically and how to see the business as separate from one are important in the beginning. Collaboration and team building are an essential part of good organizations for which much time is needed. In the beginning, considerable time and resources for this are needed, and the doctor has to manage the fine balance between doctoring and managing.

Risk goes down with bigger size. Sometimes, the opposite may happen. As the organization becomes larger, it may become an easier target for audits or reviews by federal agencies if quality control systems are not in place. There has to be a surveillance in place constantly for the constantly-moving parts and people.

A good compliance manual ensures protection. A good compliance manual that is not rigorously adhered to may, in fact, be of greater risk to the practice(s). Once one documents the policies and procedures and puts them in place, there is no excuse for flawed execution of the same.

Free is good, but the only free cheese is in a mousetrap. One needs to be very careful of the relationship of the organization with vendors, suppliers, pharmaceuticals, or nutraceuticals. If you are getting paid for a patient you did not see, please ensure that it does not look suspicious to an auditor. One needs to be extremely skeptical of any lab that wishes to rent your office space, or a drug company that promises to pay you for case reports masquerading as research, or anyone wanting to pay you. Consider them your enemies unless proven otherwise.

Physicians’ huge salaries are the biggest overhead and drawback. Physicians are the bottom-line. They are not the overhead. A doctor’s practice is a great platform to scale from as long as one is aware of the legal constraints, business, and financial regulations and is able to create a model where people become paramount but systems are not secondary.

Next week, Dr. Singh will discuss the three concepts of scaling, including height is scale, core is scale, and depth is scale. Dr. Singh can be reached at psingh@accesshealthcarellc.net. 

Making Systems Part of Your Company Culture
by David Finkel

Finkel

David Finkel is the Wall Street Journal bestselling author of SCALE: Seven Proven Principles to Grow Your Business and Get Your Life Back, which can be viewed by clicking here. As the CEO of Maui Mastermind, he has worked with 100,000+ business coaching clients and community members to buy, build, and sell over $5 billion worth of businesses.

You’ve heard all the talk about the need to systematize things in your business, but how do you get your team to buy in? Here’s how you make systems part of your company culture.

Today, I want to share with you what I think are the core concepts you need to make systems thinking (both creating and using them) an integral part of your company culture.

First, let’s be clear: Building systems can’t be a one-person, one-time effort. It’s got to be an ongoing company-wide culture of creating, using, organizing, refining, and if need be, deleting your business systems.

Likely, this will mean you’ll need to train your team to participate in the systematization of your business since many of your new team members will have little or no training in the importance, creation, and refinement of systems. In fact, some will instead see systems as a hassle or an impediment.

It’s your job to help them recognize how useful systems can be to get their jobs done and how critical they are to the long-term success of the business.

Click here to continue reading this article on inc.com. You can also follow David on Twitter: @DavidFinkel

See David Finkel Live in Clearwater on December 2, 2015!

Gassman, Crotty & Denicolo, P.A., in conjunction with the Sara F. Gassman Music Foundation, has arranged for best-selling book author and business advisor David Finkel to conduct an interactive problem-solving workshop on the topic of SCALING YOUR BUSINESS/PRACTICE – WHAT DOES THIS MEAN?

This presentation will take place on the evening of Wednesday, December 2, 2015 as a benefit for the Sara F. Gassman Music Foundation. The event will include a wine tasting and heavy hors d’oeuvres. Each attendee will receive a Scale Tool Kit. Requested donation is $100 per attendee or couple.

Details about this event will be forthcoming. Please email Alan Gassman at agassman@gassmanpa.com for more information.

Richard Connolly’s World
Keeping Up with Recent IRS Rulings

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “IRS Ruling Makes After-Tax Contributions More Attractive” by Ann Carrns. This article was featured in The New York Times on September 22, 2015.

Richard’s description is as follows:

Making pre-tax contributions to your 401(k) retirement plan is a no-brainer. But recent changes in federal tax rules may make it more attractive for serious savers to increase after-tax contributions as well.

A recent IRS ruling has made it easier to convert those after-tax contributions directly to a Roth IRA when you retire or leave your company. Under the new rules, you can roll over your pre-tax contributions and any earnings into a traditional IRA while putting the after-tax contributions into a separate Roth IRA where the money can then grow tax-free.

(Recall that a Roth, while funded with after-tax money, allows the funds to grow tax-free and remain tax-free upon withdrawal.)

This article discusses Notice 2014-54, which may be old news to you, but might be new to your clients.

Please click here to read this article in its entirety.

The second article of interest this week is “Questioning Timing of Shares Donation, IRS Nixes $12.7 Million Charity Deduction for Stein Mart CEO” by Ashlea Ebeling. This article was featured on Forbes.com on September 17, 2015.

Richard’s description is as follows:

Donate to charity. Take a charitable tax deduction off your federal income taxes. If it were only that simple. Jay Stein, chief executive of discount retailer Stein Mart, and his wife, Deanie, are fighting the Internal Revenue Service over a donation of 500,000 shares of publicly-traded Stein Mart they made back in 2005 to their private foundation.

On audit last year, the IRS questioned the timing of the donation and then bizarrely disallowed the entire $12.7 million charitable contribution deduction the Steins claimed. The IRS assessed an additional tax of $3.4 million, which the Steins paid. That’s according to a previously unreported lawsuit the Steins filed last week in federal district court in Jacksonville seeking to recover the tax they say was “erroneously or illegally assessed and collected by the IRS.”

Their lawyer, Robert Bernstein, a tax lawyer with Foley & Lardner, said, “We do not understand why the IRS disallowed the entire charitable contribution deduction claimed in the Stein’s tax returns other than to try to apply pressure on Mr. and Mrs. Stein to settle the case for less than they are entitled.”

Please click here to read this article in its entirety.

Thoughtful Corner
Responsibility to the Public and Public Service

As lawyers and members of our communities, we have a responsibility to help our communities. Rule 1.6 of the model rules of professional conduct states:

Every lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least fifty (50) hours of pro bono public legal services per year. In fulfilling this responsibility, the lawyer should:

  1. Provide a substantial majority of the fifty (50) hours of legal services without fee or expectation of fee to:
    1. Persons of limited means or
    2. Charitable, religious, civic, community, governmental, and educational organizations in matters that are designed primarily to address the needs of persons of limited means; and
  2. Provide any additional services through:
    1. Delivery of legal services at no fee or substantially reduced fee to individuals, groups, or organizations seeking to secure or protect civil rights, civil liberties or public rights, or charitable, religious, civic, community, governmental, and educational organizations in matters in furtherance of their organizational purposes, where the payment of standard legal fees would significantly deplete the organization’s economic resources or would be otherwise inappropriate;
    2. Delivery of legal services at a substantially reduced fee to persons of limited means; or
    3. Participation in activities for improving the law, the legal system, or the legal profession.

In addition, a lawyer should voluntarily contribute financial support to organizations that provide legal services to persons of limited means.

There are many opportunities to get involved in the community and donate your legal expertise for the greater good. Some of these opportunities will even give you some training like Bay Area Legal that offers free training on Guardianship Advocacy in exchange for accepting a non-paying client.

There are many non-profit legal foundations in the area that will allow you to come in and donate your time, even if you are not an expert in the field, which will give you the opportunity to gain some experience in that particular area of law. This gives you an opportunity to network and meet new people in the field, and, of course, the most important reason of all, you would be giving back to the community and helping the less fortunate.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign Updated

John Cleese and Eric Idle of Monty Python fame brought their show to Clearwater this week! John Cleese & Eric Idle: Together Again At Last…For the Very First Time was performed last night and will be performed again tonight at Ruth Eckerd Hall. REH’s description of the show is as follows:

In Together Again At Last…For the Very First Time, Cleese and Idle will blend scripted and improvised bits with storytelling, musical numbers, exclusive footage, aquatic juggling, and an extended audience Q&A to craft a unique comedic experience with every performance. No two shows will be quite the same, thus ensuring that every audience feels like they’re seeing the show for the very first time. And now you know why the show is called that, don’t you?

As founding members of Monty Python, Cleese and Idle are unarguably among the godfathers of modern comedy, helping to pioneer an irreverent, absurdist sensibility that is emulated by comics around the world. As individuals, they have written, performed, and produced some of the most beloved and critically-acclaimed shows of all time, including Spamalot, A Fish Called Wanda, Fawlty Towers, and The Rutles.

Tickets to Together Again At Last…For the Very First Time can still be purchased by clicking here. This is a production not to be missed!

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Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: Hyatt Regency Sarasota | 1000 Boulevard of the Arts, Sarasota, FL, 34236

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE WEBINAR:

Steve Gorin will join Alan Gassman for a free, informative webinar on the topic of INCOME TAX EXIT STRATEGIES.

There will be two opportunities to attend this presentation.

Date: Thursday, October 29, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

To download the brochure, or for a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM and 10:50 AM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ST. PETERSBURG PRESENTATION:

ST. PETERSBURG COLLEGE FOUNDATION PRESENTS THE WOZNIAK PROJECT

Apple co-founder Steve Wozniak will be the first featured speaker in the new St. Petersburg College Foundation Distinguished Speakers series.

Wozniak is a Silicon Valley icon and philanthropist who helped shape the computing industry with his design of Apple’s first line of products. In 1976, he and Steve Jobs founded Apple Computer, Inc. In 1985, for his achievements with Apple, Wozniak was awarded the National Medal of Technology, the highest honor bestowed on America’s leading technological innovators. He was inducted into the Inventors Hall of Fame in 2000.

Join Steve Wozniak and the Foundation for a lively, interactive discussion. Charitable proceeds will benefit the St. Petersburg College Foundation. Tickets range from $85 to $95.

Thanks to the Bank of Tampa, Merrill Lynch Wealth Management, Raymond James, and the CPA firm of Gregory Sharer and Stuart for being sponsors of this event.

Date: Monday, November 2, 2015 | 7:00 PM

Location: The Palladium Theater | 253 Fifth Avenue North, St. Petersburg, FL 33701

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information. 

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 10.8.15 – UTMA, ACO, and Away We Go

Posted on: October 8th, 2015

Questions and Answers About the Updates to the Uniform Transfers to Minors Act

An Account of Accountable Care Organizations (ACOs) by Pariksith Singh, M.D.

Pour-Over Will Savings Clause for Living Trusts

Seminar Spotlight: Representing the Physician 2016

Richard Connolly’s World – Estate Planning Habits of the Super Wealthy

Thoughtful Corner – Client Relationship Strategies

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com. 

Quote of the Week

“I believe that if you don’t derive a deep sense of purpose from what you do, if you don’t become radiantly alive several times a day, if you don’t feel deeply grateful at the tremendous good fortune that has been bestowed on you, then you are wasting your life.
And life is too short to waste.”

– Dr. Srikumar Rao

Questions and Answers About the Updates to the
Uniform Transfers to Minors Act

What is the Uniform Transfers to Minors Act (“UTMA”)?

The Uniform Transfers to Minors Act is an act that allows a minor to receive gifts such as money, patents, royalties, real estate, and fine art without the aid of a guardian or trustee. Under UTMA, the gift-giver or an appointed custodian manages the minor’s account until the minor becomes of age. The UTMA also shields the minor from tax consequences on the gifts, up to a specified value. The UTMA was originally drafted in 1986 by the National Conference of Commissioners on Uniform State Laws and is an extension of the Uniform Gifts to Minors Act (UMGA), which was limited to the transfer of securities.

Updates to the UTMA became effective on July 1, 2015.

Are the updates retroactive?

No. The amendment authorizes a transferor to create a new UTMA account after July 2015 that will not be required to terminate until the minor turns 25, as defined by the updated statutes, instead of 21, as defined by the old statutes.

What do you have to do?

To take advantage of the new termination age of 25, you must create a custodianship for a person who is a minor (also known as a person who has not yet attained age 21.)

Can creditors of the child reach account assets?

Creditors of the child can reach the account assets, but if these are invested in 529 Plans, creditors can probably not reach into them.

Who is the “owner” of the assets in a UTMA account?

The minor beneficiary is considered the owner of the assets as a transfer to the UTMA account is treated as an irrevocable gift.

Below is a compare of the 2014 statute and the updated 2015 statute. New additions to the 2015 statute are featured in green. Language that has been removed is featured in red.

710.123 Termination of custodianship.

(1) The custodian shall transfer in an appropriate manner the custodial property to the minor or to the minor’s estate upon the earlier of:
(a) The minor’s attainment of 21 years of age with respect to custodial property transferred under s. 710.105 or s. 710.106. However, a transferor can, with respect to such custodial property, create the custodianship so that it terminates when the minor attains 25 years of age;
(b) The minor’s attainment of 21 18 years of age with respect to custodial property transferred under s. 710.105 or s. 710.106; s.710.107 or s. 710.108; or
(c) The minor’s death.

(2) If the transferor of a custodianship under paragraph (1)(a) creates the custodianship to terminate when the minor attains 25 years of age, in the case of a custodianship created by irrevocable gift or by irrevocable inter vivos exercise of a general power of appointment, the minor nevertheless has the absolute right to compel immediate distribution of the entire custodial property when the minor attains 21 years of age.

(3) As to a custodianship described in subsection (2), a transferor may provide, by delivery of a written instrument to the custodian upon the creation of such custodianship, that the minor’s right to compel immediate distribution of the entire custodial property will terminate upon the expiration of a fixed period that begins with the custodian’s delivery of a written notice to the minor of the existence of such right. To be effective to terminate the minor’s right to compel an immediate distribution of the entire custodial property when the minor attains 21 years of age, the custodian’s written notice must be delivered at least 30 days before, and not later than 30 days after, the date upon which the minor attains 21 years of age, and the fixed period specified in the notice for the termination of such right cannot expire before the later of 30 days after the minor attains 21 years of age or 30 days after the custodian delivers such notice.

(4) Notwithstanding the definition of the term “minor” as provided in s. 710.102, if the transferor creates the custodianship to terminate when the minor attains 25 years of age, solely for purposes of the application of the termination provisions of this section, the term “minor” means an individual who has not attained 25 years of age.

(5) A financial institution has no liability to a custodian or minor for distribution of custodial property to, or for the benefit of, the minor in a custodianship created by irrevocable gift or by irrevocable exercise of a general power of appointment when the minor attains 21 years of age.

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[1] https://www.franklintempleton.com/retail/page/generic_content/prog_serv/ugma_utma/ugma_utma_pub.jsf

An Account of Accountable Care Organizations (ACOs)
by Pariksith Singh, M.D.

Singh

Pariksith Singh, M.D. is a board-certified internal medicine physician who received his medical education at Sawai Man Singh Medical College in Rajasthan, India (where he was awarded honors in internal medicine and physiology).  His residency training occurred at All India Institute of Medical Services (New Delhi, India) and Mount Sinai Elmhurst Services, (Elmhurst, New York).  Upon completion of his residency, Dr. Singh relocated to Florida and worked for several years before establishing Access Health Care, LLC in 2001.

It has been more than three years since the Accountable Care Organization (ACO) initiative became operational in the United States. After all these years, what have we learned? It may be worthwhile to review these lessons, challenges, failures, and future possibilities that have or will occur.

It must be noted outright that accountable care, as practiced at present, is different from managed care. In some ways, this was intentional, offering a different model for physicians and health care professionals to focus on quality, incentivize physicians, and reduce the cost of medicine, but there have also been new business models thrown open with the success of ACOs over the last few years.

The latest numbers show that only 25% of ACOs in the country have turned a profit. The rest have floundered either because of the failure to reach the quality measures or because they are simply unable to reduce expenses. This was perhaps predictable since most ACOs have arisen de novo without any prior exposure to managed care. On the other hand, factors leading to the success of ACOs are physician leadership, hospital involvement, and the creation of a data and quality driven organization.

Reviewing the trends, it was counter-intuitive to see that the ACOs, which grew aggressively by signing up some of the worst utilizers, became highly successful. Upon a deeper look, it became clear that these organizations usually had an organizational leader who was experienced in managed care. Bringing poor utilizers into the ACO increased the benchmark, thereby increasing the chances of financial success as long as there was a modicum of focused and cost-effective management.

We have also seen specialists become highly involved in some of these ACOs, since the Center of Medicare and Medicaid Services (CMS) does not distinguish between primary care physicians and specialists, unlike managed care. This has given specialists a chance to participate in management and become stakeholders, not only as managers, but also as owners. In fact, more specialists own ACOs than primary care physicians.

The biggest expense items in the medical field have been, as expected, hospital inpatient claims followed by skilled nursing facilities (SNFs). In an attempt to improve earnings, we have observed SNFs attempting to increase the length of stay of Medicare patients, often even after they have shown the recovery needed for discharge from the facility. The next big expense items, in our experience, have been Inpatient Rehabilitation hospitals, Long Term Acute Care hospitals (LTACs) and home health care.

What are the present challenges for ACOs? It is difficult to control referrals or utilization as gate-keepers. However, engagement and proper education of patients, along with strong disease management and care management, can show great returns if properly implemented.

Data and analytics are still not as granular as with managed care. Medical professionals are hoping that CMS will address this deficiency as soon as possible. ACOs are not allowed to do a Memoranda of Agreement with vendors, facilities, or specialists to reduce costs or choose preferred providers. The initial expense and expertise involved in building an infrastructure, network, and information technology platforms and systems may still be prohibitively expensive for small physicians’ groups attempting to set up an ACO, even though CMA allows advance payout agreements with ACOs to set up the same.

It is entirely possible that more physicians will be encouraged with the marginal success of accountable care to join or create more ACOs. If managed properly, the program has the potential to reduce the national outlay for health care significantly. However, that remains to be seen. It is also possible that the movement to start new ACOs may come to a standstill due to the failure of nearly 75% of ACOs in becoming profitable.

The experience with Accountable Care may give organizations a flavor of managed care or even the desire to start Commercial ACOs. We have a much better understanding now of how the model works and hope that CMS will capitalize on this initial momentum to give ACOs an even greater incentive to expand and grow.

Pour-Over Will Savings Clause for Living Trusts

Every few years, we see a situation where another law firm’s client has signed a revocable trust but not a Will that would pour all assets into that trust.

Not only is this very embarrassing for the law firm, but it can be catastrophic for the estate plan.

The client’s personally-owned assets may pass under the Florida Intestacy Statute, and the main asset of the estate may be the cause of action against the law firm that somehow allowed a revocable trust to be signed without a pour-over Will.

We, therefore, use the following savings clause in our living trust agreements and hope that other lawyers reading this Thursday Report will consider doing the same.

We welcome any questions, comments, or suggestions on the following:

Article ____ – Pour-Over Will Savings Clause

To take into account the possibility that I may not have a Pour-Over Will at the time of execution of this Trust Agreement, this document shall be considered a Last Will and Testament or Codicil to my prior Last Will and Testament, whereby the rest, remainder, or residue of the property owned by me at the time of my death, real, personal and mixed, and wherever the same may be situated, including any interest that I might have in any estate, and all property which I may acquire or become entitled to after the execution of this document, shall pour into this Trust unless a Last Will and Testament is in place which explicitly refers to this Trust. For the purposes of this Article ___, the term “Pour-Over Will” shall mean a Last Will and Testament which, by its terms, gives, devises, or bequeaths all or a portion of the rest, remainder, or residue of the property owned by me at the time of my death to this Trust, or any trust that is revocable at the moment immediately preceding my death, of which I am a Grantor, if and to the extent executed on the same date of or after the date of execution of this Trust Agreement, from the date that this Trust began to exist.

