Archive for the ‘Thursday Reports’ Category

The Thursday Report – 12.31.15 – 2016 Reasons to Love Thursday!

Posted on: December 31st, 2015

Best of The Thursday Report 2015

Don’t Miss These Bloomberg BNA Webinars!

There’s Still Time to Donate! Gassman, Crotty & Denicolo to Match All Ruth Eckerd Hall School Time Donations Through December 31, 2015 – Proceeds Go to Students Who Cannot Afford a $5 Educational Field Trip

Thoughtful Corner – I Can’t Plan for 2016, but I Can Get Organized by Linda Chamberlain

Thoughtful Corner Replay – Resolutions are not Legally Binding

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.

Gassman, Crotty & Denicolo thanks you personally and only you (don’t tell others!) for reading, enjoying, opening, or at least not spamming the Thursday Report this year. No matter where we go, there are people who have never heard of it. Thanks for not being one of those people and for aspiring for better things for others in 2016 and thereafter.

In addition, please set your time travel machines one notch up so you don’t end up transporting yourself to next year when you meant to be transporting yourself to the previous year. And no fair doing time travel while your billing system timer is still on!

P.S. – Has anyone seen Santa’s wallet? He told us he last saw it on your dining room table when he tripped over the dog or the cat. He wasn’t sure which one it was.  He also stepped in the water bowl and had to clean up the food that he kicked. Next Christmas, Santa requests that you please leave the lights on, not leave pet food out in a pan overnight, and the pets in bed where they should be.

Happy New Year from Colonel Sanders and all of us (or at least most of us) at The Thursday Report!

Quote of the Week

“Last year’s words belong to last year’s language, and next year’s words await another voice.
To make an end is to make a beginning.”
– T.S. Eliot

T.S. Eliot was an American-born writer of essays, plays, poetry, and literature. He’s considered to be one of the twentieth century’s major poets. Eliot immigrated to England at age 25 and was eventually naturalized as a British subject. He won the Nobel Prize in Literature in 1948 “for his outstanding, pioneer contribution to present-day poetry.” Some of his best-known work includes The Love Song of J. Alfred Prufrock, The Hollow Men, The Waste Land, and Murder in the Cathedral. To preview some of his work, please click here.

Best of The Thursday Report 2015

As 2015 comes to a close, we look back at some of the best The Thursday Report had to offer this year. We hope to see you in 2016, and have a Happy New Year!

Gassman, Crotty & Denicolo in the News
(originally published in the January 15, 2015 Thursday Report)

The December 18, 2014 and January 1, 2015 editions of the Thursday Report featured write-ups on the Florida District Court of Appeals Biel Rio case, where it was determined that a debtor who had engaged in a fraudulent transfer more than four years before was nevertheless subject to having the transfer set aside under a proceedings supplementary brought in state court by the creditor.

The solution to this would’ve been for the debtor to file bankruptcy, as explained in our new Leimberg commentary letter that is being released tonight on the Leimberg system. To view our Leimberg letter, please click here.

Bay News 9 was kind enough to profile our book entitled The Florida Legal Guide for Same-Sex Couples on their website. The complete article can be viewed by clicking here.

Thanks to reporter Chris Hopper, and to purchase or preview the book, please click here.

Florida Law Trivia
(originally published in the January 15 and 22, 2015 Thursday Reports)

In January, we asked readers the following questions:

  1. Unless the Operating Agreement or Articles of Organization provide _____________ to the LLC having a manager or being managed by its members, the LLC will be treated as a member-managed LLC.
  2. True or False: The Florida Homestead Tax Exemption is usually $25,000.
  3. The property appraiser sends a Notice of Proposed Property Taxes, or a _____________ notice in August, and the owner has 25 days to contest the proposed value after receiving the notice.
  4. True or False: Equity from a protected homestead can be sold and used to invest in mutual funds without being considered a fraudulent transfer.
  5. Post October 1, 2011, a __________________ will only permit an agent to act with respect to items specifically described in the Power of Attorney and will not authorize a number of acts to be taken unless they have been specifically authorized and initialed or separately signed under by the principal.
  6. True or False: Florida Statute § 222.21 has not always provided that inherited IRAs were exempt from the creditors of beneficiaries.
  7. A debtor must generally have lived in Florida for _______ consecutive days in order for Florida law to apply in Bankruptcy Court.
  8. True or False: 36 states permit married couples to own assets jointly as tenants by the entireties.
  9. The ______________ has the power to waive beneficiaries’ rights to annual trust accountings, to receive information regarding the trust and the trustee, and to represent and bind the applicable beneficiaries with respect to any notices, accountings, information, or reports related to the trust.
  10. A(n) _________________ indicates that there can be no transfer or encumbrance without the written consent of a specified individual or company.
  11. True or False: The surviving spouse can elect to become a one-half undivided owner of the homestead with the descendants equally sharing ownership of the other one-half undivided interest effective upon the decedent’s death.
  12. There are ________ exceptions that permit a creditor to invade a third party spendthrift trust providing for health, education, and maintenance of one or more beneficiaries.