Seminar Spotlight
Representing the Physician 2016:
The Only Constant is Change

Speakers

Pictured above are 5 featured speakers from the Florida Bar, Friday, January 8, 2016, Representing the Physician Conference at the Rosen Plaza Hotel in Orlando.

The 2016 Representing the Physician seminar will take place on Friday, January 8th in Orlando, Florida at the Rosen Plaza Hotel. The theme for the event will be The Only Constant is Change.

The schedule, developed by program co-chairs Lester J. Perling and Alan S. Gassman, is as follows:

Schedule

For more information, please email Alan Gassman at agassman@gassmanpa.com.

Richard Connolly’s World
Estate Planning Habits of the Super Wealthy

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Private Trusts for the Very Rich” by Liz Moyer. This article was featured in The Wall Street Journal on December 14, 2014.

Richard’s description is as follows:

Mega-rich families increasingly are setting up their own trust companies to manage and invest their wealth.

Trust companies run by banks or other corporate entities have long helped rich families preserve their assets for the long term. But wealth managers and lawyers who specialize in trusts say they are seeing more families that typically have assets of $100 million or more – mainly in family-owned businesses or partnerships – setting up their own private trust companies.

Doing so, the advisers say, gives the families more control over the trust’s investment decisions and ensures more personal service than if the family uses a traditional trust company.

Please click here to read this article in its entirety.

The second article of interest this week is “Death and Taxes: What Better Legacy than Tax-Free Wealth?” by Genie Nguyen. This article was featured in Bloomberg BNA on September 1, 2015.

Richard’s description is as follows:

As reported by Bloomberg Business, General Electric paid $314,511 in premiums for $22 million of life insurance coverage for CEO Jeffrey Immelt. Why would the super wealthy need a multi-million dollar policy when they leave behind a massive fortune? For the super wealthy, life insurance is about providing liquidity to the beneficiaries to pay large estate taxes rather than for the replacement of lost income, according to Bloomberg Business.

Life insurance is a tax-efficient estate planning strategy. So long as the insured does not retain any incidents of ownership over the policy, life insurance proceeds are not taxable as income to the beneficiary or includible in a decedent’s estate.

Please click here to read this article in its entirety.

Thoughtful Corner
Client Relationship Strategies

Client Retention and Success

A prospective client will typically have a checklist for making sure they have the right attorney for their needs. The seven most common items on that checklist are as follows:

  1. Is the lawyer qualified?
  2. Is the lawyer knowledgeable and experienced?
  3. Is the lawyer recommended by someone [the client] trusts, a rating service or organization, or do they have a great website?
  4. Does the lawyer ask the right questions and seem to know what he or she is doing?
  5. Does the lawyer describe a process they will go through to provide the services needed?
  6. Does the lawyer care about his or her clients and want to achieve the best results?
  7. Are the lawyer’s fees reasonable for the services provided, and will the extent of the services be communicated to the client before, during, or after the work occurs?

Good habits for lawyers to pass this checklist include:

  • Show up on time.
  • Follow through on promises.
  • Be friendly; say please and thank you.
  • Show effort.
  • Be thorough on the work provided, or make sure your team is thorough.
  • Prepare in advance, but do not over-prepare. Let the client tell you their story.
  • Let the client know what you are doing and when you are doing it. 

Building Relationships During a Client Meeting

When the client comes in for a meeting, be sure to thank them for coming to see you. So often, we communicate with texts, phone calls, or even brief “bump into you” events without actually sitting down, one-on-one and uninterrupted with someone. There is a magic to meeting in person, as it gives you an opportunity to think through the client relationship and define common objectives and activities. Therefore, be sure to thank the client for taking time out of their day to come see you.

If you are meeting with a new client, ask that person how they found you. Be sure to speak positively of anyone who recommended them to you.

Ask open questions throughout the meeting. For instance, ask “what it is that I can do for you?” If they came in for estate planning, the answer might be obvious, but there has typically been an incident that made them seek you out at that particular point in time. An intended inheritance may need to be changed, one spouse might be about to have surgery, or something else that has made the clients fearful about the future may have happened.

Ask open-ended questions about their assets as well. For instance, “What do you like best about your home?” or “What are your current plans for your motorcycle collection?” or “I see that you have $2,000,000 at Wells Fargo. What is your investment philosophy or method?”

Open-ended questions such as the above allow the clients to communicate with their advisors about something that they know and care about, and they allow the advisors to gauge the client’s knowledge and thoughts along the way.

Getting the Client’s Attention

Everyone these days is overloaded with emails, letters, deliveries, faxes, and texts. So how do you get on your client’s list of things to do?

An important question to ask every client is “How do I best communicate with you when I need to get a response?” You can have a conversation about how some clients are hard to get a hold of and how it is often difficult to get responses from these clients. Ask them what method of communication works best for them.

Some clients will say it is best to email at any time of day. Some clients will say it is best to call them, and they will give you certain hours at which to make those calls. Some clients will respond to text messages; other clients won’t want you to text them at all. Some clients will only respond to regular mail or to faxes.

When they have indicated their preferred method of communication, note it on their file or in their directory. Use that note for future reference.

If they have indicated that emails to a business address are the best way to reach them, consider pre-setting your emails to go to those clients before 7 AM or after 7 PM so that you have less immediate competition from day-to-day business communication.

Have you tried their preferred method of communication and are still coming up short on responses? Try another method. If they’ve missed an email, they might notice a follow-up letter in the mail, or vice versa.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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In the News
by Ron Ross

Following the success of the first Crayola Activity and Children’s Fashion Store, the Mr. Bubble Company has opened their own themed store, selling toys and clothing in stores filled with soap bubbles that reach a height of four feet.

Customers can pick up their missing children next door at the Amber Alert store.

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In addition to jewelry, a salon, and banking services, Walmart is now offering their own legal services desk with a full-time attorney. So far, the most common legal question is, “Is this ‘Britney Forever’ tattoo legally binding?”

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Stephen Colbert gets the guests on his new show that no one else can book, including Jeb Bush, Joe Biden, Stephen Breyer, and that King Cobra that escaped from Orlando.

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Scott Walker dropped out of the Presidential race after falling in the polls to the spot just behind the New York Subway pizza rat.

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The Florida Department of Environmental Protection has issued a report on a non-native, invasive mouse species that has not only taken over the territory of native mice, but has usurped all of the natural resources in its habitation, forever changing the environment of Southwest Orange County. Wildlife officials are unable to remove it, as it seems to be impervious to any kind of government intervention.

The species in question wears yellow shoes, white gloves, and has sent the Florida Department of Environmental Protection this frightening note:

“M-I-C…See ya real soon!”

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: Hyatt Regency Sarasota | 1000 Boulevard of the Arts, Sarasota, FL, 34236

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

For a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM and 10:50 AM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ST. PETERSBURG PRESENTATION:

ST. PETERSBURG COLLEGE FOUNDATION PRESENTS THE WOZNIAK PROJECT

Apple co-founder Steve Wozniak will be the first featured speaker in the new St. Petersburg College Foundation Distinguished Speakers series.

Wozniak is a Silicon Valley icon and philanthropist who helped shape the computing industry with his design of Apple’s first line of products. In 1976, he and Steve Jobs founded Apple Computer, Inc. In 1985, for his achievements with Apple, Wozniak was awarded the National Medal of Technology, the highest honor bestowed on America’s leading technological innovators. He was inducted into the Inventors Hall of Fame in 2000.

Join Steve Wozniak and the Foundation for a lively, interactive discussion. Charitable proceeds will benefit the St. Petersburg College Foundation. Tickets range from $85 to $95.

Thanks to the Bank of Tampa, Merrill Lynch Wealth Management, Raymond James, and the CPA firm of Gregory Sharer and Stuart for being sponsors of this event.

Date: Monday, November 2, 2015 | 7:00 PM

Location: The Palladium Theater | 253 Fifth Avenue North, St. Petersburg, FL 33701

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 10.1.15 – Charting Genetics

Posted on: October 1st, 2015

Marital Asset Preservation Systems (MAPS) by Alan Gassman

Physical Remains of a Decedent – Assets of the Estate or Subject to the Direction of a Personal Representative?

Coming Soon to a Conference Near You: Alan Gassman Live Presentations

Richard Connolly’s World – Six Financial Considerations Concerning Prenups and Divorces

Thoughtful Corner – Proper Conduct After a Client Meeting

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com. 

Quote of the Week

“I gave a presentation at Kennedy Space Center for about 4 days, probably about 6 hours a day of presentations. In those days, they used flip charts, and you gave them copies of your flip charts. I had hundreds and hundreds of charts.”

– Marvin Gassman

Marvin Gassman

Marvin Gassman worked for NASA on the Gemini, Apollo, SkyLab, and Shuttle programs in the Engineering and Operations divisions from the mid1960s until his retirement in 2003. Charting tendencies are, apparently, genetic.

Marital Asset Preservation Systems (MAPS)
by Alan Gassman

Alan

While not as exciting as NASA and rocket ships, helping married couples make sure that marital assets stay in the family is often a paramount concern that is not discussed in estate and financial planning. Once discussed, the scope and nature of an estate planning project will change significantly as the result thereof. The opportunity to have more charts to explain the systems is only one spin-off benefit!

One of the primary purposes for utilizing the Marital Asset Preservation System (“MAPS”) is to ensure that married couples keep their marital assets in the family for generations to come. In general, conscientious estate and tax planners will do their very best to meticulously plan and preserve assets for a surviving spouse while also enabling the surviving spouse to leave assets to common descendants of the decedent, with the minimal amount of taxes and probate expenses.

However, there is one question that is routinely left out of the discussion between married couples and estate planners during the planning process:

Would you like some assurance that your marital assets will only pass to your common descendants upon the death of the survivor of you?

The answer to this question is usually a resounding “yes” and, as such, requires the surviving spouse to protect the martial assets by not allowing them to be left to a subsequent spouse or some other future significant other. That answer leaves the estate planner with some rather intricate issues and challenges, not to mention more work, and an added layer of complexity to design and implement the various trust systems and strategies to be used.

Once the clients have decided that this is the right strategy for them, the planner must explain that upon the death of one spouse, the surviving spouse may serve as Trustee or Co-Trustee of one or more irrevocable trusts, with the power to change the trusteeship within pre-agreed parameters. These irrevocable trusts may only allow the surviving spouse to have access to assets and monies as needed for the spouse to maintain the standard of living that has been enjoyed during the marriage and to provide support for common descendants.

There are several restrictions that can be placed on a surviving spouse, one of which is to allow them to only make distributions outside of the family based upon an annual allowance that might be used for charity, religious organization dues, and donations and gifts to friends based upon guidelines that can be set forth in the documents. There can also be limitations placed on how much compensation might be paid to third parties for services like housekeeping, nursing, private lessons, personal trainers, and otherwise. There can also be limited access for charity, church or synagogue donations, and other defined causes.

An Ability to Provide Limited Benefits and Compensation to a Subsequent Spouse

While it is commonly assumed that the “next spouse” might threaten to deprive descendants of marital wealth and might place the surviving spouse in jeopardy of losing assets that would be needed for his or her well-being, there is also the possibility that the subsequent spouse will contribute meaningfully both to the preservation and enhancement of marital assets and with respect to providing care and support for the surviving spouse. It could be both unfair and counterproductive for the surviving spouse to not be able to allow a subsequent spouse to contribute meaningfully to marital assets and to be compensated for providing necessary services, whether personal, nursing, or managerial, where this is clearly in the best interests of the surviving spouse and possibly one or more of the descendants of the original marriage.

For this reason, the authors also provide that the MAPS Agreement or system may be amended by one or more of the adult descendants of the original couple and/or an independent Trust Protector or other advisor to take into account appropriate circumstances and formal requests for changes.

The above normally fits well and naturally under a credit shelter/marital deduction trust arrangement that will typically be established on the death of a first dying spouse where federal estate tax is a possible concern, but quite often, a good many assets will be owned outright by the surviving spouse or jointly with right of survivorship. IRA and qualified retirement plans are typically best left to a surviving spouse to enable postponement of having to take taxable distributions.

The planner must therefore explain that those assets that are not naturally captured under a trust system on the first death of a spouse will need to be either: (1) contributed to a trust system by the surviving spouse, as encouraged or required by planning documents and possibly a Marital Asset Preservation System (MAPS) Agreement; or (2) have the surviving spouse contractually bound by a MAPS Agreement requiring them to maintain existing marital assets and any income derived from those assets for the surviving spouse’s life. Also direct that those assets be left for only common descendants upon the surviving spouse’s death.

The author commonly uses one or both of these alternatives. These techniques are often coupled with carefully drafted trust provisions, as well as an explanation in the trust document to ensure that every possible step is satisfied that the MAPS objectives are met.

One issue for couples having more than the $10,860,000 exemption level situation, or expectation thereof, is whether limitations placed on inherited assets would cause loss of the federal estate tax marital deduction and consequent income tax to be paid on the first death. Each individual presently only has a $5,430,000 estate and gift tax exemption amount, which must be considered. This issue is especially important when the surviving spouse is contractually bound to preserve and leave the assets for subsequent descendants, as opposed to receiving the assets as the sole owner without any legal entanglements.

Generally, there is no marital deduction allowed for dispositions that do not at least allow the surviving spouse to have all income from marital deduction trust property and to be the sole beneficiary of a trust holding such property for his or her lifetime. A marital deduction may also not be received for assets that are paid outright to a surviving spouse who has significant contractual limitations on what he or she is able to do with the property.

In states that do not recognize community property, most planners will use separate revocable trusts for affluent husbands and wives because of established customs and the complexities associated with using joint trusts. In such situations, it is possible to have the revocable trust of the surviving spouse become irrevocable upon the death of the first spouse. For purposes of federal estate and gift taxes, this event will be considered an incomplete gift because it provides the surviving spouse with the right to veto payments to any person other than the surviving spouse during their remaining lifetime and the power to appoint trust assets to common descendants of the married couple. Alternatively, in states that do recognize community property, joint trusts are becoming more prevalent.

An objective for many estate and tax planners, regardless of the state in which they live, is to have the first dying spouse’s death cause a step-up in the income tax basis to a fair market value for any and all family assets. This strategy should be utilized to the extent that the family would benefit from having an increased basis, which would essentially take any property that appreciated during the decedent’s lifetime and provide the surviving spouse with the ability to not recognize any gain on such property when they come into possession.

Many planners in non-community property states are using Joint Exempt Step-Up Trusts (“JEST”), which may enable clients to receive this stepped-up basis on all joint trust assets upon the death of the first dying spouse. When the first spouse dies, assets held by the joint trust are used to fund a credit shelter trust for the benefit of the surviving spouse and descendants. These assets now held by the credit shelter trust will receive a full step-up in basis and escape tax liability upon the surviving spouse’s death.

Life insurance can also be integrated into the arrangement by having the death benefit payable to an irrevocable trust, which may be a separate trust that owns the policy so as not to be subject to federal estate tax on the death of the first dying spouse.

Waiver of Marital Rights

Most states have statutes which provide a surviving spouse with a minimal outright disposition, most commonly known as the Elective Share. In addition, some states provide a surviving spouse with homestead inheritance and other rights which may be waived during the estate planning process while both spouses are living.

The estate planner will have to be very careful with respect to disclosing conflict of interest issues and evaluating whether one or both spouses should be required, or at least strongly urged, to seek independent legal counsel before being legally bound to have limited access and control to marital and inherited assets after the death of one spouse. In the event that a conflict of interest does arise, the estate planner should withdraw and require the spouses to retain separate counsel. Furthermore, because the planner represented both spouses, they are prohibited from representing either one of them against the other, even with informed consent.

ABA-Model Rule 1.7 addresses the rules for Current Client Conflicts of Interest. In essence, Rule 1.7(a) states that a lawyer shall not represent a client if representing one client will be directly adverse to another client. However, this Rule is not an absolute bar to representing a client when there is a conflict. Subsection (b) provides that a lawyer may represent a conflicted client if (1) they believe they can provide competent representation; (2) it is not prohibited by law; (3) it does not involve one client asserting a claim against another client, both of whom are represented by the lawyer; and (4) each client gives informed consent. In the context of marital inheritance, subsection (b)(3) will almost always bar the attorney from representing one client over another, even with informed consent.

Physical Remains of a Decedent – Assets of the Estate or Subject to the Direction of the Personal Representative?
by Chuck Rubin

One would think that the body of the decedent is an asset of the estate that might be subject to Probate Code guidelines on real and personal property. According to the Florida courts, however, this is not necessarily the case.

Chuck - Final

Notable trust writer and dedicated writer/blogger Chuck Rubin wrote an outstanding article on this subject, based upon the May 2014 Palm Beach Probate court case of Wilson v. Wilson, in which divorced parents fought over whether or not their son’s remains were divisible after the 23-year-old’s untimely death. The father wished for the remains to be declared property so he could bury a portion of the ashes in a family plot in Georgia. The mother wanted the entirety of the remains to stay near her West Palm Beach home.

A summary of Chuck’s take on this case and the practical applications thereof are as follows:

Executive Summary

An heir unsuccessfully asserts that the decedent’s cremated ashes are estate property that should be divided with the other property of the estate.

Facts:

A father of a deceased child sought to have the cremated ashes of his son divided equally with his former wife who was the mother of the deceased child. The mother objected to the division on religious grounds. Both the Florida probate court and the appellate court held for the mother.

Florida law recognizes there is a legitimate claim of entitlement by the next of kin to possession of the remains of a decedent for burial or other disposition. However, the scope of that entitlement, especially when the decedent made no expression of desire as to the disposition of his or her remains and there is a dispute among the kin, is not well-defined.

To get around this uncertainty and obtain half of the ashes, the father posited that his son’s ashes were “property” of the probate estate and should be disposed of in accordance with the disposition of all the decedent’s property. Since he and the mother were the beneficiaries of their son’s estate, the remains should be divided equally between them.

Florida Statutes §731.201(32) defines property for Probate Code purposes as “both real and personal property or any interest in it and anything that may be the subject of ownership.” So, at first glance, it appears that bodily remains may fit within this definition. However, the Florida Supreme Court has articulated that the next of kin have no property right in the remains of a decedent. Kirksey v. Jernigan, 45 So 2d 188 (Fla. 1950); State v. Powell, 497 So 2d 1188 (Fla. 1986); Crocker v. Pleasant, 778 So. 2d 978 (Fla. 2001). The appellate court indicated that this position has deep roots in the common law, quoting Sir William Blackstone’s Commentaries that heirs have no property interest in bodies or ashes of decedents.

Thus, the appellate court rejected the father’s attempt to divide the ashes based on the ashes being property of the probate estate subject to division. This is not to say that the probate court, in exercise of its discretion in the matter, was without authority to divide the ashes – just that it could not be compelled to do so based on a property rights argument.

Comment:

Similar results should apply in other states outside of Florida that follow the common law. While not a perfect solution, dispositive directions in the Last Will of decedents over disposition of remains can help reduce disputes over remains, especially in circumstances where a later dispute is possible, such as second marriage situations or when the children do not get along.

Charles Rubin is a Managing Partner with Gutter Chaves Josepher Rubin Forman Fleisher Miller, P.A. Chuck earned both his J.D. degree and his LL.M. in Taxation from the University of Florida. He is Florida Bar Board Certified in Taxation and was named the 2015 Lawyer of the Year by Best Lawyers in Taxation in the Miami metropolitan area. He has been running Rubin on Tax, a tax blog on developments relating to Federal and Florida tax, estate planning, probate, and business law, since 2005. The blog currently features over one thousand posts, and can be viewed by clicking here http://rubinontax.floridatax.com/.

Coming Soon to a Conference Near You
Alan Gassman Live Presentations

October 2015

October 24th – 2015 Mote Vascular Symposium

Alan Gassman will be speaking on the topic of Estate, Medical Practice, Retirement, Tax, Insurance, and Buy/Sell Planning – The Earlier You Start, the Sooner You Will Be Secure.

This presentation will take place at the Hyatt Regency in Sarasota, Florida.

November 2015

November 5th – Interactive Estate and Elder Planning Legal Summit

Alan Gassman will be speaking on the topic of Scientific Marketing for the Estate Planner – How to Do More of What You Love to Do and Less of the Other While Better Serving Clients, Colleagues, and Your Community.

This presentation will take place at the New York Hilton – Midtown Manhattan in New York City.

November 12th – Suncoast Estate Planning Council

Alan Gassman will be speaking on the topic of Portability Under New Regulations and Alice’s Looking Glass.

This presentation will take place at All Children’s Hospital in St. Petersburg, Florida.

January 2016

January 8th – Representing the Physician: The Only Constant is Change

Alan Gassman will present three talks at the Florida Bar sponsored Representing the Physician seminar. His topics will include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice
  3. Where Tax and Health Law Simply Don’t Work Together (with Lester Perling)

This event will take place at the Rosen Plaza Hotel in Orlando, Florida. More information about this program will be featured in next week’s Thursday Report.

January 30th and January 31st – MER Internal Medicine for Primary Care Program

Alan Gassman will present four, one-hour Medical Education Resources, Inc. talks for cardiologists and other doctors who attend this four-day conference. His topics will include:

  1. The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  2. Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  3. 50 Ways to Leave Your Overhead
  4. Essential Creditor Protection and Retirement Planning Considerations

This presentation will take place at the Casa Marina Resort in Key West, Florida.

May 2016

May 6th – 3rd Annual Ave Maria School of Law Estate Planning Conference

Alan Gassman will be presenting a talk entitled Coffee with Alan: An Introduction to Select Estate Planning and Asset Protection Strategies. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of What We Wish We Knew When We Started Practicing Law – Non-Tax and Practical Advice for Estate Planners Young and Old.

This presentation will take place at the Ritz Carlton Golf Resort in Naples, Florida.

Attend all but one of the above presentations and receive 25 buckets of Kentucky Fried Chicken (thighs only!) and mashed potatoes, no gravy, delivered to your favorite mother-in-law the day before Thanksgiving, 2016. Attend all of the above presentations and receive a new mother-in-law!

Please note that we also speak at weddings and Bar Mitzvah’s!

Richard Connolly’s World
Six Financial Considerations Concerning
Prenups and Divorces

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Talking Prenups with Clients: 6 Tips” by Kimberly Foss. This article was featured in Financial Planning on May 18, 2015.

Richard’s description is as follows:

Many clients walk down the aisle with the security of a prenuptial agreement. Because the foundation of our work with clients is to plan for an unknowable future and ensure that they are prepared financially for whatever life throws at them, it is almost always advisable to sign a prenup.

But pitching the prenup isn’t always easy. Many clients initially view it as unnecessary and, well, unromantic.

Six tips for working with clients to create a successful prenup are as follows:

  1. Get a head start – Six months before a wedding is standard.
  2. Manage the romantics – Think of a prenup as insurance, not something that will tarnish a relationship.
  3. Discuss both assets & liabilities – This is especially important for people with student loan or other large sums of debt.
  4. Allow for (some) flexibility – Marriages can change over time; a prenup should be able to adapt, too.
  5. Think beyond money – Prenups can also include financial goals, investment strategies, annual vacations, and social media clauses.
  6. Use star power – Is the prenup still a tough sell? Use celebrity examples. Everyone enjoys a good Hollywood story.

To explore each of these tips in detail, please click here to read this article in its entirety.

The second article of interest this week is “Divorce and Money: Six Costly Mistakes” by Veronica Dagher. This article was featured in The Wall Street Journal on May 15, 2015.

Richard’s description is as follows:

Divorce can be hazardous to your financial health. Splitting up is expensive, and your cost of living is likely to go up when it’s all over.

If you are considering seeking a divorce, plan carefully in advance so that you can make rational decisions at a time when emotions may be running high. Six common mistakes to avoid are as follows:

  1. Overlooking assets – It is crucial to know what your family’s assets and liabilities are.
  2. Keeping the house – A household that took two people to run may be far too expensive for just one.
  3. Underestimating expenses – It is key to get a firm handle on expenses beyond housing.
  4. Seeking revenge – Couples are better off approaching divorce as an opportunity to strike a favorable business deal rather than a chance to settle scores.
  5. Forgetting about taxes – Be careful not to divide assets in a way that looks fair but sticks one spouse with a larger tax bill.
  6. Thinking the work is done – There are other important financial matters that need attending to after the papers are signed.

To explore each of these mistakes in detail, please click here to read this article in its entirety.

Thoughtful Corner
Proper Conduct After a Client Meeting

Client meetings can result in a great deal of information being gathered and a number of follow-up items. Ideally, we would all take perfect notes or have a scribe in the room to take perfect notes for us, but this rarely occurs.

If you are working as best you can on communication skills, creative thinking, and explaining things during a conference, it is unlikely that you can also take notes that can be relied upon the next day or week as an appropriate summary of what happened and what you need to know moving forward.

Lawyers who have a long drive home are blessed with the ability to dictate their notes from meetings and client follow-up letters (more on those below!) on their way. If you do not have a long drive home, the following steps are an excellent way to ensure that all work for a client is remembered and completed.

Have your office staff scan all notes and materials reviewed during the meeting so that it is not possible for them to get lost thereafter.

Sit in the same room you met with the client(s) in and sit in the same seat, facing the same direction, and tape record an explanation of what was discussed. Have a paralegal who can manage the client’s follow-up in the room during this recording.

If there is time, dictate a letter to the client with the paralegal sitting there listening and looking at the notes taken during the meeting. This letter can concentrate what was discussed and what your staff is doing. By having the paralegal in the room with you, he/she can interrupt to ask for more detail and remind you to note certain things in the letter that need to be done or that the client needs to do.

Then, follow your notes and explain what was discussed and what needs to be done directly to the paralegal. The paralegal can ask questions, which can prompt you to make decisions and begin thinking about issues and next steps immediately following the meeting. This discussion can also help you to recall exactly what was discussed.

If there is limited time, record the same ideas as a memo to yourself or to the file of what is needed to remember and what is needed to later explain. The information can then be crafted into a letter when time permits.

If anything significant comes up before the work promised in the follow-up letter is done, you can call the client or send them a quick email to make a mid-course connection or to clarify understanding while the client is still very much into the process as well.

Studies (and my experience) have shown that the best memory of an event comes when you sit in the same place you were in when that event occurred, so it is best to do this as soon as possible after the meeting has concluded.

If you’re able to dictate a letter to the client right away, it’s fine to indicate specific things such as, “as part of the work we will be doing for you, we will draft a clause that does this, a clause that does that, and will also provide…” because this gives the client an explanation of what you are doing while also providing a roadmap and a reference document for your paralegals, lawyers, and other team members.

This letter essentially serves as your “fee agreement” because it defines what you are doing, what you are not doing, and anything else that you may have discussed about costs. It is the most important post-meeting product and becomes the focal point for the project. This letter is typically completed before any other work is started.

We review this follow-up letter when a client comes back for another meeting, when document packages go out, or when we need to remember what we were doing or not doing for the particular client. An incidental benefit of this review method is that you will have much better recall of what was discussed with the client if you have immediately repeated the most important parts and told their story to a staff member.

This, and illustrating and charting all data on one Excel document, will be a very valuable part of your work product for the client. 

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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A Poem
by Ron Ross

Romans conquered the world with swords, arrows, and spears,
The weapons they used filled their enemies with fears.
Their ships deployed “the raven,” a kind of giant claw,
They also invented siege towers, catapults, and attorneys at law.

Etruscans once ruled Italy. Know why they don’t remain?
Romans took their land using imminent domain.
When Hannibal and Carthage attacked, they were left with two cents.
The court seized their army, declaring their elephants a public nuisance.

Wonder why the Jews found Romans so abhorrent?
They sacked the Holy Temple, armed with only a search warrant.
But payback comes to everyone, just as a matter of course.
Rome wept when the Eastern Empire was granted a divorce.

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In the News
by Ron Ross

Halloween is coming soon, and Presidential candidates are expected to be popular costume choices. Buy your Donald Trump or Bernie Sanders wigs now before they’re all gone!

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California announces that the 3,380 fires this year were caused by 3,379 different people who left the house without unplugging their iron.

In related news, two women discovered their husband was a bigamist when local news reported he accidentally burned down both of his homes by leaving the iron on.

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An elephant wandered away from the zoo and ended up in a nunnery where the sisters have taken a vow of silence. They literally cannot talk about the elephant in the room.

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: Hyatt Regency Sarasota | 1000 Boulevard of the Arts, Sarasota, FL, 34236

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present three talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice
  3. Where Tax and Health Law Simply Don’t Work Together (with Lester Perling)

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

For a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM, 10:50 AM, and 4:25 PM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information. 

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 9.24.15 – The Greatest Thursday Report Ever!

Posted on: September 24th, 2015

What Estate Planners Need to Know About Minority Owned Business Interests

Travel Insurance: A Practical Safeguard or Money-Making Scheme?

Who Really Lives (or Doesn’t) in Your Household? by Tim Ryles, Ph.D., AAI

Richard Connolly’s World – Recent Federal Tax, Estate, and Partnership Changes

Thoughtful Corner – Dealing with Clients Who Have a Terminal Illness

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

What Estate Planners Need to Know About
Minority Owned Business Interests

by Alyssa Eberle, J.D.

What You Need to Know to Not Inadvertently Lose Small Minority Business Status in Your Planning – One Wrong Transfer Can Spoil a Whole Company

The United States Small Business Administration has developed a program called the SBA 8(a) Business Development Program that helps minority-owned businesses develop through counseling, workshops, and management guidance. Some states, including Florida, have adopted the program into their own statues and legislation in order to address the pattern of past and continuation discrimination against minority business enterprises.[1]

The Florida Department of Management Services outlines the eligibility requirements to become certified as a minority business within the state. The minimum eligibility requirements are as follows:

  • The business must be registered in MyFloridaMarketPlace.
  • The business must be independently owned and operated, with a net worth not exceeding $5 million. The business must also employ 200 or fewer full-time permanent employees or must be recognized as a certified business by the federal government.
  • 51% of the business must be owned, managed, and controlled by: a minority, a woman, or a Florida veteran who is a citizen of the United States and a permanent resident of Florida.
  • If a professional license if required for the industry, the minority owner must be the license qualifier.
  • The minority owner did not acquire their majority ownership of at least 51% through a transferal of ownership occurring within a minimum of two years, when the previous majority ownership interests in the business was by a non-minority who is or was a relative, former employer, or current employer of the minority persons on whom eligibility is based.
  • The business must currently be in operation.
  • The business must be legally registered to do business in Florida.[2]

In order for the business to qualify as minority owned, the business must be unconditionally owned and controlled by the minority-owner. The owner will have control if he or she directs both the long-term decision making as well as day-to-day management and administration of the business’s operations. To be “unconditionally owned,” the ownership in the business must be direct.[3] In other words, the business cannot be owned by another business entity, nor can the business be owned by a trust such as an employee stock ownership trust.[4] However, ownership by a living trust is permitted and may be treated as the “functional equivalent of ownership” so long as the minority-owner is the grantor, a trustee, and the sole beneficiary of the trust. Once the ownership and control has been determined, the business can file with the Office of Supplier Diversity to receive their certification.

If the minority business owner determines that owning the business by way of a living trust is the most beneficial, the owner will want to be aware of relevant trust law. It is essential to note that living trusts are revocable trusts, meaning that they are able to be changed throughout the life of the grantor. However, minority business owners will want to be wary that the living trust could potentially become a self-settled trust since the owner is the grantor, the trustee, and the beneficiary. Self-settled trusts are trusts established for one’s own benefit and do not provide asset protection benefits.[5] If the business owner wishes to add a trustee to the trust, they must ensure that this will not affect the ownership or control of the business. Doing so could put the minority-owned status at risk.

Minority owned businesses are a growing participant in many industries in Florida. Women and minorities should be aware of the potential benefits in certifying their business, as well as the potential benefits in owning their business in a trust.

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[1] See Fla. Stat. §287.09451.
[2] More on the eligibility requirements for a Florida owned minority business may be found here: http://www.dms.myflorida.com/agency_administration/office_of_supplier_diversity_osd/certification/eligibility_requirements.
[3] 13 C.F.R. § 124.105.
[4] Id.
[5] See Fla. Stat. § 736.0540.

Travel Insurance: A Practical Safeguard or Money-Making Scheme?
by Noah Fischer, J.D. Candidate, Stetson Law School

You are 135 times more likely to match all but one number in the Florida Lottery than you are of suffering death or dismemberment in a plane crash. If you already have adequate life insurance, it would seem that the American Express and other similar Travel Accident Protection Insurance is unnecessary.

Executive Summary:

American Express (AmEx) credit card users are able to obtain Travel Accident Protection Insurance, covering accidental death and dismemberment, before departing on vacation. Users can pay between $11 and $35, depending on the terms of the specific AmEx card and the type of coverage offered. If you have the misfortune of needing the coverage while on vacation, you could earn between $250,000 and $1,500,000.[1] What are the odds of cashing in on this?

Some countries may not honor foreign medical insurance coverage, so it would make sense to purchase a policy that would cover any emergencies. AmEx offers a Global Medical Protection policy that covers emergency medical and dental expenses, as well as the cost of emergency medical transportation, for the first 60 days of a trip. The Travel Accident Protection Insurance, however, is less of a logical investment. If you already have adequate life insurance, you probably don’t need additional protection. You are more likely to die in a car crash on the way to the airport than in a plane crash on the way to or from your destination.

Why would someone purchase this coverage, despite the odds telling them they don’t need it? Orit Tykocinski, a professor at the Interdisciplinary Center Herziliya in Israel, plainly addresses why some people may be skeptical when it comes to passing up this offer:

“Why would I want to pay so much for a life-insurance policy that covers me only on airplane trips, which are the safest of all trips? It doesn’t seem like a good deal to me, but that’s just my brain talking. My gut thinks the insurance will make sure the plane gets me to that beach.”

As illustrated by the quote above, many people are provided with a sense of safety when they know they are insured against a plane crash, even though additional coverage does not raise the probability of keeping that bird in the sky.[2]

Facts:

Odds of Dying in a Plane Crash:

As most people know, the odds of dying in a plane crash are extremely low, especially in the United States. There were a total of only six fatal accidents involving US-registered jets during 2013, resulting in 17 fatalities.[3] According to the International Air Transportation Association (IATA), only 210 people died worldwide in airline crashes in 2013, with approximately 3 billion people boarding 35 million total flights in that same year.

Phil Derner, Jr., founder and president of NYCAviation, insists that the odds of dying in a plane crash in the United States are equivalent to the odds of being struck by lightning seven times.[4] For comparison purposes, the odds of winning the jackpot in the Florida lottery are 1 in 22,957,480, while the odds of matching all but one number are 1 in 81,409.[5] The average probability for dying in a plane crash in the US is 1 in 11,000,000.[6]

To further put these odds into perspective, the odds of dying in a motor vehicle crash are about 1 in 5,000, and the odds of dying in a railroad accident are 1 in 306,000.[7] Even if you do end up aboard a flight that happens to crash, according to the National Transportation Safety Board, 95.7 percent of passengers involved in a plane crash survive. Even in the most devastating of crashes, the passenger survival rate is still 76 percent.[8]

Policy Information:

Despite the odds, many people are risk adverse and would like to have the peace of mind that comes with knowing there is additional coverage protecting themselves and their families.

Should you choose to purchase Travel Accident Protection coverage, the coverage begins at 12:01 AM on the first day of the trip and ends at 12:01 AM on the day immediately following the trip’s conclusion date. If the trip that coverage has been purchased for lasts more than one year, only the first 365 consecutive days will be covered. The benefit for the purchased policy is payable if the covered person suffers accidental death or dismemberment while traveling into or departing out of a scheduled airline or common carrier.

The payout depends upon the extent of injuries sustained in a possible plane crash. For example, if your plane crashes and you lose a hand or lose sight in one eye, then 50 percent of the total policy will be paid out. Death, the loss of both hands, feet, eyes, or a mixture of any two of the three is required to have 100 percent of the total policy paid out. The benefit will be paid within 100 days of the accident that caused the death or dismemberment. If accidental death or dismemberment occurs from exposure to the elements while on the insured trip because of disappearance, sinking, or wrecking of a scheduled airline, the coverage will apply.

Death from riding in or driving a rental vehicle is not covered if you meet any one of the approximately 20 exclusions, such as intentional exposure to exceptional danger or any mental or emotional condition, whether it be diagnosed or undiagnosed.[9] Death from any sickness obtained while on the trip is also not covered under the Travel Accident Protection policy.

Once a claim for a death benefit is made, the accidental death or dismemberment benefits will be paid out in a single lump sum.

Comment:

The odds of needing to collect on AmEx’s Travel Accident Protection Insurance for accidental death and dismemberment are already low, even before taking into account the restrictions and exclusions of the policy.

For AmEx, however, it could be a pretty lucrative deal. Assuming that AmEx sells 200,000 of these policies per year with a premium of $23 (the average cost of the different policies), they would make $4.6 million profit while taking minimal risk. A plane would have to defy the 1 in 11 million odds of crashing, and a passenger on that plane would have to have Travel Accident Protection Insurance coverage through American Express, and that passenger would have to suffer a qualifying death or dismemberment under the policy before AmEx would have to dish out the benefit. Not to mention the price of $11-$35 per person per covered trip[10], if annualized, far exceeds the cost of a normal life insurance policy[11].

If you are planning to travel outside of the United States to a country that does not accept your health insurance or is inherently dangerous, you could look into AmEx’s Global Medical Protection plan, but if your flight is confined to the US, you are better off skipping the American Express travel insurance coverage and spending the cash on Florida lottery tickets instead.