To see the answers, please click here for Part I (Questions 1-6) or here for Part II (Questions 7-12).

The Barber of Seville Replaces No Time for Sargeant
by Travis Arango and Alan Gassman
(originally published in the February 19, 2015 Thursday Report)

It is shocking that the difference between a Limited Liability Company’s membership interest and stock in a corporation could cause such a different result. In Sargeant v. Al-Saleh, the stock in a foreign corporation could not be reached by the court while Well Fargo Bank v. Barber sent the creditor offshore to get a foreign court to allow seizure. In Barber, sole ownership of a Nevis LLC was considered to be like any other intangible personal property that a Florida judgment could be applied against.

In Well Fargo Bank v. Barber[1], the plaintiffs, Wells Fargo, had a deficiency judgment against Barber for $62,491,162.98. Before this judgment, the defendant had made a number of transfers.

Plaintiffs seek injunctive relief, to foreclose on Barber’s membership interest in Blaker Enterprises, LLC, or seek a charging order against it and to avoid the fraudulent transfers made by Barber based on actual and constructive fraud. The court dismissed the injunctive relief claim stating that it is “a remedy that is [only] available upon a finding of liability on a claim.”[2] The second claim was an attempt to foreclose on the membership interest or to obtain a charging order.

For a timeline of the transfers made, as well as a commentary on the court’s judgement, please click here.

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[1] 2015 WL 470589
[2] Id.

Live Long and Prosper: Leonard Nimoy
by Stephanie Herndon and Alan Gassman
(originally published in the March 5, 2015 Thursday Report)

Those of us who grew up watching television in the late 1960s while entranced by the space program, the promise of a more ideal society, and the desire to travel in time and see new worlds and civilizations could’ve had no better vehicle, at least on Thursday nights, than Star Trek, and Mr. Spock was a big part of that.

Star Trek

Star Trek’s predecessor was the western show Wagon Train, where a somewhat emotional leader and a logical first mate riding shotgun on explorations to unknown lands made for a very successful formula. Star Trek was almost entitled “Wagon Train to the Stars” and was marketed as a western in outer space before its premiere in 1966.

Star Trek was creator and producer Gene Roddenberry’s science fiction twist for a Wagon Train equivalent, and, with science fiction, Roddenberry could go further in exploring a character so logical that he had to be an alien from another planet. This character was named Spock. He was half human, with shielded and locked up emotions, and half Vulcan, an extraterrestrial humanoid species from the planet with the same name, known for their ability to live logically and with tremendous mental and mathematical power. Spock exemplified these Vulcan characteristics, not to mention the ability to read minds and to pinch people’s shoulders and make them pass out.

Roddenberry intended each episode of Star Trek to tell two stories each week: one of suspenseful adventure and one of morality, like the stories contained in Jonathan Swift’s Gulliver’s Travels. Spock was in constant combat with his emotions, revealing an extremely ironic sense of humor. The character’s journey on the show illustrated an evolution from being extremely starchy and impersonal in the first few episodes to becoming likeable and eventually one of the most beloved, fan-favorite characters of all time.

Spock was portrayed by Leonard Nimoy, an accomplished and talented actor who became an international phenomena through Spock and Star Trek. Nimoy never had the chance to play the role of Colonel Sanders, but he continued to return to Spock and the Star Trek universe throughout his lengthy career.

For more on Roddenberry, Nimoy, and Star Trek in one of our favorite and most loved stories of the year, please click here.