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[1] “American Express Travel Insurance.” American Express Travel Insurancehttps://www295.americanexpress.com/travel-insurance/quoteDetail.do?aetiSource=AETI#99
[2] Tierney, John. “The Magic of Flight Insurance.” The New York Timeshttp://tierneylab.blogs.nytimes.com/2008/05/05/the-magic-of-flight-insurance/?_r=0.
[3] Zimmerman, John. “Have We Won the Safety Battle?” Air Facts Journal (2014). http://airfactsjournal.com/2014/01/won-safety-battle/ .
[4] Golgowski, Nina. “Odds of Dying in Plane Crash in US are Equal to Being Struck by Lightning SEVEN Times: Expert.” New York Daily News. http://www.nydailynews.com/news/national/common-plane-crashes-expert-weighs-deadly-week-article-1.1879212 .
[5] “Odds Calculation Results.” LottoStrategies.comhttp://www.lottostrategies.com/script/odds_calculate.
[6] Sherwood, Ben. “Flight Check: What are the Chances I’ll Die on my Next Plane Trip?” The Huffington Post. http://www.huffingtonpost.com/ben-sherwood/the-sky-is-falling-will-i_b_170038.html
Barrabi, Thomas. “After Air Algerie AH5017 Incident, A Statistical Look at the Probability and Chances of Dying in a Plane Crash.” International Business Times. http://www.ibtimes.com/after-air-algerie-ah5017-incident-statistical-look-probably-chances-dying-plane-crash-1638206.
[7] Ropeik, David. “How Risky is Flying?” PBS. http://www.pbs.org/wgbh/nova/space/how-risky-is-flying.html.
[8] “How Do People Survive Plane Crashes?” Curiosity.com. https://curiosity.com/playlists/how-do-people-survive-plane-crashes-o53cN3Xy/?utm_source=dsc&utm_medium=rdr&utm_campaign=rdrwork#intro-playlist
[9] “Platinum.” InsureMyTrip.comhttp://www.insuremytrip.com/popup/certificate/AETIP/accidentalDeathCommonCarrier.html?rev=5.[10] “American Express Travel Insurance.” American Express Travel Insurancehttps://www295.americanexpress.com/travel-insurance/quoteDetail.do?aetiSource=AETI#99.
[11] “Life Insurance Cost.” TrustedChoice.com. https://www.trustedchoice.com/life-insurance/compare-coverage/cost/.

Who Really Lives (or Doesn’t) in Your Household?
by Tim Ryles, Ph.D., AAI

Thank you to Tim Ryles, David Thompson, and the Florida Association of Insurance Agents for allowing us to bring this fascinating discussion that shows how complicated and non-intuitive defining residency can be to Thursday Report readers.

Ryles

Tim Ryles, Ph.D. provides consulting services and expert testimony in insurance litigation, regulatory matters, and consumer protection. He is also a frequent author and speaker on those issues. Dr. Ryles served as the Georgia Commissioner of Insurance from 1991 to 1995 and was appointed by Governor George Busbee to serve as Administrator of Georgia’s Governor’s Office of Consumer Affairs from 1975 to 1982. Dr. Ryles received his MA and Ph.D. in political science from the University of Georgia. He can be contacted at Tim Ryles Consulting Services, LLC by emailing timryles@bellsouth.net.

The following article is copyrighted by the Florida Association of Insurance Agents and is used with permission.

Given the broadening range of risks within modern families, the boundary lines between resident and non-resident are of great significance in determining coverage issues, including whether an insurer has a duty to defend. Determining residency in a blended-family society is, in many ways, a moving target for insurers and insureds. This article examines the issues raised by non-definition of “resident” in homeowners insurance policy and how it is sometimes construed.

Justice Roger Trainer once observed that, “Plain words, like plain people, are not always as plain as they seem.” Take the common language about who is an insured in homeowners policies as an example. The language of the Insurance Services Office, Inc. (ISO), Broad Form HO 2 policy provided below is representative.

“Insured” means you and residents of your household who are:
your relatives; or
other persons under the age of 21 and in the care of any person named above.
“You” includes the named insured and spouse if a resident of the same household.

The key terms “residents,” “household,” “relative,” and “in the care of” are undefined and have been the subject of considerable dispute and litigation. If past disagreements over their meanings aren’t enough reason to prompt insurers to define what the terms mean, two additional factors converge to highlight the problem: (1) dynamic sociological changes in family structure, and (2) varying court interpretations of the terminology.

Sociological Changes in American Families

Since many of our conceptions of what insurance terms mean may be grounded in an earlier social paradigm similar to that portrayed in “Leave it to Beaver” television series, insurers that fail to adapt to accelerating changes in the American family structure may be in for trouble in the future. Consider, for example, possible implications for risk of the following statistics and trends.

Census figures show that the ratio of marriages to divorces is about 2:1, that divorces annually affect over a million children (16.8 per 1,000 children); and children of divorce are more likely to suffer from psychological or emotional problems, drop out of school, incur teen pregnancies, and end up in prison for aberrant behavior. Of all weddings, 43 percent are remarriages for at least one parent, thereby giving rise to a continuing increase in the number of blended families in which children, parents, and grandparents may share no blood relationships.

Blended families not only combine offspring and in-laws from previous marriages, but also may create a fertile ground for domestic violence by bringing together inhabitants who hold deep-seated, hostile feelings toward one another. Increased step-parenting and live-in significant others may contribute to sexual abuse and other forms of violence against children. Persons living in strained family circumstances may engage in acts of displaced aggression toward others, thereby incurring greater liability for everyone. In other words, it isn’t just the family-dog threat that insurers need to be concerned about.

Who Lives Here? – What Courts Say

Since disagreements about residency often end up in court, a review of how judges resolve the issue is instructive; indeed, the directions taken by judges show that rather than clarifying matters, courts instead may clutter them. Among the factors courts often examine are issues of domicile versus residence, dual residency, and how a grant of child custody in divorces confers residency on children.

Domicile and Residence

It is customary to consult a dictionary for guidance when insurance terms are undefined, technically for the purpose of giving the words their ordinary meaning. Webster’s Ninth New College Dictionary accords the following definition to “resident”: “Living in a place for some length of time. RESIDING.” To “reside” is “to dwell permanently or continuously.” Although policy language does not mention the term “domicile,” some state statues and common-law principles distinguish domicile from residence.

Consistent with this, “resident” is not necessarily “domicile,” view. A New Jersey court distinguished the two as follows: Domicile is “the place where a person has his true, fixed, permanent home, and principal establishment, and to which, whenever he is absent, he has the intention of returning.” Conversely, a residence lacks “the elements of permanency, continuity, and kinship with the physical, social, and political attributes which inhere in a home.” The court added, “Intention adequately manifested is the catalyst which converts a residence from a mere place in which a person lives to a domicile.” [See Miller v. USF&G, 127 NJ Super 37 (1974).]

This “intention adequately manifested” adds a subjective element to the formula for determining resident status. Knowing where a person resides is insufficient – where that person intends to live is also a vital part of the formula. To allay cases of adjuster jitters, some courts temper this subjective element. For example, a California court asserted that exclusive reliance on this subjective indicator “would mean that coverage expands and contracts on the whimsical plans of a dependent family member.” [See Utley v. Allstate Insurance Company, 19 Cal App 4th 820 (1993).]

Other venues make no distinctions between resident and domicile. In West Virginia, for example, “The word residence, as used in divorce statues, is almost universally construed to be the equivalent of domicile.” [See Taylor v. Taylor, 128 W Va 198, 204 (1945), cited at fn. 5, Farmers Mutual Insurance Company v. Hubert Junior Tucker, 213 W Va 16 (2002).] Since blended families are usually the result of divorce proceedings, a prudent adjuster may need to consult a divorce law specialist in making final determinations of how “resident” is applied in a particular jurisdiction when determining a child’s residency.

Dual Residency

For insurance purposes, many states recognize that a person may have more than one residence, a status called dual residency. [See New York Central Fire Insurance Company v. Lawrence W. Perkey, et. al., 747 NYS 2d 878 (2002.)] Factors that call attention to dual residency include the ownership of second homes, child custody assignments in divorce cases, adult children in the process of establishing independence from parents, and elderly parents moving in with children. However, while the view in some states is that one can reside in more than one place, this is not a universal rule: Montana, by statute, does not allow dual residency.

Custody versus Residency

Generally, it may be assumed that in cases of divorce, residency is established by the custody awarded in the divorce decree. (Census figures show that 72 percent of custody awards are to the wife, 9 percent to the husband, and 16 percent are for joint custody.) That a divorce decree is not the final word, though, is well illustrated by the case of Miller v. USF&G, 316 A2d 51 (NJ 1974). In Miller, the divorce decree granted custody to the mother, but the court determined that in actual practice, both parents had custody; consequently, the child was covered under both homeowners policies (a finding of dual residency). Thus, the determining factor is not what the decree says, but what the people involved actually do that matters most. Insurers, therefore, must look beyond formal custody documents to determine residency.

Qualitative and Quantitative Factors: It’s More than Just Headcount

A Georgia court set forth the following guideline for establishing resident status: “The aggregate details of the family’s living arrangements must be considered…not any one factor.” [See Rainey v. State Farm Mutual Automobile Insurance Company, 257 Ga App 618 (1995).] In this approach, the inquiry is directed largely at measuring quantitative indicators, and much of the focus is determining whether separate households have actually been established. As the court noted in Rainey, “Physically maintaining living accommodations in the insured’s home is one, but not the sole, consideration” in determining residency.

New Jersey courts crafted the concept of a “substantially integrated family relationship” to ascertain resident status. Under this label, courts apparently look not only at the qualitative elements but also quantitative ones as well. Quantitative inquiries encompass questions about how people function together as family members in such activities as sharing meals, expenses, and pursuing common goals based upon common interests.

With the New Jersey and Georgia views in mind, it is easier to understand how courts have determined that people don’t have to live together under the same roof to qualify for resident status [Gibson v. Callahan, 158 NJ 662 (1999)] and that resident of a house does not automatically qualify one as a resident of a household for insurance purposes [Hawkeye Security Insurance Company v. Sanchez, 460 NE2d 873 (Ill App 1984)].

Conclusion

Since failure to define “resident” contributes to significant litigation, one might ask why insurers don’t read the judicial tealeaves and make appropriate amendments. Could it be that under the current language, insurers find it easier to deny coverage? For example, insurers can argue that a child visiting a parent on the weekend who causes property damage or bodily injury to others is not a resident, and that a negligent divorced parent who is held responsible for bodily injury suffered by a child during a visitation period and is sued by the other parent is a resident. Whether true or not, plaintiffs’ attorneys will most likely catch on to any apparent company inconsistency in claim adjudication whether it occurs by design or through lax claim management.

For claims personnel, lack of clarity imposes an added burden in investigations to make sure that their determination of who is a resident demonstrates a diligent effort to pursue quantitative and qualitative indicators of resident status and to show familiarity with the prevailing case law.

Finally, claimants may add ammunition to arguments for coverage by pointing out that “resident of your household” language has been found ambiguous [Gibson v. Callaghan] and contend further that different interpretations from one jurisdiction to another of what the word resident means automatically qualifies the term as ambiguous. Given this possible scenario, perhaps insurers should more seriously heed the words of Justice Traynor and assign plain definitions to plain words so plain people can be deterred from giving insurers a plain whipping in court.

For more great articles, check out the FAIA’s Education Library at https://www.faia.com/Resources.aspx?pid=198.

Richard Connolly’s World
Recent Federal Tax, Estate, and Partnership Changes

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “What Congress Didn’t Do Before Summer Vacation: Several Dozen Tax Benefits Remain in Limbo” by Laura Saunders. This article was featured in The Wall Street Journal on August 7, 2015.

Richard’s description is as follows:

As Congress was heading for recess in late July, lawmakers passed several important tax changes. This article provides information on the changes, with the dates they take effect.

Some of the notable changes include:

Partnerships – Starting in 2017, for the 2016 tax year, partnership tax returns will be due March 15 rather than April 15.

Estates – Some estates now will have to provide both heirs and the IRS with information about the value of certain assets to ensure that tax won’t be underreported if the asset is later sold.

The provision takes effect for estates filing returns after July 31, 2015, so it could affect the estates of some who died last year.

Please click here to read this article in its entirety.

The second article of interest this week is “Navigating Tougher IRS Rules for Family Partnerships” by Paul Sullivan. This article was featured in The New York Times on August 7, 2015.

Richard’s description is as follows:

The Internal Revenue Service is about to toughen the rules on a type of investment vehicle that has been abused by some very wealthy families to avoid millions of dollars in taxes.

The wealthy are allowed to use family limited partnerships, family limited liability companies, and their variants to hold family businesses, real estate, or other illiquid, hard-to-value investments.

But some partnerships have put marketable securities, even cash, into the entities and still claimed a discount, even though the investments have a value that is easy to determine.

Stung by its mixed record in challenging these entities in court, the IRS could soon get help from the United States Treasury. Cathy Hughes, an attorney-adviser at the Treasury’s office of tax policy, said in May that new regulations restricting what would be allowed with family partnerships could be released as soon as mid-September.

This article may be what you need to get a procrastinating client moving.

Please click here to read this article in its entirety.

Thoughtful Corner
Dealing with Clients Who Have a Terminal Illness

Throughout your career, it is likely that you will obtain a few clients who are facing terminal illnesses. Do not expect clients or people with terminal illnesses to be logical, to follow-through, or even to be appreciative of your services.

They are often having very big psychological, not to mention physical, issues, and talking about death and what happens after they die can be extremely painful.

One strategy for effectively serving these clients is to have them sign anything that will improve the situation they are in without much fanfare or expensive review. If they can sign a “quick interim plan” that improves on their situation while you also work on a conventional and more extensive re-vamp of their existing documents, everything will be much better if and when they die without getting back to you or before you can finish.

Time is very much “of the essence” in these situations, as people go through what Elizabeth Kübler-Ross wrote about in her landmark 1969 book, On Death and Dying. She established the Kübler-Ross model, which postulates a series of emotional stages experienced when facing either one’s own death or the death of a loved one.

A great many clients and advisors have found the book to be extremely accurate in describing the following states of psychological change and challenge that someone facing death will go through. The stages are as follows, though they can occur in any order:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

Also consider that people with terminal illnesses may be on mind-altering drugs and are certainly going through extreme changes with respect to their businesses, loved ones, and hobbies. Death is worse than losing everything because you lose not only your belongings but also your relationships and yourself.

Get the person to do as much as they are willing to do as soon as they are willing to do it while also showing compassion for their situation.

If you personally cannot keep the pace the client requests, delegate some of the work to someone else in the office and get it handled. Be willing to go to their house, their hospital room, their rehab, or whatever it takes.

It might also be a good idea to get the family members who will become your clients upon the person’s death and who will bear the consequences of your work to be as involved in the process as possible, but do not expect them to be as logical or necessarily supportive as they should be.

To read more about the Kübler-Ross model, please click here.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Cartoon 2 - final

Cartoon 3

Upcoming Seminars and Webinars

Calendar of Events

LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counter-intuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.17.15 – News and Views from the Notre Dame Tax Institute

Posted on: September 17th, 2015

News and Views from the Notre Dame Tax Institute

Should Every Estate Planning Lawyer Offer to be Appointed as a Trust Protector?

NAIC Closing the Loop on Illustrations by Barry D. Flagg

Richard Connolly’s World – The Latest in Estate Planning & How to Avoid EP Fatigue

Thoughtful Corner – Don’t React Immediately

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

News and Views from the Notre Dame Tax Institute

The 41st Annual Notre Dame Tax and Estate Planning Institute opened this morning with participation from hundreds of lawyers, accountants, and other professionals. The brochure for this event can be viewed by clicking here.

Jonathan Blattmachr is stuck in weather in the Arctic Circle, so Alan Gassman will be delivering his talk on Reducing Estate and Trust Litigation Through Disclosure, In Terrorem Clauses, Mediation, Arbitration, and Pre-Mortem Probate.

The first part of this presentation is reproduced below in the article entitled “Should Every Estate Planning Lawyer Offer to Be Appointed as a Trust Protector?”

Alan Gassman and Barry Flagg, whom we also have more from below, also contributed materials for the panel presentation on Life Insurance.

Thursday Report readers can obtain a copy of these Chapter 6 materials next week by contacting agassman@gassmanpa.com.

Next year’s Notre Dame Tax and Estate Planning Institute will be held on Thursday, October 27th and Friday, October 28th, 2016. A large Florida contingency should be there. Please put this on your calendar, and hats off to Jerry Hesch and his fine team at Notre Dame for putting together another amazing program!

Should Every Estate Planning Lawyer Offer
to be Appointed as a Trust Protector?

by Alan Gassman, J.D., LL.M. and Seaver Brown, J.D.

Should every estate planning lawyer offer to be appointed as a trust protector to help ensure that testamentary intent will be followed a la Minassian v. Rachins, 152 So. 3d 719 (Fla. 4th Dist. App. 2014)?

The use of a trust protector has generally been confined to offshore trusts, but a recent opinion from Florida’s 4th District Court of Appeals may cause them to become more common in Florida.

Executive Summary

Florida Statute Section 736.0808 allows the settlor of a trust to give a third person the sole discretionary power to amend or terminate the trust for certain specified reasons. This discretionary power is typically given to either a trustee or another individual other than the settlor.[1]

The concept of a trust protector has a long and storied history. Under British Common Law, it was well-accepted procedure to appoint a trust protector who could change the terms of the trust for the benefit of some or all of the beneficiaries and, in some instances, terminate the trust altogether. One reason settlors would confer this power to amend or terminate trust provisions was to have a viable remedy to address any unforeseen events after their death, some of the most prominent of which included: ambiguous trust provisions, a change in circumstances, or a change in the applicable estate tax laws. However, despite the various reasons why a trust might need to be amended, the underlying purpose has always been to effectuate the settlor’s original intent.

Facts

In the case of Minassian v. Rachins, there was a dispute between the settlor’s surviving spouse, acting as trustee, and his children from a prior marriage.[2] The crux of the matter dealt with a trust protector who had the sole and absolute discretion to determine and then alter provisions that were ambiguous or erroneous enough to defeat the settlor’s original intent.

The language provided in the trust agreement, with respect to the trust protector’s appointment and authority, read as follows:

“To protect…the interests of the beneficiaries as the Trust Protector deems, in its sole and absolute discretion, to be in accordance with my intentions…The Trust Protector is empowered to modify or amend the trust provisions to inter alia: (1) to correct ambiguities that might otherwise require court construction; or (2) to correct a drafting error that defeats my intent, as determined by the Trust Protector in its sole and absolute discretion, following the guidelines provided in this Agreement.”

The disputed revocable trust was created by Mr. Minassian in 1999 and was followed by an executed restatement of trust in 2008 that would become irrevocable upon his death. The primary purpose for creating this trust was so that he and his wife, acting as sole trustees, could provide for themselves during their lives and then have the remaining trust assets pass to his children. Mr. Minassian and his wife were both very passionate about horse racing and legal gambling, and he wanted to provide for his wife so she could continue to live in the same manner she had grown accustomed to. However, Mr. Minassian was concerned that there would be problems between his children and wife, especially in regards to the manner in which she would spend the money contained in the Family Trust during her lifetime.

Eventually, his fears became true, and the beneficiaries sued the wife as trustee, alleging that she breached her fiduciary duties by taking too much out of the trust. The wife moved to dismiss the children’s claims for lack of standing because they were not beneficiaries of the trust. She argued that the Family Trust would terminate upon her death, at which point a new trust would then be created naming the children as beneficiaries. Contrary to the wife’s argument, the children insisted that the trust provisions would not create a new trust upon her death but instead would create separate shares in the existing Family Trust for each child. The trial court found that the wording of the trust was unclear and that it would be inappropriate to allow the Trust Protector to change the trust to clear up the ambiguity.

The wife nevertheless appointed a trust protector to clear up these ambiguities, as permitted by the above quoted language of the trust. Under such language, the protector was permitted to correct drafting errors that would have defeated the husband’s intent and, in certain circumstances, modify the trust without court authorization. The trust document further required the trust protector to determine the husband’s intent and consider the interests of current and future beneficiaries as a whole.[3] However, amending the trust could only be done if the agreement benefitted the beneficiaries as a group or furthered the husband’s probable wishes in an appropriate way.[4] Most importantly, though, the trust made any exercise of these powers binding and conclusive on all parties.

Pursuant to these guidelines, the trust protector modified the ambiguous trust provisions but did so unfavorably to the children’s position. In response, the beneficiaries filed a supplemental complaint against the wife and trust protector, arguing that those modifications were invalid. Both parties then moved for summary judgment as to whether the modifications were valid. Initially, the trial court held that the modifications made by the trust protector were improper and did not benefit all the beneficiaries. The court reasoned that, under the proposed modifications, the children had no right to challenge the actions of the wife as trustee and invalidated the provisions modified by the trust protector.

The wife then appealed the trial court’s ruling on the grounds that the provisions of the original trust were ambiguous and the trust protector could have modified it so as to properly effectuate her husband’s intent. Thus, the appellate court first had to address the validity of the trust protector provision under Florida law. If it was found to be invalid, then any subsequent amendments made by the trust protector would have been invalidated. On the other hand, if they were found to be valid, then the trust protector provision would control, and the protector could exercise any powers with sole and absolute discretion.

Florida Statute Section 736.0808(3) allows the terms of a trust to confer on a trustee or other person (i.e. trust protector) the power to direct the modification or termination of a trust. The children’s primary argument here was that Florida Statute Section 736.0808(3) conflicts with the common law rule that a trustee cannot delegate their discretionary powers to another person or entity. Here, the Court held that it is the settlor who delegates the power to modify the trust in a third person, not the trustee. Further, “the common law principles of trust and equity supplement [the Florida Trust Code], except to the extent modified by this code or another law of this state.”[5] Essentially, the Florida Trust Code controls when the common law of trusts contradicts it.

The children also argued that Florida Statute Sections 736.0410 – 736.04115 and Section 736.0412[6] provide the sole and exclusive means of modifying a trust.[7] Again, the court disagreed and held that those Sections are not the exclusive means for modifying a trust, otherwise Section 736.0808(3) would have no effect. Therefore, the Florida Trust Code permits the settlor to appoint a trust protector with the power to modify the terms of the trust.[8]

In sum, the trial court initially found that the trust was unambiguous and that the trust protector acted contrary to the settlor’s intent when he modified those unambiguous provisions. On appeal, however, the court found that the provision stating the Family Trust would terminate on the wife’s death was ambiguous. Since there was an ambiguity as to the husband’s original intent, the court was free to consider extrinsic evidence outside the four corners of the document. The appellate court noted that the trial record contained un-contradicted extrinsic evidence of the husband’s intent.[9] Specifically, “from the trust protector’s affidavit…it appears that the husband settled on the multiple-trust scheme for the very purpose of preventing the children from challenging the manner in which the wife spent the money.”[10]

While the trust protector’s actions may have disadvantaged the children, he was authorized to correct ambiguities as long as the actions benefitted the group of beneficiaries, or, as in this case furthered the husband’s desire to resolve any ambiguity with a trust protector.[11] His intent would have been violated if the authority he granted to the trust protector was stripped and given to a court. Thus, the modifications initially proposed by the trust protector were valid because they furthered the husband’s original intent.

Comment:

For many years, trust protectors have been a common theme for offshore trust agreements, but not until recently have they become more prevalent in the design of domestic trusts. Settlors are not limited in who they may select to serve as trust protector, unless by state statute. The protector may be one or several trustees of the trust, as well as one or more of the beneficiaries. They may also be a trusted friend of the settlor, a third party advisor, or some combination of the above.

Generally, the powers granted to a trust protector can take any form, limited only by the Settlor’s intent. Some of the most common and, oftentimes, controversial powers granted to protectors include the ability to:

  1. Remove or replace trustees;
  2. Remove, replace, or add beneficiaries;
  3. Terminate the trust;
  4. Vary trust provisions to reflect changes in tax laws;
  5. Modify distribution provisions;
  6. Consent to or veto discretionary powers of the trustee, such as investments or distributions to beneficiaries;
  7. Change trust situs to a state with favorable laws;
  8. Resolve disputes between beneficiaries and trustees; and
  9. Appoint a successor trustee.

As you can see, trust protectors are beneficial for many reasons, most notably because they provide flexibility within trust vehicles that are traditionally not so flexible. For example, an irrevocable trust cannot be changed by the grantor or trustees, but a trust protector can make such amendments as needed. This flexibility, however, can pose some significant problems in the future that the settlor and estate planner did not contemplate.

A settlor who has their mind set on using a trust protector should limit the protector’s powers to replacing a trustee and appointing a successor trust protector only. The reason for specifically limiting the protector’s powers is to prevent future conflicts between the protector, trustee, and beneficiaries. Without doing so, the protector could inadvertently expose the trust to unnecessary court costs and even completely destroy the original intent of the settlor. In order to maximize these potential complications, the provisions of the trust should clearly delineate the rights and responsibilities between protectors, trustees, and beneficiaries.

This then begs the question – do trust protectors hold personal powers that would allow them to act with impunity, or are they held to the higher standard of conduct related to fiduciaries? Unfortunately, the concept of a trust protector is still relatively new, so there is little statutory and case law guidance defining the fiduciary roles and responsibilities of trust protectors. In those cases where a trust protector’s power is deemed to be personal rather than fiduciary, the protector is limited only by exercising such power in good faith. Personal powers are those that a protector is under no duty to exercise and can be contrary to the settlor’s intent absent any fraud.[12]

The Uniform Trust Code, which Florida adopted and modeled their Trust Code after in 2006, states that an individual providing direction to a trustee is a fiduciary per se, but it does not address whether the trust protector is a fiduciary outright.[13] States such as Alaska and Arizona have statutes that expressly allow for the use of trust protectors and provide that the protector will not be treated as a fiduciary unless the trust instrument expressly provides for such treatment.[14] By contrast, other states such as Idaho and Wyoming provide that a protector will be treated as a fiduciary unless the trust provides otherwise.[15]

Many times, the duties a protector owes to the beneficiaries of a trust are dependent on what other roles they hold with respect to the trust. Alexander Bove provides a fairly simple example that illustrates this point.[16] Imagine that a settlor names his daughter as the trust protector with the sole power to add and delete beneficiaries with no restrictions.[17] With this power in mind, the daughter then proceeds to remove all her siblings from the trust and replace them with her children. In this scenario, it is likely that her actions would have been fully contemplated by the settlor, and therefore, a proper use of her personal powers. Using the same scenario, imagine that instead of naming the daughter as trust protector, the attorney who drafted the trust is now the protector. If the attorney began to remove beneficiaries and supplement them with beneficiaries of his own choosing, it is far more likely that the protector breached the applicable fiduciary duty.

Thus, to determine whether a trust protector will be held to a fiduciary standard, one should ask whether the protector is acting pursuant to the powers granted by the trust and in furtherance of the trust and its beneficiaries, as may have been contemplated by the settlor. However, even if a state statute or trust instrument requires the protector to be held as a fiduciary, the scope of those fiduciary duties continue to remain unclear.

As we briefly mentioned above, because of this uncertainty, it would be wise to include language expressly stating whether or not the protector is a fiduciary and how they should exercise those powers. Furthermore, the trust protector should be someone that the settlor “trusts,” because without the proper safeguards in place, the protector has the ability to cause significant and expensive problems.

In addition to the practical considerations described above, there are important tax considerations that should not be overlooked and often should be carefully thought through. This includes any power to limit the rights of a surviving spouse that could cause loss of the federal estate tax marital deduction, naming foreigners as trust protectors, which can implicate the foreign trust reporting requirements and cause penalties and interests that could exceed the value of the trust assets over time and the impact that trust protector provisions can have upon the income tax status of an irrevocable trust.

Trust settlors, and to some extent, estate planners, typically do not give much thought about how to minimize the cost and frustration of future complications. In our experience, most law firms do not appoint trust protectors or themselves as trust advisors. Consequently, there is no one that will have the ability to resolve ambiguities outside of a court or arbitration. We believe that a trust protector can save a family time, money, and relationship problems when it comes to resolving ambiguities and questions as to intent and what actions have been or should be taken by the trustee.

Should you and your law firm be doing the same?

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[1] Fla. Stat. § 736.0808(3) (2008).
[2] 152 So. 3d 719 (Fla. 4th Dist. App. 2014).
[3] Id. at 722.
[4] Id.
[5] Fla. Stat. § 736.0106 (2008) (emphasis added); see also Abraham Mora, et. Al., 12 FLA. PRAC., ESTATE PLANNING § 6:1 (2013-14ed.) (“The common law of trusts supplements the Florida Trust Code unless it contradicts the Florida Trust Code or any other Florida law.”)
[6] This Section provides for non-judicial modification of an irrevocable trust, which requires the unanimous agreement of the trustee and all qualified beneficiaries.
[7] Minassian. 152 So. 3d at 724
[8] Id.
[9] Id.
[10] Id.
[11] Id. at 727.
[12] Trust Protectors: What Role Do They Play?, SS043 ALI-ABA 585, 588.
[13] See, Uniform Trust Code § 808(b) (amended 2005).
[14] See, Alaska Stat. Ann. § 13.36.370(d)(West); Ariz. Rev. Stat. Ann. § 14-10818.
[15] See, Idaho Code Ann. § 15-7-501 (2005); Wyo. Stat. Ann. §§ 4-10-710 – 4-10-718 (2005); Tenn. Code Ann. § 35-15-808 (2005).
[16] Bove, Alexander. The Trust Protector: Trust(y) Watchdog or Expensive Exotic Pet?, Estate Planning Vol. 30 No. 08: 390, 392, available at http://www.bovelanga.com/publications/articles/The_Protector.pdf.
[17] Id.

NAIC Closing the Loop on Illustrations
by Barry D. Flagg

Barry Flagg

Barry D. Flagg is the founder of Veralytic. He has more than 25 years of experience in the life insurance business. He is currently the youngest CFP in history and the inventor of all Veralytic patents. He is regularly engaged as an expert speaker on the topics of life insurance industry trends and regulations and has been a featured speaker at numerous national conferences. He has also been published or featured in ABA Trusts & Investments, AICPA Wealth Management Insider, National Underwriter, Financial Advisor, The Heckerling Institute on Estate Planning and more. Veralytic is a leading innovator in life insurance analytics. Their research has been trusted by dozens of brokerages and agencies across the United States representing billions in managing life insurance policies and assets.

On June 18, 2015, the Life Actuarial (A) Task Force of the National Association of Insurance Commissioner’s (NAIC) Life Insurance and Annuities (A) Committee adopted new Actuarial Guideline 49 governing indexed universal life (IUL) illustrations. The new guidelines are in response to overly aggressive marketing practices and are intended to make illustrations more reasonable. Despite insurance companies asking for a delay in implementation of this new Actuarial Guideline, it’s scheduled to become effective for all IUL policies sold on or after September 1, 2015 and all new business and inforce on March 1, 2016.

Uniform Guidance

NAIC Actuarial Guideline 49 was introduced to provide uniform guidance to IUL illustrations by:

  1. Addressing the obvious problem of using unrealistic index returns on illustrations;
  2. Limiting the policy loan leverage shown on illustrations; and
  3. Requiring additional consumer information to aid in consumer understanding

The NAIC acknowledges that this is just an interim guidance specifically for IUL illustrations, and on the April 16, 2015 conference call, they accepted that more needs to be done.

Mike Boerner, Chair of the Life Actuarial (A) Task Force said in a letter dated April 27, 2015, “the Life Actuarial (A) Task Force will consider requesting approval from the Life Insurance and Annuities (A) Committee to open Model 582 to incorporate the changes specified in the guideline and to address similar issues in other product illustrations. Revising Model 582 will provide the opportunity for the Task Force to ensure that a level playing field for all product illustrations is attained.”

Lack of Uniformity

NAIC adopted the Life Insurance Illustrations Model Regulation, which can be seen by clicking here.

Since then, there’s been continued evolution in products and their design, including the introduction of IUL with benefits that are tied to an external index or indices. “Although these [IUL] policies are subject to Model Regulation #582, not all of their features are explicitly referenced in the model, resulting in a lack of uniform practice in its implementation. In the absense of uniform guidance, two illustrations that use the same index and crediting method often illustrated different credited rates. The lack of uniformity can be confusing to potential buyers and can cause uncertaintity among illustration actuaries when certifying complicance with Model Regulation #582.”

Other Guidance

Other guidance suggests practitioners should avoid relying solely on hypothetical illustrations and embrace proven and long/well established Prudent Investor principles using research that independently measures policy charges and performance and provides documentation that the inforce policy and/or product being recommended is competitive and suitable relative to the universe of peer-group product alternatives.

In addition, comparing illustration of hypothetical policy performance can be “misleading,” are “strictly prohibited” by the chief regulatory body of the financial services industry are “fundamentally inapprorpriate,” according to a study by the chief actuarial body of the life insurance industry and “are subject to a high degree of fluctuation” and thus not reliable for determining the suitability of a given policy, according to the US Office of the Comptroller of the Currency.

A Good Start

This new guideline is a good start to a long and overdue process for reining in the life insurance illustration practices and educating the consumer on an essential financial product and should be considered together with emerging Best Practice Standards.

Richard Connolly’s World
The Latest in Estate Planning & How to Avoid EP Fatigue

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Breaking the Barriers of Estate Planning Fatigue” by Kimberly Bernatz. This article was featured on WealthManagement.com on September 8, 2015.

Richard’s description is as follows:

There’s been quite a buzz in the media since the recently published CNBC Millionaire Survey found that a third of those with at least $1 million in investable assets haven’t used a professional to establish an estate plan.

According to many industry experts, the constantly changing nature of federal estate tax laws has resulted in estate planning fatigue. We’ve had nearly a decade of uncertainty and changes in the tax law, and during that time, responsible advisors have been reaching out to their clients to explain those changes and encourage them to update their plans, if necessary. That consistent uncertainty is almost enough to make people wash their hands and say, “enough is enough.” Couple that feeling with the fact that today’s federal estate tax exemption amount of $5.43 million is making many people feel that planning is unnecessary if their estates fall below that threshold.

So while we, as professionals, understand the importance of an estate plan, the question is how do we most effectively communicate that message to our clients?

The answer might lie within psychological barriers that prevent our clients from taking important action.

Please click here to read this article in its entirety.

The second article of interest this week is “What’s Hot in Estate Planning Right Now May Surprise You” by the Wealth Counsel Staff at WealthManagement.com. This article was featured on their website on September 1, 2015.

Richard’s description is as follows:

Estate planning has truly evolved over the past 20 years. Gone is the uncertainty about federal estate taxes and the absolute requirement for married couples to use complex trusts to minimize these taxes.

But also gone is planning for the “traditional” family. In this article, you will learn why estate planning has become more complicated and what your clients need to do now to insure their estate plans are flexible enough to roll with the changes.

Please click here to read this article in its entirety.

Thoughtful Corner
Don’t React Immediately

There is no way to avoid having an emotional response to challenging situations. One of the things that our brain does is prompt an immediate reaction to such situations, and this reaction is often not rational.

One of the things our reptile brain does is provoke the “flee or fight” response. This response was helpful to prehistoric men and women, as they would not have been able to survive if they did not have an immediate response to dangers, challenges, or otherwise.

Fortunately, we no longer live in caves, and immediate response by email, in meetings, or on the telephone are simply not necessary or in the best interests of ourselves, our clients, or our business relationships if we are having an emotional response.

Many lawyers and other professionals are quite adept at setting up opponents or even clients to provide an emotional response that they can then take further advantage of. Don’t fall victim to this trap!

Also, emails may sometimes appear to be terse and rude, but they are instead simply shortened and filled with less eloquent statements made by someone who might not be thinking about how their message could be interpreted.

The adage to “count to ten and take deep breaths” certainly has a great deal of utility to modern man (and probably cavemen as well!) Ask for a minute to think things through. If you’d like, you can use an excuse, such as you need to make a phone call, go to the bathroom, check on something, or something else that could provide a moment alone.

You can get used to saying things like the following when these circumstances apply:

  1. I think I understand where you are coming from, but I need to think this through. I may also talk it over with _______________ and review before getting back to you.
  2. Thanks very much for…
  3. I’m very surprised that you said that and will simply not respond at this time.

If you “lose it” or say the wrong thing or let your emotions get the better of you or otherwise realize, perhaps an hour later, that you made a big mistake, apologize immediately and tell the person that they will receive a less emotional response from you the following day. Then, talk the situation over with someone you trust to get it off of your list of things to worry about.

The same principles apply with interacting with office staff, friends, or family members.

Why come to blows or risk doing something that can cause the loss of a good relationship, someone else to be upset, or undermining the ability to have productive team work?

Immediate reprimands work well with children but not necessarily with colleagues, clients, or employees. Let yourself cool down before deciding exactly how to communicate, unless you have already thought through the response in advance and know that it is appropriate based upon what the person has done.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Alan Gassman has been out of town this week, starting with a day in Boston and then heading on to the Notre Dame Tax and Estate Planning Institute in South Bend, Indiana. While he was gone, you might have gotten one of the following messages when attempting to send him an email:

Boston:

We hopped on Jet Blue for one day in Boston,
The streets are a maze, so we are now lost in
The cradle of the American Revolution,
Where tea-throwing seems a clever solution.

Marcia and I are dining on chowda,
Drinking Sam Adams, and saying to locals “How do-
you do? Do you pahk you cah?
I heah that Hahvahd is not very fah.”

Thanks for enduring this quick little blip,
So that we can focus on our very short trip.
The Freedom Trail is a great historical walk,
But mostly we just hear fans yelling “Go Sox!”

If you need to get in touch, our office is not yet on Yelp;
But you’ve got our number, so please call us for help.

Notre Dame:

On the first day of Notre Dame,
Marcia wouldn’t go with me,
“I’ll see you at the end of the week.”
I flew to South Bend, with anything but sorrow,
To learn from Jerry Hesch and Edwin Morrow

On the second day of Notre Dame,
I saw Natalie Choate speak,
She’s truly the bees’ knees.
And the exhibit booths were one big party,
I cut loose with Barry Flagg and many tax geeks.

On the last day of Notre Dame,
I just so totally freaked!
I learned all about jurisdictions that are weak,
I attended the lunch meeting (all the food was free),
And I brainstormed ideas for Steve Leimberg’s LISI.

………

On the Monday after Notre Dame, my assistant shrieked at me:
You have twelve clients in the lobby,
Eleven new estate plans,
Ten dozen unanswered voice mails,
Nine probate cases waiting,
Eight dozen follow up letters pending
Seven revised petitions,
Six angry attorneys,
FIVE IRS CLEARANCE LETTERS!
Four notebooks lost,
Three incomplete articles,
Two notebooks of un-reviewed bills……….

Oh, how long until the next Notre Dame???????

Thanks to Kristen Sweeney for the above poems!

Upcoming Seminars and Webinars

Calendar of Events

LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:30 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.10.15 – Nothing Interesting, For a Change

Posted on: September 10th, 2015

Alan Gassman Kicks Off Distinguished Speakers Series for a Very Impressive Charity

Ross, Et. Al v. AXA Equitable Life Insurance Co. – Policy Holders Have No Recourse

Paying for College: Understanding Student Financial Aid, Part II

Gregory Gay’s Corner – Medicaid Nursing Home Assistance, Part II

Richard Connolly’s World – Special-Purpose Trusts & 529A Accounts

Thoughtful Corner – College Students: Homesickness and Separation by Dr. Diana Trevouledes

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“Knowing that you are living in a dream world is very liberating because it gives you the option of waking up.”
– Dr. Srikumar Rao

Nothing Interesting, For a Change

Based upon popular request, we have made the Thursday Report dull, dulled it down, and even used a form of the word dull three times in a sentence so as not to grab your attention and pull you from more important tasks that you may have to accomplish. Many readers asked that the Thursday Report not be so interesting that it distracts them so much from their jobs and their demanding and unreasonable bosses. In such event, we have worked very hard this week to make this Thursday Report not eye catching, not exciting, and not (as) insightful.