New Crummey Case – Worth its Weight in Gefilte Fish?
(originally published in the April 16, 2015 Thursday Report)

The recent tax court victory in the case of Mikel v. Commissioner was the subject of an excellent write-up by Jonathan Gopman in the Steve Leimberg Newsletter No. 2301. It can be viewed by clicking here.

Our friend and idol Edwin Morrow has written a draft LISI newsletter, which can be viewed by clicking here that we welcome questions, comments, and suggestions on.

The Biel Reo Bank Case Denied Certiorari by Florida Supreme Court
by Ken Crotty and Alan Gassman
(originally published in the June 25, 2015 Thursday Report)

Just in time, a bankruptcy court decision confirms that the extended statute of limitation on fraudulent transfer pursuits will not apply if the debtor files for bankruptcy.

In the 2014 First District Court of Appeals case of Biel Reo, LLC v. Barefoot Cottages Develop., it was concluded that the four year statute of limitations on fraudulent transfers will not apply in a proceedings supplementary.[1] The crux of the court’s decision rested on the fact that a proceedings supplementary is not an independent cause of action and instead is “collateral to the main action at law” and serves as a means to enforce a pre-existing judgment. The court held that, despite the fact that “proving and defending fraudulent transfer claims brought under §56.29 borrow substantively from the Uniform Fraudulent Transfer Act (UFTA), this does not require the adoption of the UFTA’s much shorter limitations period. This is mainly because §56.29’s contrary scheme and precedent broadly establishes the availability of proceedings supplementary for the life of the judgment, when a valid, unsatisfied execution exists.”[2]

For more on this decision, please click here to read the article in its entirety.

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[1] So.3d 506 (Fla. DCA 2014).
[2] Biel Reo, LLC at 4.

Office of Inspector General Fraud Alerts: An Interview with Lester Perling
(originally published in the June 25 and July 2, 2015 Thursday Reports)

Perling

On June 9, 2015, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services issued a fraud alert, which can be viewed by clicking here.

Alan Gassman interviewed Lester Perling of Broad & Cassel about the OIG Fraud Alert.

Alan – Today, we are going to talk about the OIG’s warning shot about physician compensation and medical directorships. Lester, welcome.

Lester – Thank you, Alan.

Alan – June 9, 2015, the Fraud Alert. Physician compensation arrangements may result in significant liability. Lester, what is this, and what do we learn from it?

Lester – Well, Alan, this flows from a case in which we actually represented one of the doctors who got in trouble – one of the twelve physicians and his wife. This was a home health aide. This particular case has generated this Fraud Alert.

Fraud Alerts, by the way, for those that don’t know, are a fairly rare thing for the OIG to issue. They haven’t issued one in quite some time. They might issue one every two to three years when they have a topic that they are particularly concerned about and they want to send a message. So this is a message to the physician community about natural arrangements between them and entities to which they refer. This was a case of a home health agency who had multiple medical directors, which probably, for a time, was more common than it is now. The agency also hired several physicians’ spouses to work for it, which has also been a common thing with home health agencies and other types of providers.

So this particular home health agency hired the physicians’ spouses to do various tasks like marketing, even nursing. Some of the spouses were actually nurses and did clinical work in the field. Some of the spouses did nothing but were still paid. Others did, in fact, provide services for a period of time. The facts of this case really probably aren’t the most important thing. What is really important about this Fraud Alert and what the OIG has been talking about in the recent weeks and months is the fact that they are going to start looking more at not just the entity involved in physician arrangements in terms of sanctioning them but at the physicians as well.

This is kind of going full circle.

To read the rest of this great interview with Lester Perling, please click here for Part I and here for Part II.

Stop Struggling and Allow it to Happen
by Srikumar Rao, MBA, Ph.D.
(originally published in the August 13, 2015 Thursday Report)

Rao

Dr. Srikumar Rao is the creator of the original Creativity and Personal Mastery (CPM) course that has helped thousands of executives and entrepreneurs achieve quantum leaps in effectiveness. He earned a Ph.D. in Marketing from Columbia University and is the author of Happiness at Work and Are You Ready to Succeed?, which has been published in over 60 languages.

You don’t have to work hard and use willpower and rigid discipline to achieve phenomenal results.

Here is how most of us live life:

We set a goal for ourselves and then take appropriate action to reach that goal. When things do not go our way, we work harder. We put our “nose to the grindstone” and try to remember that “when the going gets tough, the tough gets going.”