Hopefully, no statutes of limitations or filing requirements will be missed this week by reason of compulsive reading of the Thursday Report, and please don’t send copies of this Report to the Thursday Report Reporting Society, as it could hurt our 2.5 (out of 10) rating or the Federal Grant we receive for outstanding journalism needs by a non-501(c)(3) organization with private manurement.

Alan Gassman Kicks Off Distinguished Speakers Series for a Very Impressive Charity

Gassman & Payne - FINAL

On Tuesday, Alan Gassman kicked off the Distinguished Speakers Series put on by the Community Foundation of Sarasota County in partnership with the Southwest Florida Estate Planning Council. Alan presented on the topic of “Everything You Always Wanted to Know About Creditor Protection and Didn’t Even Think to Ask.”

Gassman Speech - FINAL

The Community Foundation of Sarasota County posted 28 great photos from this event, including the two featured here. You can view all 28 event photos by clicking here.

The Community Foundation of Sarasota County is a model for what all community foundations should aspire to be. A public charity founded in 1979 by the Southwest Florida Estate Planning Council, the Community Foundation of Sarasota County is a resource for caring individuals and the causes they support. Just last year, the Community Foundation distributed more than $19.3 million in grants and scholarships in the areas of education, health, human services, the arts, animal welfare, and the environment. Learn more about the Community Foundation of Sarasota County by clicking here.

Ross, Et. Al v. AXA Equitable Life Insurance Co. – Policy Holders Have No Recourse
by Alan Gassman and Alyssa Eberle, J.D.

Southern District of New York, 2015 – Policy Holders have No Recourse when it is Discovered that a Carrier has Violated State Law Reserve Requirements by Using Inadequately Disclosed Captive Reinsurance Carriers in Violation of State Law

In Ross v. AXA, a class action suit was brought on behalf of AXA insureds alleging that AXA was in violation of the New York insurance law by engaging in “shadow insurance” transactions. The Court held that the Plaintiff class failed to establish that AXA has incurred a financial loss worthy of federal judicial intervention at this time.

By way of background, the National Association of Insurance Commissioners (NAIC) introduced two model regulations: Regulation XXX and AXXX, which had been adopted in New York. These regulations were adopted by the state to increase the safety factor of reserve requirements by increasing the overall reserve level and limiting a company’s ability to use their admitted assets for anything other than supporting its reserves.[1]

In order to minimize the risk of the insurer not being able to pay off a large amount of claims in a small amount of time, many insurers obtain their own insurance called reinsurance. This is where a primary insurer pays a premium to the reinsurer in exchange for carrying some of the risk involved with claims payments. Reinsurance therefore allows the insurer to claim “reserve credits” which reduce the assets an insurer is required to maintain for its reserves. Consequently, reinsurance helps fulfill two objectives: (1) it manages risk and (2) it helps free up some capital for the insurer to use for another purpose.[2]

In the event that the reinsurer defaults, the primary insurer still remains liable on all policyholder claims. Because of this, insurance regulations allow for the primary insurer to take a reserve credit only when there is sufficient assurance of the reinsurer’s ability to pay for claims when it assumes the risk.[3] “[I]n essense, [such arrangements are] reducing the assets a primary insurer is required to maintain in support of its reserve liabilities.”[4] There are two categories of reinsurance transactions that are deemed to be safe enough to grant the insurer a reserve credit:

  1. Those with reinsurers who are licensed or accredited by the primary insurer’s own regulators (“authorized reinsurers”); and
  2. Those with unauthorized reinsurers who post sufficient high-quality, easily liquidated collateral to account for potential obligations – typically by maintaining a trust with a United States financial institution or by obtaining an irrevocable and renewable (“evergreen”) letter of credit from a United States financial institution.[5]

However, in spite of these requirements for claiming reserve credits for reinsurance transactions, a report issued by the New York Department of Financial Services (NYDFS) discovered that New York insurers had been using captive reinsurance to “end-run around higher reserve requirements” and “hide risk.”[6] An insurer would most likely be able to do this by creating an insurance entity in another state with less stringent regulatory requirements. Under these more loosely regulated states; the insurance companies use their parent company’s guarantees to back a letter of credit that is posted as collateral to obtain reserve credit for the reinsurance transaction.[7] This process allows insurers to acquire reserve credits –reducing the total amount of assets used to support their reserve liabilities – without transferring the risk associated with these policies, since the reinsurer’s obligations are not supported by its own financial strength, but with the financial strength of the parent company.[8] This process creates little to no detail regarding the reinsurance transactions, hence “shadow insurance.”

These undisclosed guarantees in the shadow insurance transactions could lead to potential disasters in the insurance industry. Most significantly, the report completed by the NYDFS found that none of the parent companies had established significant reserves or contingent liabilities to support reinsurance transactions; in fact, most had none. The implications of having little to no reserve means that a parent company would likely be subject to financial stress from its risk exposures, leaving reserves depleted and creating a risk that the insurer may not be able to pay claims.[9]

The class represented in the suit filed against AXA had all purchased life insurance policies in New York that were in effect at the time the suit was filed. Based on the NYDFS Report, the Plaintiffs alleged that the annual disclosures that had been filed by AXA were misleading since they failed to disclose details of the shadow insurance transactions; thereby making AXA’s financial strength appear stronger than it actually was.[10] For example, AXA reported $1.9 billion in letters of credit securing their reinsurance obligations in its 2011 annual statement. However, the reserve credit was not based on the financial strength of AXA alone but rather through “undisclosed or inadequately disclosed guarantees and indemnifications from an affiliate.”[11]

The Plaintiffs alleged that because AXA used letters of credit that were backed by undisclosed or inadequately disclosed parental guarantees to lower its reserves, AXA’s existing assets appeared to provide policyholders with greater protection against loss than was actually the case.[12] Plaintiffs did not allege, however, that the undisclosed or inadequately disclosed shadow insurance transactions caused them financial harm, nor did the plaintiffs allege that they were influenced by AXA’s representations.[13]

The United States District Court in New York concluded that the Plaintiffs lacked standing to pursue their claims. Indeed, while Plaintiffs sought to bring their claim under federal law, the Court stated that because the cause of action arises under state law, they lacked the jurisdiction to make a decision. The District Court concluded that:

Plaintiffs must established that at least one of them has otherwise suffered an injury sufficient to entitle him to sue in federal court – namely, the “invasion of a legally protected interest which is…concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”[14]

The Court noted that because the Plaintiffs did not allege that they would not have purchased life insurance policies from AXA but for its disclosures, or that they had suffered any past or current financial harm by AXA’s misrepresentations, any risk of harm is in the future – the risk that AXA, because of its shadow transactions, will be unable to pay Plaintiffs’ claims when they are eventually made.[15] Since the Court held that this theory was hypothetical and speculative, it did not justify federal judicial intervention. Therefore, the District Court dismissed the case for lack of subject-matter jurisdiction. However, in its conclusion, the Court noted that it did not arrive at its conclusion lightly. Indeed, the Court noted:

The pervasiveness of shadow insurance in New York – and AXA’s alleged failure to disclose details of those transactions – may well pose a threat to the stability and reliability of the state’s insurance system, as NYDFS suggested. Nevertheless, the Court cannot address the legality or propriety of AXA’s conduct without the constitutional authority to do so.

Though the Plaintiffs were unable to get a decision from the Court, the Complaint still served a purpose. The NYDFS created a new regulation after its investigation into shadow insurance that “explicitly require[s] disclosure of additional information regarding shadow insurance transactions.”[16] Time will tell whether the performance of AXA and other insurance carriers, coupled with possible consequent increases in premiums as needed to sure up the financial circumstances of such carriers will work an undue hardship on those who have purchased and maintained policies. This situation brings up the question as to whether insurance carriers are viable stewards for the amount of wealth and the many illustrative projections that they make in order to sell policies in a far from transparent and not-well-regulated environment.

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[1] LISI Estate Planning Newsletter #2328 (July 30, 2015) at http://www.leimbergservices.com.
[2] Id.
[3] Id.
[4] Ross, 14-cv-2904 – Document 138.
[5] Id at 4.
[6] Id citing NYDFS Report 4.
[7] Id.
[8] Id at 6.
[9] Id at 7.
[10] Id.
[11] Id at 8.
[12] Id.
[13] Id.
[14] Id citing Lujan, 504 U.S. at 560.
[15] Id at 19.
[16] Id at 22.

Paying for College: Understanding
Student Financial Aid, Part II
by Dena Daniels

Each year, the US Department of Education awards approximately $150 billion to assist students with paying for college. There are two main types of financial aid: (1) aid based on academic merit and (2) need-based aid. The former is not dependent upon the parents’ assets and income but rather the student’s academic performance, “if you have the grade, you get the aid.” The latter takes into account both the parents’ and the student’s income and assets.

Last week, we examined the different types of need-based federal financial aid available to students. To refresh your memory, please click here to see last week’s Thursday Report.

PART II – HOW TO APPLY

In order to receive federal financial aid, the student is required to complete the Free Application for Federal Student Aid (FAFSA). This application process is completed online, and both the student and the parents must apply for a PIN number and report their financial information. The student must fill out the FAFSA at www.fafsa.ed.gov.

How Eligibility is Calculated

Eligibility is determined by the following calculation:

Cost of Attendance – Expected Family Contribution (EFC) = Need

Cost of Attendance (COA) is the amount it will cost for the student to attend school. Most colleges and universities provide a “cost of attendance” breakdown for the entire school year (which includes the fall and spring semesters). The Cost of Attendance usually includes the following:

  • Tuition and Fees
  • Housing and Meals
  • Books and Supplies
  • Personal Expenses Including Transportation

The Expected Family Contribution, or EFC, is the minimum amount that the household is expected to contribute towards the cost of the student’s college education. It is calculated using the following three methods:

  1. Federal methodology
  2. Institutional methodology
  3. Consensus methodology

All three methods are based on the income and assets of the parents and student as reported on the FAFSA and the CSS Profile. The FAFSA is free to file and is income driven, while the CSS profile is charged a filing fee and is asset driven.

Although retirement assets are not included when calculating the EFC, other assets, such as checking and savings accounts, CDs, real estate investments, stocks, bonds, etc. must be reported. Parents are expected to pay 5.64% of the assets to pay for college when using the federal methodology and 5% of the assets to pay for college when using the institutional and consensus methodology. Small businesses, home equity, and non-qualified annuities are not counted in the federal methodology, but they are counted in the institutional and consensus methodologies. However, under the consensus methodology, home equity is capped at 1.2 times the parents’ adjusted gross income.

Excluded Assets for the FAFSA

The following assets are not counted when filling out the FAFSA form:

  • Possessions (i.e. car, stereo, furniture, etc.)
  • Family’s principal place of residence
  • Family-owned and controlled small businesses
  • Retirement plans and whole-life insurance

As far as retirement plans and whole-life insurance are concerned, the values are not counted as assets, but distributions are counted as income.

Small Business Exclusion

Since July 1, 2006, small businesses that are owned and controlled by a family are excluded assets. This exclusion was established by Section 8019(c) of the Higher Education Reconciliation Act of 2005. In order for the small business exclusion to apply, the family-owned and controlled small business must:

  • Have 100 or fewer full-time equivalent employees; two half-time employees count as the equivalent of one full-time employee.
  • Be owned and controlled by the family. This means that more than 50% of the voting rights must be owned by the family. For this purpose, a family includes: (1) persons directly related to the student (i.e. parent, sister, cousin) or (2) persons who are or were related to the student by marriage.

A business can be any type (i.e. LLC, LLP, C-Corp, S-Corp) to qualify as a family-owned and controlled small business. If the business qualifies as a family-owned and controlled small business, then the student and parents are not required to report any assets of the business on the FAFSA. However, income received from the small business is required to be reported.

The family owned small business exclusion is applied to the FAFSA, not the CSS Profile. However, only approximately 250 schools actually use the CSS Profile. The CSS Profile is a lot more detailed and takes an in-depth look at the assets of the family. The CSS Profile is used to determine institutional financial aid – that is, monies distributed by the school for need-based students – whereas the FAFSA is for federal funds.

Gregory Gay’s Corner
Medicaid Nursing Home Assistance, Part II

Gregory Gay

Gregory G. Gay, Esquire is an attorney from Tarpon Springs who specializes in meeting the special needs of senior citizens and the disabled. He is Board Certified in Wills, Trusts & Estates and in Elder Law by the Florida Bar. He has also been named a Certified Advanced Practitioner by the National Elder Law Foundation.

Mr. Gay is the author of the Florida Senior Legal Guide, the 8th edition of which can be purchased by clicking here. In the coming weeks, we will be profiling some of the best chapters from this excellent publication. Our deepest thanks to Mr. Gay for making this content available to Thursday Report readers!

This week, we take a look at promissory notes, loans, mortgages, undue hardships, irrevocable annuities, and how they influence Medicaid assistance eligibility. To see Part I of the Medicaid discussion, please click here.

Promissory Notes, Loans, and Mortgages

All promissory notes, loans, and mortgages signed on or after November 1, 2007, will be considered a transfer of assets without fair compensation unless the promissory note, loan, or mortgage has a repayment term that is actuarially sound based on Social Security’s life expectancy tables and has payments made in equal amounts during the term of the loan with no deferral or balloon payments and the note does not allow for debt forgiveness.

Undue Hardship

A nursing home patient who has made an uncompensated transfer subjecting him or her to a penalty period affecting eligibility and a person with a home equity interest exceeding $536,000 must be offered an opportunity by the Department of Children and Families to demonstrate that the imposition of the penalty period will create an undue hardship. This opportunity must be granted before the disposition of the application. Nursing home facilities are allowed to apply for an undue hardship waiver on behalf of an individual with the consent of the applicant or the designated representative. An undue hardship exists when application of the transfer of asset penalty or excess home equity penalty will deprive the nursing home patient of medical care such that his or her health or life would be endangered or the individual will be deprived of food, clothing, shelter, or other necessities of life.

Other federal and state laws prohibit a nursing home from evicting a resident without transferring the person to a safe place. Thus, the nursing home might be required to continue to provide care to an indigent patient without receiving public assistance until the undue hardship waiver has been determined.

Irrevocable Annuities

When an individual purchases an annuity, he or she generally pays to the insurance company that issues the annuity a lump sum of money, in return for which, he or she is promised regular payments of income in certain amounts. The payments may continue for a fixed period of time (for example, 10 years) or for as long as the individual (or another designated beneficiary) lives, thus creating an ongoing income stream. The annuity may or may not include a remainder clause stating that if the person who owns the annuity dies, the insurance company converts whatever is remaining in the annuity into a lump sum and pays it to a designated beneficiary.

Annuities, although usually purchased to provide a source of income for retirement, are occasionally used in conjunction with Medicaid planning. To avoid penalizing persons who validly purchased annuities as part of a retirement plan, but to capture those annuities that were purchased to shelter assets, a determination is made by the Department of Children and Families that the return to the annuitant is fairly computed. If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the beneficiary, the annuity is deemed sound for actuarial purposes and is not considered to have been purchased to shelter assets.

The annuity must also be irrevocable and non-assignable. The periodic payments (including the interest portion) are counted as unearned income in the eligibility determination and patient responsibility. An annuity that is revocable or non-assignable is not considered a countable asset. If the annuity is revocable, the asset value is the amount the purchaser would receive from the annuity insurer if the annuity is cancelled. If the annuity is assignable, the asset value is the amount the annuity can be sold for on the secondary market.

To determine that an annuity is sound for actuarial purposes, the life expectancy tables, compiled from information published by the Office of the Actuary of the Social Security Administration, are used. The average number of years of expected life remaining for the individual must coincide with the length of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value for the annuity based on the projected return. In this case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, possibly subjecting the individual to a penalty.

The penalty is assessed based on a transfer of assets for less than fair market value that is considered to have occurred at the time the annuity was purchased. For example, a male at age 65 has a life expectancy of 14.96 years, according to the table. Thus, if he purchases a $14,080 annuity to be paid over the course of 10 years, the annuity is actuarially sound. However, a male at age 80 has a life expectancy of only 6.98 years. Thus, if he purchases an annuity to be paid over 10 years, the amount that will be received for the last 3 years is considered a transfer of assets for less than fair market value, and that amount is subject to penalty.

The new Medicaid laws still permit a spouse with countable assets in excess of the $115,920 community spouse resource allowance to purchase an annuity with the excess assets. The annuity must be paid to the community spouse over no longer than his or her life expectancy. However, the new law requires that the state be named the first beneficiary for at least the total amount of medical assistance paid on behalf of the annuitant, except when the owner of the annuity has a spouse or a minor or disabled child. In this case, the State of Florida may be named as the secondary beneficiary after the spouse, minor, or disabled child. Since the new law addresses only the medical assistance paid on behalf of the person over whose life the payments are to be made, there is a question as to whether there is a repayment obligation if the annuitant is the community spouse.

The next edition of Gregory Gay’s corner will feature a discussion of the “half-a-loaf” method, personal service contracts, and exemptions to the transfer rules for those applying for Medicaid. If you would like to read the Florida Senior Legal Guide in its entirety, please visit http://www.seniorlawseries.com. Mr. Gay can be reached at gregg@willtrust.com.

Richard Connolly’s World
Special-Purpose Trusts & 529A Accounts

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “For Parents With Troubled Adult Children, Financial Hurdles Abound” by Paul Sullivan. This article was featured in The New York Times on August 28, 2015.

Richard’s description is as follows:

There are many painful, emotional issues surrounding crises like mental illness and addiction that affect children. But there are concrete financial steps parents can take that won’t worsen their child’s condition, enable their child’s addiction, or, in the case of mental illness, run afoul of limitations on the number of assets a person can have and still qualify for government benefits.

One starting point is a special-purpose trust, which can provide care for the suffering child and peace of mind for the parent.

Please click here to read this article in its entirety.

The second article of interest this week is “Tax-Free Savings Accounts for Disabled are Expected in 2016” by Ann Carrns. This article was also featured in The New York Times on August 28, 2015.

Richard’s description is as follows:

Special savings accounts for people with disabilities are likely to become available in most states next year.

The accounts were made possible in 2014 by the ABLE Act – for Achieving a Better Life Experience – and are loosely modeled on the popular 529 college saving accounts.

As with 529 college savings plans, 529A accounts allow contributed funds to grow tax-free and to be withdrawn tax-free for eligible expenses. Anyone – including family and friends of a disabled person, as well as the disabled person themselves – can contribute to the accounts, but there is no federal tax deduction for the contribution.

An important feature of the accounts is that they allow people with special needs to save for their care and education without disqualifying them from receiving government benefits.

This article answers questions about the new 529A accounts, including what sort of expenses can money in the accounts be used for, can an individual have more than one 529A account, and when 529A accounts will be available in a variety of states.

Please click here to read this article in its entirety.

Thoughtful Corner
College Students: Homesickness & Separation
by Dr. Diana Trevouledes

Trevouledes

Diana Trevouledes, Ph.D. is a licensed Clinical Psychologist and Social Worker with over 20 years of experience in a variety of mental health setting including university counseling centers and private practice. Dr. Trevouledes has held faculty positions at Fordham University, Mercy College, and the City University of New York, teaching psychology and mental health counseling at the doctoral, masters, and undergraduate levels.

Mehra - UPDATED

This article was brought to our attention by Dr. Rahul Mehra of MehraVista Health. He is boarded in adult psychiatry, boarded in child psychiatry, and boreded of both of them! His favorite heroes are Subway and Firehouse Subs, and you can view the MehraVista website by clicking here http://mehravistahealth.com/. Thanks, Rahul, for permission to bring this article to Thursday Report readers!

Although most students are excited about starting their college careers, the thought of leaving behind the comforts of home, high school friends, and family members can be very stressful. Even if your son or daughter has been looking forward to starting college and has demonstrated no apprehension prior to his or her arrival, it is not unusual for first-year students to feel somewhat anxious and uncomfortable once they actually arrive on campus. For the most part, students who experience homesickness and discomfort about separation will find that these feelings pass after a week or two. They make friends, get involved with activities, and feel like they are fitting in. But other students may not adjust after a few weeks on campus. Instead they may:

  • Be preoccupied by thoughts about what family members are doing at home and distracted by activities they might be missing.
  • Become tearful during their waking hours and have difficulty getting to sleep at night.
  • Feel anxious about making friends and fitting in (this is especially true of first-year students who will need to create a new social network upon their arrival on campus.)
  • Experience loneliness that comes from being disconnected from family and friends and not yet having established a new social network.
  • Experience increasing panic and a need to come back home (perhaps even calling urgently requesting to come home.)

Here are some suggestions about how parents can assist their student in managing the challenges of separation anxiety, homesickness, and loneliness:

  • Patiently listen to your son’s or daughter’s concerns regarding their separation anxiety. It is important to find a balance between panicking and not taking their distress seriously.
  • While letting your child know that you genuinely hear how uncomfortable he or she is, explain that separation anxiety typically does pass, even though it may feel that it will go on forever.
  • Reassure your son or daughter that many people have difficulty with transitions and that the feelings that they are experiencing are perfectly normal and to be expected.
  • Encourage your son or daughter to become involved in clubs, organizations, and co-curricular activities, particularly the activities that have been designed for new students.
  • Encourage him or her to stay at school and not return home immediately. Allowing your child to come home reduces everyone’s level of discomfort in the short run; however, it only prolongs separation anxiety.
  • Let your child know that his or her resident assistant or other campus helpers are there to offer comfort and support.
  • In order to build your child’s self-confidence during this time of transition, remind your child that he or she has confronted difficult situations in the past and mastered them.
  • Encourage your child to get involved in campus-sponsored volunteer activities. Many students get involved in these activities to meet other students as well as to help others.
  • Encourage your student to eat in the dining hall rather than in his or her room and study in the library or other public places rather than alone.
  • Remind your first-year student that it will take time to build friendships; therefore, encourage him or her to be persistent and not to be dismayed if this doesn’t happen immediately.
  • If, over time, your son or daughter continues to feel panicky, lonely, and unhappy, encourage them to contact the counseling center. Many students seek counseling to get support during the transition to college, and typically, they can be helped after just a few sessions.

The above article was featured in Success and Sanity on the College Campus: A Guide for Parents by Diana Trevouledes and Ingrid Grieger, which can be viewed on Amazon by clicking here.

Top Portion 2

For more information on how to help your student transition to college, be sure to check out the webinar by Alan Gassman and Molly Carey Smith entitled The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making. This webinar will be presented this Saturday, September 12, at 9:00 AM. Click here to register.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Failure to Read My Mind

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE BIGGEST MISTAKES TO AVOID CONCERNING YOUR HIGH SCHOOL CHILDREN – COLLEGE FAILURES IN THE MAKING.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:30 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.3.15 – Statute Changes, Succession Planning, and Understanding Financial Aid

Posted on: September 3rd, 2015

Update on Changes Made to Florida’s Estate Tax Apportionment Statute by Keith B. Braun

An Introduction to Succession Planning and Possibly All You Need to Know, Part III

Paying for College: Understanding Student Financial Aid, Part I

Seminar Spotlight – The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making

Richard Connolly’s World – Retirees Stung by ‘Universal Life’ Cost

Thoughtful Corner – Out of Sight, Out of Mind

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“Ready, Fire, Aim,” – H. Ross Perot

Ross Perot sold Electronic Data Systems (EDS) to General Motors (GM) in the 1980s. A few years later, he was asked to explain the difference between the two companies. Perot claimed that EDS had a “Ready, Fire, Aim” strategy, i.e. a “get on with it now” philosophy towards running the business.

Oftentimes, it is best to determine where your gun is pointed by firing it and then adjusting from there. This is often true for situations where trial and error is the most effective way to get things going.

When you need to get something done or determined, consider the ready, fire, aim concept.

Update on Changes Made to Florida’s Estate Tax Apportionment Statute
by Keith B. Braun

Braun

Keith B. Braun has practiced for over 30 years, primarily in the areas of estate planning and probate and trust administration. He received his law degree from the University of Pennsylvania Law School and is a partner of the Palm Beach Gardens law firm of Comiter, Singer, Baseman & Braun, LLP. Keith is admitted to practice in Florida and Michigan and advises many law firms in Northern states on Florida issues. He is AV rated by Martindale Hubbell; Board Certified Wills, Trusts, and Estate Lawyer by The Florida Bar Board of Legal Specialization and Education; a Chartered Advisor in Philanthropy® (CAP®); and an Accredited Estate Planner ® (AEP®).

Two weeks ago, we provided summaries and compared statutory language to help you mount the learning curve for these delightfully concise and straightforward changes efficiently and effectively. You can click here to review the changes, which have already been read by millions of people throughout the world and, allegedly, Colonel Sanders as well.

We thank Keith B. Braun, David J. Akins, and Pamela O. Price for their hard work and achievement in facilitating the updated tax apportionment statutes. Braun, Akins, and Price were the members of the Estate Tax Apportionment Subcommittee of the Estate and Trust Tax Planning Committee of the Real Property, Probate, and Trust Law Section of the Florida Bar that drafted the proposal which formed the basis of the Amendment. You can read their article about the changes to the tax apportionment statute by clicking here.

Keith’s special Thursday Report write-up on the apportionment statute is as follows:

This year, the Florida Legislature revised the Florida estate tax apportionment statute Section 733.817. The revised apportionment statute is much easier to read; it has been better organized and now includes titles. Further, the statute has been updated to reflect changes in the federal estate tax law, address issues not previously covered, codify existing case law, and, I believe, better reflect what most people would want.

Section 733.817 sets forth default rules for determining the apportionment of estate tax – federal and state – among the various property interests passing as a result of a decedent’s death, applying a modified equitable apportionment regime. These default rules can be modified.

The key changes made to the apportionment statute are as follows:

  • No estate tax is apportioned to gift taxes on gifts made within 3 years of death or to the recapture of excess 529 plan gifts made within 5 years of death.
  • Estate tax on protected homestead, exempt property, and family allowance is apportioned to other estate and revocable trust property. First, such taxes are apportioned to recipients of property passing by intestacy, thereafter, to recipients of residuary interests and pretermitted shares, and finally, to recipients of nonresiduary interests. Property necessary to satisfy the elective share will not bear any of the tax on these interests. Note that exempt property and family allowance receive the same favorable treatment as homestead.
  • The common instrument construction rules have been modified to treat all recipients of property passing from related governing instruments (pour over will and revocable trust or revocable trusts where one pours into another) as taking under a common instrument.
  • A direction in a governing instrument providing for apportionment in a manner different than provided in Section 733.817 (i.e., intra document apportionment must be express.)
  • Property included in the gross estate under both Section 2041 (general power of appointment) and Section 2044 (QTIP) is treated as includible under Section 2041. As a result, the greater specificity requirements of Section 2207A must be met to waive the right of recovery and such property bears the additional tax incurred by reason of inclusion of such property in the beneficiary’s estate.
  • The holder of a general power of appointment may expressly direct that property subject to such power bear the additional tax incurred by reason of the inclusion of the property in the power holder’s gross estate (i.e., be treated similarly to QTIP property).
  • If governing instruments contain conflicting tax apportionment provisions, the last executed tax apportionment provision controls. If a will or trust is amended, the date of the amendment is only controlling if the amendment contains an express tax apportionment provision.

Practitioners will be pleased with this revised statute.

Keith will also be presenting a more detailed talk on this subject entitled “Gobblin’ Up the New Estate Tax Apportionment Statute” at the Florida Bar sponsored Estate & Trust Planning/Asset Protection: Tricks, Treats and Really Scary Things seminar on Friday, October 23, 2015. For more information about this event, please click here.

An Introduction to Succession Planning and
Possibly All You Need to Know, Part III

by Alan Gassman

Two weeks ago, we covered terminology and important concepts relating to succession planning. You can review this by clicking here.

Last week, we covered approximately one-half of our substantive succession planning materials, which were written for intelligent laymen, which can be viewed by clicking here. The conclusion to these materials is as follows:

Shareholder Agreements

The present estate tax law has a very advantageous provision which allows stock in a family company to be valued based upon a formula or criteria that would be used by similarly situated arm’s-length parties. This provision applies even if the “low side value” results from use of the formula, which can take into account that there are no non-competition covenants in place between family members, if that is the case. For most businesses and industries, there are formulas that will result in a value that is significantly less than what the IRS would otherwise consider company ownership interests to be worth.

This is one advantage to having a purchase occur upon death between family members. In addition, or alternatively, shareholder agreements between family members which prevent the transfer of stock to third parties and have other restrictive provisions can help to reduce the value that the stock will be taxed upon in the event of an owner’s death.

Further, where company stock constitutes more than 35% of a decedent’s adjusted gross estate, it may automatically qualify for an advantageous estate tax payment plan that can be based upon interest only and a government subsidized rate for the first four years, followed by payments ratably over the following ten years. Many family businesses can easily survive and even prosper with that type of payment plan, but many families mistakenly have corporate debt or asset structuring that causes the net value of the corporate stock to be less than 35% of the shareholder’s adjusted gross estate (see Internal Revenue Code Section 6166).

Another common error is to have a real estate business that predominately leases its property on a triple net basis. The payment plan rules described above can apply to investment real estate where the property holding entity provides active management services. This is often the reason that affluent families have family members actively engaged in managing the family real estate (besides the fact that it keeps them off of the streets). Active management can also result in avoidance of the 3.8% Medicare tax that is often otherwise imposed upon net rental income.

Examples of Business Allocation Planning for Family Members

Scenario #1

The business entity assets will be allocated to the trust for my daughter to the extent not exceeding 50%, with the other assets being allocated to the trust for my son.

If the business entity assets turn out to be worth more than 50%, then my daughter’s trust will owe my son’s trust a note for the difference, payable upon such terms as the Trust Protectors deem appropriate.

If the business company is still renting the business real estate from me at the time of my death, then the business real estate may be allocated to the trust for my son, and the Trust Protectors may install a long-term fair market value lease with option.

Scenario #2

Get it sold early, but get it sold to a trust that can be changed based upon changes to the family dynamics.

For example, Father, Mother, and Son #1 may be running the business, and it is going well. Son #2 has no interest in the business, and Son #3 is still in high school.

Father and Mother believe that the business should most likely go to Son #1, but they are not sure about Son #3, and they are not getting along very well with Son #1’s wife, whom he married just two years ago.

They establish an irrevocable trust for all three children and give long-time family advisors and wise siblings the title of Trust Protector with the power to divide the trust into three parts, one for each son, and to allocate the assets as between the three parts as the Trust Protectors see fit.

During the lifetime of the parents, the trust receives ownership in the business, the entity that owns the real estate that is leased to the business, and monies are received by the company as distributions on the above real estate and entity ownership.

When Father and Mother die, they leave a trust that provides for the children to be treated equally from a net value standpoint and allows the Trust Protectors to value the business, allocate the corporate ownership as they see fit and in the best interests of both the company and the children, and to have notes due from a trust receiving excess value business interests to a trust receiving non-business interests as needed for balance.

On the death of the surviving parent, the Trust Protectors divide the assets in all of the above-referenced trusts as they deem appropriate.

The siblings do not fight with each other over the results, because the results are beyond their control.

Scenario #3 – Alternate Example for Life Insurance

Son #1 buys a second-to-die life insurance policy on the parents and enters into a binding Agreement to pay them an amount that is based upon a formula determined by the CPA for the company, which will hopefully be binding upon the IRS for valuation purposes.

The Agreement provides for the price to be paid in cash to the extent of 80% of the insurance proceeds and for the remaining 20% of insurance proceeds to be contributed to the company (or used to pay down debt and to release Father’s estate from any liability) as working capital and to help make sure the company is in compliance with any loans.

The purchase price above the 80% of insurance proceeds level is financed by a note that might be payable over 9 years by 108 monthly installments with interest at 1% above what the prime rate is on the death of the parent.

The child whose trust receives the company may be required to sign an Employment Agreement with a non-competition covenant that will require the child to work only for the company and dedicate all efforts to the company until the note is paid. It becomes the recipient child’s decision as to whether to involve siblings or others in the business.

Scenario #4

How about voting control for a situation where the mother owns 50% of the company and one daughter owns the other 50%, with several other siblings who are not as involved with the business?

In addition, what happens with respect to operating control of the business if the mother or her co-shareholder daughter become incapacitated but are still alive? How about providing for a “King Solomon Committee” that would have to agree with the remaining mother or daughter if one of them becomes incapacitated or dies with respect to continuing to run the business while giving each of them the option to buy the business at a fair market value price determined by the long-term CPA of the family?

For more on these and related topics, see Louis Mezzullo’s articles entitled Cain v. Abel: Dealing with Sibling and Cousin Rivalries and Business Succession Planning, which are available upon request by emailing agassman@gassmanpa.com. Louis Mezzullo is a lawyer, author, and well-known authority on succession planning. In fairness to Lou, his contact information is as follows:

Louis Mezzullo
Withers Bergman, LLP
6050 El Tordo
PO Box 2329
Rancho Santa Fe, CA 92067

Paying for College: Understanding Student Financial Aid, Part I
by Dena Daniels

Each year, the US Department of Education awards approximately $150 billion to assist students with paying for college. There are two main types of financial aid: (1) aid based on academic merit and (2) need-based aid. The former is not dependent upon the parents’ assets and income but rather the student’s academic performance, “if you have the grade, you get the aid.” The latter takes into account both the parents’ and the student’s income and assets.

PART I – TYPES OF NEED-BASED FEDERAL FINANCIAL AID

Federal Pell Grants

Federal Pell Grants are usually awarded to undergraduate students based on a combination of factors including: (1) the student’s financial need, (2) the institution’s cost of attendance, (3) the student’s enrollment status, and (4) the length of the academic year in which the student is enrolled. For the 2014-2015 academic year, the maximum Federal Pell Grant was $5,550 for the year. A student is eligible for this award for a total of twelve (12) semesters.

Federal Supplemental Educational Opportunity Grants

Federal Supplemental Educational Opportunity Grants are awarded to undergraduate students who have exceptional financial need. This type of aid is determined by the institution’s financial aid office and is contingent upon not only the student’s need, but also the available funds at the institution.

Direct Subsidized Loans

Direct subsidized loans are available to undergraduate students who demonstrate financial need. This type of loan usually has more favorable terms than unsubsidized loans to assist students. The loan amount is determined by the school the student attends, and the US Department of Education pays the interest on these loans as long as one of the following situations exists:

  • The student is enrolled in school at least half-time;
  • For the first six months after the student leaves school (this is referred to as a “grace period”); or
  • During a period of deferment.

Federal Perkins Loan Program

Federal Perkins Loans are low-interest loans for both undergraduate and graduate students who demonstrate exceptional financial need. The loans have an interest rate of 5%, however, not all colleges and universities participate in the Federal Perkins Loan Program. In this program, the school is the lender for the loan and payments are usually made to the school. The funds for this loan are limited based on the student’s need and the availability of funds at the school.

Federal Work Study

Federal Work Study provides part-time jobs for both undergraduate and graduate students who demonstrate financial need. This program affords students the opportunity to earn money to assist with the payment of education-related expenses, and in order to qualify, the student must be enrolled either full-time or part-time. The type of work in this program encourages community service work and work related to the student’s area of study.

Students participating in the Federal Work Study Program earn at least the current federal minimum wage, however, the student may earn more depending on the type of work and the level of skill necessary for the position. The total award a student receives under this program depends on: (1) when the student applies, (2) the level of financial need, and (3) the school’s funding level.

The means in which a student is compensated depends on whether the student is an undergraduate or graduate student. If the student is an undergrad, he/she is paid by the hour, whereas a graduate or professional student may either be paid hourly or by salary, depending on the work. The school must pay the student at least once a month, and the funds must be paid directly to the student unless the student requests that the school: (1) send the payments directly to the student’s bank account, or (2) use the money to pay for education-related institutional expenses and charges.

Next week, we will explore how to obtain the above types of federal financial aid, including eligibility requirements and how to apply.

Seminar Spotlight

The Biggest Mistakes to Avoid Concerning Your High School
Children – College Failures in the Making

Molly

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making on Saturday, September 12, 2015 at 9:30 A.M.

Molly Carey Smith, M.A. is the owner of College2Career in Tampa, Florida. College2Career is a career counseling business for college students and young adults. She brings years of experience in college guidance, essay and application guidance, career aptitude assessments, resume building, internship and job search strategies, and interview preparation. To find out more, visit her website at http://www.college2career.us.

The 10 mistakes that will be discussed during the webinar are as follows:

  • Sending your son/daughter to college without the emotional and mental maturity to succeed in college
  • Too much focus on athletic scholarships and sports in general
  • Allowing your son/daughter to choose a college major without your input
  • Failure to have a realistic and objective view of your son/daughter’s true abilities
  • Forgetting to introduce and to educate your son/daughter about the true costs associated with college each year
  • Believing that private universities have a better rate of return than public universities
  • Giving up scholarships from a public university in order to attend a private university
  • Not encouraging your son/daughter to work during college
  • Losing focus on the importance of character development
  • Not cultivating a mindset of financial independence

To hear more about these mistakes, please click here to register for the Saturday webinar.

Richard Connolly’s World
Retirees Stung by ‘Universal Life’ Cost

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the article of interest is “Retirees Stung by ‘Universal Life’ Cost” by Leslie Scism. This article was featured in The Wall Street Journal on August 9, 2015.

Richard’s description is as follows:

Retired high school teacher Nicholas Vertullo long felt confident that his wife, Grace, wouldn’t have to pinch pennies after he died. Nearly three decades ago, he bought a $238,000 life insurance policy and later bought three more policies, pushing the death benefit to about $500,000.

But he didn’t anticipate the policies’ annual costs would rise as much as they did, jumping to about $30,000 combined.

Low interest rates lead to soaring premiums for those who bought in the 1980s, and this article lists the things a client should do with an old policy, including:

  1. Get an in-force illustration from the insurance company to determine if the current premium will keep the policy in force.
  2. If the required premium is too high, look at reducing the face-value amount to an amount an affordable premium will support.
  3. If in good health, see if the client can qualify for a new policy with a lower guaranteed premium.
  4. If none of these options provides a good solution and the client is going to surrender the policy, look at selling it to institutional investors for more than its cash value through life settlement.

Use this article to encourage clients to have their policies checked out.

Please click here to read this article in its entirety.

Thoughtful Corner
Out of Sight, Out of Mind

Consider recommending a separate email address for mail related to litigation or similar highly distracting situations. Many times, clients are clearly haunted by on-going litigation or disputes, and it can be difficult to compartmentalize or not be distracted from these types of situations when there are periodic emails that appear.