Our lives are full of struggle as we accumulate accomplishments. This is just the nature of life, right?

Well, maybe not.

Here is a scary thought:

Do you really have to impose your will, with all of the pain it involves and the drama it creates, on the universe to make things happen the way you want them to? Or can you learn to set aside your oh-so-strong preferences and let a greater wisdom guide you effortlessly through life?

To read more about this concept from Dr. Rao, please click here.

Avoiding the Carnage Caused by Pay-on-Death Accounts
by Alan S. Gassman & Christopher J. Denicolo
(originally published in the October 15 and 22, 2015 Thursday Reports)

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

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.

To read Part One of this article, which features a discussion of distortion or obliteration of an estate plan by pay-on-death accounts and possible ways to manage this risk, please click here. Part Two, which discusses the creditor protection advantages of using pay-on-death accounts, can be viewed by clicking here.

Don’t Miss These Bloomberg BNA Webinars!

Practical and Creative Planning Series

Blattmachr Invitation

Essential Elements Series

Berry Invitation

Shenkman Invitation

There’s Still Time to Donate! Gassman, Crotty & Denicolo to Match All Ruth Eckerd Hall School Time Donations Through December 31, 2015

Proceeds Go to Students Who Cannot Afford a $5 Educational Field Trip

REH Bus

The Marcia P. Hoffman Institute recently announced its 2015-2016 School Time Field Trip Series. This program brings live theater to young students through educational performing arts experiences, which include classroom reinforcement in math, reading, and science, and touches the lives of more than 15,000 students each year, 75% of whom qualify for free or reduced lunches. To see a brochure for this program, please click here.

Providing 15,000 kids with free performances and free transportation requires $50,000 in donations. Last week, through a generous anonymous challenge pledge and the contributions of many other donors, Ruth Eckerd Hall made it halfway to that donation goal in only 24 hours.

This week, Ruth Eckerd Hall board member Alan Gassman has pledged to match all donations to the School Time series up to $10,000. Alan found out that children who were unable to bring in 5 dollars to cover the cost of the field trip were not permitted to go, which he found unacceptable.

All donations made through December 31, 2015 of up to $10,000 will be matched by Gassman, Crotty & Denicolo, P.A.

Click Here to Donate Today!
or email Alan Gassman at agassman@gassmanpa.com to donate!

To be sure your donation is matched, please provide a donation amount and select “Year End Giving” from the initiative drop-down menu.

Thoughtful Corner
I Can’t Plan for 2016, but I Can Get Organized
by Linda Chamberlain

Chamberlain

There is no way I could have predicted, thank goodness, the major events in my life over the last five years. My mother passed away with ovarian cancer, two of my sons got married, we had our first grandchild, my 91-year-old dad got remarried and moved, and one of my best friends died.

I keep a crystal ball in my office. I often tell clients I meet with it’s not working today. We will quickly look over at it and see right through it. It tells us nothing. I’m actually glad about that because there are many events you simply cannot plan for, and the anxiety of worrying about them happening is often worse than the actual event.

What I have realized over the last five years is that I can be more organized and need to be more organized to be prepared for what life brings my way. I am tackling the piles of paperwork, documenting the many passwords and websites I use, and physically and electronically filing my documents and paperwork. This is not a task that is complete in a day or week, and, to be honest, I am still working on it.

When my friend died, I was truly amazed with the time he had taken getting organized and planning for his death. While many of us glibly will state we are doing it and that we are prepared, in reality, I find most people will not complete what is required while they are living. Many of us prefer instead to avoid thinking about it and leave many required tasks to our surviving loved ones. It is easy to say “if” I die, when there is no doubt about it: it’s a “when” I die.

Getting Organized

Aging Wisely has developed a simple tool to help you start organizing your exit strategy. We call it our questionnaire. We have found clients appreciate our help completing and getting their information together. The questionnaire takes you step by step through your personal information. It helps you start thinking about “who” may help you. It reminds you of assets you may have to manage and helps you evaluate your monthly income and expenses so you will know what you have to spend on a monthly basis, all information you need to get organized for your future as well as illness or your death.

Exit Strategy

I have to admit, I get tired of hearing about planning for my death. I do like the idea of organizing my Exit Strategy – something about saying that makes me sort of smile. I am going to tackle my Exit Strategy this year and get organized. It will be useful for living and eliminate much stress I bring upon myself not being able to find things when I need them. There will be many tips to share through the process. Stay tuned.