We therefore often recommend that the client consider establishing a new, separate email address that would receive any and all non-urgent emails and messages concerning the matter.

The client can then check that particular email address every few days, once a week, or perhaps less frequently. This will allow them to not have the distracting situation interrupt them on a daily (or more frequent) basis.

“Out of sight, out of mind” is a powerful truism when it comes to focusing attention on what we know we need to handle and not being distracted by unproductive thoughts or interruptions.

Taking that pile of work constituting a particular project off your desk and asking someone to put it back on your desk at a particular time and date in the future can be a very good step towards enhanced productivity and focus.

How often do you take a step back and think through how the logistics of communications, work flow, and distractions are working for you in your office or at home?

Make two or three changes this week to free you up and to help others.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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IN THE NEWS
by Ron Ross

The parents of 2015 lament that it’s going through those angry teen years.

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Investigators trying to find Hillary Clinton’s Blackberry are now looking in a closet that also has a typewriter from the Truman administration, a telegraph machine from the time of Lincoln, and Jefferson’s quill pen and ink stand.

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A lion at Busch Gardens eats a completely innocent attorney in a misguided attempt at revenge. Says the lion, “I thought it was that dentist.”

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Because of the large field of Republican Presidential candidates, participants in the upcoming CNN debate will be selected based on whether or not Microsoft Word’s spellcheck recognized their name. Obvious winners include Bush and Trump.

Everyone who does not get into the debate will eventually get the chance to play Colonel Sanders in a future KFC television ad.

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A monster accidentally created by Fox News escapes and is applauded at Presidential debates by reactionary voters. Says a Fox News representative, “It turns out his core demographic is people carrying torches and pitchforks.”

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Latest polls show that reasonable sounding Republican Presidential candidates George Pataki and John Kasich, among others, rank in preference with GOP voters just below a replica of Darth Vader made out of bubblegum.

Upcoming Seminars and Webinars

Calendar of Events

LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE BIGGEST MISTAKES TO AVOID CONCERNING YOUR HIGH SCHOOL CHILDREN – COLLEGE FAILURES IN THE MAKING.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 8.27.15 – I Have Become Comfortably Thursday

Posted on: August 27th, 2015

Market Jitters by Gregg A. Biro

Medical Law Update with Lester Perling

An Introduction to Succession Planning and Possibly All You Need to Know, Part II

Richard Connolly’s World – Changes for Law Firms to Consider

Humor! (or Lack Thereof!)

Upcoming Seminars & Webinars

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

I Have Become Comfortably Thursday

The 1979 double album The Wall by Pink Floyd was written entirely by Roger Waters, both in music and in lyrics, and was a watershed moment for music in a number of ways.

While many view Pink Floyd as just another rock band or as a band that is fairly far out on the “far away from conventional music” scale, Mozart was quoted to the effect that “Pink Floyd is my favorite band. The beat is unsurpassable, and The Wall is, by far, my favorite album.” Even George Gershwin recognized the importance of The Wall when he wrote An American in Paris, recognizing that The Wall, in some ways, reflected the Berlin Wall, which was only 652 miles from Paris and built only 33 years after An American in Paris was composed.

Roger Waters was born in 1943 and joined Pink Floyd in 1967. He parted ways with them in 1985. Not to be confused with Muddy Waters, Roger Waters has been said by many to be one of the most talented writers and performers in the history of Rock and Roll, according to his press agent, his present girlfriend, and the 11.5 million people who have purchased The Wall, not to mention his later works, which included The Pros & Cons of Hitchhiking and Amused to Death.

Quote of the Week

“At first, I felt that it was confined to my liver and that the operation had completely removed it, so I was quite relieved. Then, that same afternoon, we had an MRI of my head and neck, and it showed up that it was already in four places in my brain, so I would say that night and the next day until I came back up to Emory, I just thought I had a few weeks left, but I was surprisingly at ease. I’ve had a wonderful life. I’ve had thousands of friends, and I’ve had an exciting, adventurous, gratifying existence, so I was surprisingly at ease – much more so than my wife was – but now I feel, you know, it’s in the hands of god and my doctors, and I’ll be prepared for anything that comes.”

– President Jimmy Carter, when asked how he felt when he found out he had cancer

James “Jimmy” Carter, Jr. is an American politician and author who served as the 39th President of the United States from 1977 to 1981. He was awarded the 2002 Nobel Peace Prize for his work with The Carter Center, a nonprofit organization that works to advance human rights and alleviate human suffering. In August of 2015, Carter announced that he was undergoing treatment for cancer in his liver and brain.

Market Jitters
by Gregg A. Biro

Biro

Gregg is the Director of Business Development and a shareholder with Resource Consulting Group. He joined the firm in 2010. Prior to joining Resource Consulting Group, he was a Vice President for Bernstein Global Wealth Management where he provided comprehensive wealth management solutions to clients in Florida. He also served in a similar role with Wells Fargo Private Bank in Orlando. He holds his Series 65 financial security license and held his Series 7, 31, and 66 financial securities licenses. He is a graduate of The Ohio State University with a Bachelor of Science in both Marketing and Computer Information Systems. A resident of Orlando since 1987, Gregg enjoys swimming, playing golf, and spending time with his three children. He supports several local nonprofits which provide support and guidance to children.

Thanks to Gregg, Michael H. Davis, and Resource Consulting Group for allowing us to share this report with Thursday Report readers! This article has been reprinted with permission.

Market Jitters…

We’ve all seen the headlines declaring that “markets are in a free-fall.” We don’t dismiss the anxiety that market corrections may cause investors, and we want to provide a few points to remember in times like these.

First, market corrections are completely normal. In fact, over the last 35 years, the average intra-year drop from a market high to a market low is approximately 14%. The current volatility is well within this normal range.

To see a chart of intra-year declines versus calendar year returns, please click here.

Second, maintaining your discipline during times of volatility is critical to investment success. Your investment strategy must be driven by your investing goals – not by short-term movements in the markets. It is important to remember that the capital markets have consistently rewarded the disciplined investor who endures these normal periods of market volatility.

Lastly, please remember why the media is in business: to generate ratings that sell more advertising. The old adage that “bad news sells” is very true. As you have no doubt already seen, and will continue to see, the media will use “breaking news” alerts and special coverage to wring the ratings out of this market downturn. You should also expect the media to feature various “experts” offering all sorts of predictions. But we all know those predictions have nothing to do with maintaining a long-term prudent strategy for investment success. 

Medical Law Update with Lester Perling
by Travis Arango

Perling

There have been some new developments in the state of Florida’s health care laws. This article will go over the specific bills and summarize the webinar presented by Lester Perling, J.D., MHA, and Alan Gassman, J.D., LLM. You can watch the webinar by clicking here.

HB 269 – Experimental Treatments

This is known as the “Right to Try Act.” This allows patients with a terminal condition to try a drug, biological product, or device that has successfully completed Phase 1 of a clinical trial but is not yet approved by the FDA. The licensing board may not take action against a physician’s license for recommending an experimental drug, product, or device. There is also an immunity for the manufacturer of the drug as well. Another interesting nuance is that the patient’s heirs are not liable for the patient’s debt related to the treatment. Keep in mind that most insurances are not obligated to cover experimental treatments.

HB 32 – HIV Testing

Definitions for “health care setting” and “non-health care setting” are added with this bill. Health care setting is defined as a setting devoted to the diagnosis and provision of medical care (hospitals, urgent care centers, health departments, etc.). Non-health care setting is defined as a site that conducts HIV testing only for diagnosis and does not provide any treatments (community based organizations, outreach settings, mobile health vehicles, etc.). The bill reiterates that informed consent is required for both settings. The bill also changed the notification requirements before an HIV test can be performed in both settings. One notification requirement is that the patient must be told that their results will be submitted to the Department of Health, and if they do not want to have the results reported, then they will be given the locations to anonymous testing sites.

HB 633 – Abortions and Informed Patient Consent

This bill requires physicians to inform pregnant women of the risks of having an abortion. The bill also requires that the physician performing the abortion or the referring physician be present in the same room when obtaining informed consent. There is now a 24-hour waiting period for pregnant women who wish to have an abortion. This is not a direct 24-hour wait period, but instead, the informed consent must be given no sooner than 24 hours of the procedure, thus creating a 24-hour wait period. There are exceptions for the 24-hour waiting period for women who are victims of rape, incest, domestic violence, or human trafficking, with documentation evidencing that she is the victim of one or more of these crimes.

HB 655 – Clinical Laboratories

This bill revises the definition of “licensed practitioner” to include consultant pharmacists and doctors of pharmacy. The bill requires clinical laboratories to make its services available to consultant pharmacists or doctors of pharmacies in addition to other licensed practitioners (currently, a clinical laboratory cannot accept human specimens from pharmacists because they are not included in the statutory definition of licensed practitioner.) Clinical laboratories may not charge different prices for its services based upon the practitioner’s licensing.

HB 697 – Public Health Emergencies

This bill amends Florida Statutes to include provisions on communicable diseases. It allows law enforcement to enforce isolation and quarantine orders. Before this bill, law enforcement did not have the power to do this. This bill provides definitions for “isolation” and “quarantine.” “Isolation” means the separation of an individual reasonably believed to be infected with a communicable disease. “Quarantine” means the separation of an individual reasonably believed to have been exposed to a communicable disease but is not yet ill. The goal for this bill is to “fulfill an important state interest.” This is likely a response to the Ebola situation we faced at the beginning of this year.

HB 751 – Emergency Treatment for Opioid Overdose

This bill creates the “Emergency Treatment and Recovery Act,” which allows health care practitioners to prescribe and dispense emergency opioid antagonists to patients for emergency purposes. It provides “good Samaritan” protection from civil liability to practitioners that prescribe and dispense emergency opioid antagonists and does not create a duty or standard of care for a practitioner who prescribes or dispenses or a person who administers an emergency opioid antagonist.

HB 889 – Health Care Representatives

Allows a person to designate a health care surrogate to act any time, including while the person is still competent and able to make his or her own decisions. If the individual is competent to make decisions, then his or her decision controls. This bill ensures that redetermination of incapacity is not necessary for a designated surrogate to make health care decisions. It also provides for the designation of health care surrogates for minors when the minor’s legal guardian cannot be timely contacted or is unable to provide consent for treatment. It specifies that a principal’s wishes are controlling while he or she has decision-making capacity.

HB 1127 – Insurance Fraud

The law expressly provides that charges and claims for reimbursement made by unlicensed health care clinics that are operating in violation of the health care clinic statute are unlawful and could constitute theft even if the claims were not paid to the unlicensed health care clinic. This bill revises the criminal penalties for such unlawful health care charges and classifies unlicensed clinic activities as a felony. This bill requires that when health care providers have knowledge of an unlicensed clinic, they must report the clinic. Failure to report an unlicensed clinic can result in licensing sanctions.

HB 309 – Patient Admission Status Notification

This law adds a provision that if a patient is on “observation status” rather than inpatient status in a hospital, services that are performed during the observation status (such as x-rays, lab tests, etc.) must be documented in the patient’s discharge papers. The bill requires hospitals to inform patients if they are on “observation status.” Medicare coverage varies depending on whether a patient is inpatient or observation, so the point of this law is to make it clear to the patient what his or her co-payment obligation will be; it is often higher if a patient is in observation status.

An Introduction to Succession Planning and
Possibly All You Need to Know, Part II

by Alan Gassman

Last week, we covered terminology and important concepts relating to succession planning. You can review this by clicking here.

This week, we are covering approximately one-half of our substantive succession planning materials, which were written for intelligent laymen, and are as follows:

PART II – A MULTIPLE CHOICE QUESTION

The majority of businesses in the United States are family-owned. Of those family-owned businesses, it is estimated that only 30% survive to the second generation, and merely 12% survive to the third generation.[1] Arguably, the most common reason that family-owned businesses fail to survive beyond the first generation is friction from within the surviving family. A close second may be irrational decision-making to “cash in” and do other things (like spend it all.) A third reason is failure of the business due to naïve or simply incorrect decision-making.

Family-owned business succession is rife with possibilities for discord. For example, consider a business that was founded and operated by a single owner in the first generation. In many cases, that business will be passed on to multiple siblings in the business’s second generation of ownership. These siblings, each with their own individual interests, visions, and rivalries, will now need to depend on each other for their financial security and the survival of the inherited business.

There are endless factors that may bring about or exacerbate contention among siblings. Oftentimes, family members of the second generation who were inactive in the family business would rather sell the business and reinvest the proceeds elsewhere. Similarly, second generation owners who do not have children will have different attitudes about retaining the family business than siblings who do.[2]

Each of these difficulties that are inherent to family-owned business succession are compounded if the business survives to the third generation, where both siblings and cousins may share control.

Clients with successful businesses and professional practices have limited choices when it comes to how they should pass their business on to the next generation or generations of family members. In practice, this tends to be a good thing because recognizing the choices and then the sub-choices that come with each possible direction can help assure that the senior family members have a good understanding of what is possible in the future.

Where Estate Tax is a Consideration

The present estate and gift tax exemption of $5,430,000 per person allows many clients to pass businesses without any concern for federal estate tax at the level of the present owners. This simplifies planning and also enables the next generation to receive inherited stock or businesses at a fair market value income tax basis.

Families facing federal estate tax challenges need to consider the integration of estate tax avoidance techniques into succession planning. However, in most situations, the available options can be kept open while estate tax planning takes place.

For example, stock in a closely held company can be transferred annually to an irrevocable trust that will not be subject to federal estate tax at the level of the parents using the $14,000 per year per person gift tax exclusion (a mother and father can gift $28,000 per year to each of their children, in-laws, grandchildren, etc.). The irrevocable trust can hold S-Corporation or other types of ownership interests and then have them pass without being subject to the federal estate tax at the level of the donating parent.

Other techniques include the use of special trust arrangements such as (i) Grantor Retained Annuity Trusts and (ii) installment sales to Grantor Trusts to move ownership and/or the eventual proceeds from sale and profit (not to mention dividends and other distributions) outside of the federal estate tax system.

Family members or trusted advisors can be named as Trust Protectors so that various family members can benefit from inheritance, continued trusteeship, or the purchase of stock as and when circumstances change.

Often these types of trusts and techniques are used shortly before a company goes public. The rule of thumb in most industries is that a company’s stock will be worth three times as much after a successful initial public offering (IPO) as compared to pre-IPO activities.

One key point that the estate and trust planner must understand is that family members often want maximum flexibility and any one or more of the techniques above can be used.

Life Insurance Arrangements

Life insurance policies that are funded under buy-sell or redemption arrangements are, by no means, the only or even the most common way to have ownership pass to subsequent generations, but they are often considered to be a good fit for many situations.

Inexpensive term life insurance is often used to help assure families that a premature death will not bring a company down or provide serious challenges to its survival because of a loss in cash flows, capitalization, or other tax issues.

It is quite common for many buy-sell arrangements to factor in the amount of money available to pay taxes and expenses as they come due, as well as whether those beneficiaries that may not inherit or benefit from the family business can receive a reasonable inheritance. For this reason, permanent life insurance may be used in certain situations, including second-to-die life insurance policies that will pay a death benefit only on the death of a surviving spouse or business owner. This can ensure that the family has plenty of liquidity to pay taxes, handle bank debt, or provide inheritance monies for those who may not participate in the family business.

We find that, in most instances, insurance is not owned or made payable by beneficiary designation in the most optimal manner. For example, the choice between a cross purchase agreement and a redemption agreement will often be made based upon custom, or simply from a misunderstanding of what choices are available. Our article on this topic, entitled A Logical Guide to Selecting a Buy-Sell Agreement Arrangement: Traditional Choices are not Always Best, is available here.

Another simplified way of using life insurance would be to establish a trust for the primary benefit of junior family members and for that trust to own life insurance on the senior family members so that it can then be used to facilitate a purchase of ownership upon the death of the senior family members.

We rarely recommend that life insurance be owned by an operating company because it is possible for creditors of the company to attach life insurance values or death benefits if the company has a catastrophic situation or the banks are inclined to call in loans upon the death of a shareholder.

Transferring the Business To or For the Benefit of Employees

On occasion, a client will not have family as the intended recipients of a business but will instead prefer to have the key employees take over ownership and possibly pay for the value from the profits of the business.

One method to accomplish this is called the Employee Stock Option Plan (“ESOP”), under which a small contribution is made to a new qualified retirement plan for employees, which then borrows money from a bank or other financial institution and pays the money to the business owner in exchange for the stock of the business.

The business owner will pay a capital gains tax on the payments received, and the business profits payable to the ESOP will not be subject to tax until, eventually, ESOP monies are payable to employees many years down the road.

For example, a business owner receiving $1,000,000 a year in profits and a $250,000 salary might sell his stock to the ESOP for $7,000,000 that would be taxed at the 20% plus state tax bracket instead of at the normal 43.8% plus state tax bracket.

For the next 7 years, the profits of the business would be payable tax-free to the ESOP, and the ESOP would use those profits to repay the $7,000,000 note to the bank.

The seller would remain as president of the company and continue to control it to assure that the $7,000,000 is paid. The seller would be well advised to put some or all of the net after tax monies received from the sale into bond or other safe funds or investments in case the company cannot pay the loan and the selling owner had guaranteed it.

Assuming a 20% capital gains tax and a 43.4% income tax, the tax savings from this arrangement over the seven years would be approximately $1,638,000 (23.4% of $7,000,000), and the owner may be a participant in the ESOP, and thus, retain a relatively high percentage of indirect ownership.

There are also a number of rigid tax law and pension law requirements that must be met to facilitate a successful ESOP transaction.

Join us next week when we conclude our succession planning series with a discussion of shareholder agreements and business allocation planning.

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[1] Cain v. Abel: Dealing with Sibling and Cousin Rivalries by Louis A. Mezzullo at 8-3.
[2] Id.

Richard Connolly’s World
Changes for Law Firms to Consider

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Will Law Firms Flock to .Law Domain?” by Jacob Gershman. This article was featured on The Wall Street Journal Law Blog on August 13, 2015.

Richard’s description is as follows:

Starting in mid-October, law firms and credentialed lawyers will be able to purchase web addresses ending in .law, a new domain reserved for their industry.

Law firms are going to have to pay to get a .law domain. The price to register .law starts at $200. Minds + Machines [a major registrar for many new top-level domains] says domains for practice areas, like divorce.law or antitrust.law, will cost more, with prices subject to negotiation.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Baker & Hostetler Weighs Giving All Partners Stake in the Firm” by Sara Randazzo. This article was also featured on The Wall Street Journal Law Blog on August 10, 2015.

Richard’s description is as follows:

What does it mean to be a law firm partner?

At some large firms, being a partner means having an actual voice in how the firm operates and a salary that rises and falls with each year’s profits. At others, the title comes with little influence and a salary barely higher than that of a senior associate.

Baker & Hostetler, LLP is proposing a change to put all of its partners on more equal ground by eliminating its so-called two-tier partnership in favor of one that gives every partner an equity stake in the 930 lawyer firm.

As Above the Law first reported, Baker & Hostetler leadership told its partners last month that it would like to switch systems to “strengthen” its culture “by having all partners invested in the success of the firm.” The partnership is expected to vote on the change in September, according to a memo obtained by the blog.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign Final

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Cartoon

Upcoming Seminars and Webinars

Calendar of Events

LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com. 

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

August Rates

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