Linda can be contacted at linda@agingwisely.com. For more information about Aging Wisely and the services Linda offers, please click here to visit her website.

Thoughtful Corner Replay
Resolutions are Not Legally Binding

Congratulations on having successfully survived another holiday season!

A majority of Americans make New Year’s Resolutions, but statistics show that most of them are broken, causing a good deal of disappointment and bounce back.

The following are some simple strategies to make the most of New Year’s Resolutions and the opportunity for change that the new year brings:

Be Realistic

It takes fourteen or more days to make a new habit, and it is very difficult to change more than two habits at a time. Most resolutions require software changes in our minds, which don’t come from merely wishing that these changes will be so.

Unless changing the habit becomes a number one goal with respect to that aspect of your life, it is simply not going to happen. Most goals cannot be attained without accountability, support, and realistic approaches.

Based upon the above, you might think through the following today and also maybe next week, when you are not as hung over from staying up so late last night (yes, this means you!)

  1. Write down each of your resolutions – This triggers true communication with your conscious and subconscious mind.
  2. Prioritize each resolution – Mark each resolution on an alphabetical scale. A is the best and most important and E means disregard it completely.
  3. Write down two advantages to be derived from following through with the resolution. Also consider the two biggest cons involved.
  4. Write down what you have to change to accomplish the resolution and who can help you make the change(s).

For example, if you are trying to lose weight, seriously consider a program like Weight Watchers or following what Weight Watchers and all other accountable change organizations recommend for this. Some of their recommendations are listed below:

  1. Write down everything you eat. If you do this, you will lose weight. That is absolutely guaranteed.
  2. Count calories and carbohydrates, whether this is direct or indirect
  3. Plan ahead with reasonable daily parameters
  4. Count exercise as increasing your allowance
  5. Weight yourself periodically and be accountable
  6. Reward yourself emotionally and with appropriate attention for success
  7. Get your spouse or significant other involved – Have them make sure unhealthy food or unwise choices are excluded from being in your sight or being readily available
  8. Consider reduction of alcohol both for calories and willpower purposes
  9. Stay the heck away from KFC!

Weight Watchers is successful simply because their program models work. There is something quite magical that happens when ten or fifteen people sit in a room and talk about planning their food intake and what they will achieve, knowing they will face each other again the following week and receive recognition for goals accomplished and support for goals still to be reached.

Also pledge to take the next step if the above steps do not work for you. Try something more extreme, such as seeing a doctor or a psychologist if you have not lost five pounds in the first six weeks.

If you make a resolution to lose more weight your number one priority and are high-fiving yourself every time you do something right, the rest of your life will be better. Nothing will suffer but the sellers of unhealthy foods.

Help a Friend or Two Reach Their New Year’s Resolutions
While Keeping Track of Your Own

Choose one or two of your resolutions and have a serious talk with somebody you trust about what you are trying to change. Arrange to speak with them at least once a week about this for no more than three minutes. Then, do the same for them. Listen to their goals and what they would like to change about themselves. What can you do to help them get there?

Make 2015 the best it can be!

But understand your limitations.

This is well surmised by the renowned psychologist and author Robert Kegan in Chapter 3 of his book entitled The Evolving Self: Problem and Process in Human Development, which we will review in more detail next year. You can purchase or preview this book by clicking here.

Have a great Thursday and a great new year!

Humor! (or Lack Thereof!)

Sign Sayings of the Week

Signs

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In the News
by Ron Ross

George W. Bush is sailing around the world this New Year’s. To make sure he gets a friendly reception, he’s changed the name of his yacht from Mission Accomplished to Unintended Consequences. He was going to rename the yacht Stuff Happens, but that’s the name of his brother Jeb’s boat.

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Anger and Fear from the movie Inside Out endorse Donald Trump. Said Anger, “I hate people who are different than me, so I like Trump’s spirit.” Disgust and Sadness are currently undecided, and Joy was unavailable for comment, as she’s been crying ever since she read the latest Donald Trump tweet.

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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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The parents of 2015 lament that it’s going through those angry teen years, and they’re eager to move on to 2016.

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THE COOKIE WAR
by Ron Ross

When the Girl Scouts set up outside the store
Tiny eyes looked down from the shelves
“They can’t sell in our territory”
“This means war” said the Keebler Elves

The Girl Scouts would not go quietly
Wouldn’t give up the chance to make cash
They could make fire by rubbing sticks together
They had a “Cooking Elves” merit badge on their sash

The elves lost all their Vienna fingers
The Girl Scouts kept selling Coconut Dreams
But there are no winners in the cookie wars
The girls are still haunted by the tiny screams

Upcoming Seminars and Webinars

Calendar of Events

LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Annual Florida Bar Health Law and Tax Section 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 ORLANDO PRESENTATION:

HECKERLING INSTITUTE – INTERACTIVE LEGAL TALK

Alan Gassman will present a 15 minute speech at the InterActive Legal booth at the Heckerling Institute for Estate Planning on HAVE GUN TRUST, WILL TRAVEL. His bullet points will be very useful and give you ammunition to help make your gun trusts more explosive than ever! We expect this talk to be right on target, so take off your silencers and come to see this important, thorough, and detailed 15 minute talk.

While at the InterActive Legal booth, see the new Alan Gassman Channel and get a free book of your choice by being one of the first to sign up for this new, monthly, interactive, computer-based library featuring several of Alan’s books, many forms, charts, and even exclusive video webinar presentations. $129.40 per year gets you this and a bucket of Kentucky Fried Chicken if you sign up before January! (Mashed potatoes are extra.)

Special thanks to Michael Graham and George Brittingham of InterActive Legal for risking their entire operation on the success of this channel.

Date: Wednesday, January 13, 2016 | 10:40 AM

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

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

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Essential Elements webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS AND PLANNING FOR THE INCOME TAXATION OF ESTATES AND TRUSTS.

Blattmachr

This is a free webinar series being presented by Bloomberg BNA. We will have the full schedule available in a future Thursday Report. Save up so you can afford it!

Date: January 21, 2016 | Replay on January 26, 2016

Location: Online webinar

Additional Information: For more information or to register, 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 to 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 COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ESTATE PLANNING BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, February 17, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Practical & Creative Planning webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS, FINE POINTS, AND INNOVATIVE STRATEGIES FOR LIFE INSURANCE AND USE THEREOF.

Bloomberg BNA will charge for this webinar and this series of webinars, but we believe it is well worth it! We will have the full schedule available in a future Thursday Report.

Date: February 25, 2016 | Replay on March 1, 2016

Location: Online webinar

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

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ASSET PROTECTION BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, March 16, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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. Be sure to bring an extra pair of socks because the first pair will get knocked off by Jonathan’s talk!

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.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of EQUITY STRIPPING AND OTHER ADVANCED ASSET PROTECTION IDEAS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, May 11, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or 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.

Dec. Federal Rates

The Thursday Report – 12.24.15 – Santa Got Run Over By a Thursday Report!

Posted on: December 24th, 2015

If Your Clients Assets Grow at a Normal Pace, They May Outdistance the Estate Tax Exemption, Especially in 2016

Excessive Executive Compensation Can Be a Breach of Fiduciary Duty

The Future of Health Care by Dr. Pariksith Singh

Announcing the Alan Gassman Channel with InterActive Legal

Gassman, Crotty & Denicolo to Match All Ruth Eckerd Hall School Time Donations Through December 31, 2015!

Richard Connollys WorldYearEnd Extenders & IRS Budget Cuts

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

“For me, holidays are about the experiences and the people and the memories,
rather than sitting on a nice beach getting tanned. I try to plant myself where I am
and embrace what is there in front of me.”
– Evelyn Glennie

Evelyn Glennie is a Scottish virtuoso percussionist and one of the two recipients of the 2015 Polar Music Prize, a Swedish international award that is often referred to as the “Nobel Prize of Music.” Glennie began losing her hearing at 8 years old and has been profoundly deaf since age 12. She has been awarded with 15 honorary degrees from universities in the United Kingdom and is an Ambassador of the Royal National Children’s Foundation, which helps support disadvantaged young people in the UK.

To see Evelyn’s TED talk on How to Truly Listen, in which she illustrates how listening to music involves much more than letting sound waves hit your eardrums, please click here.

If Your Client’s Assets Grow at a Normal Pace, They May Outdistance the Estate Tax Exemption, Especially in 2016

The Estate Tax Exemption Will Only Rise by $20,000 in 2016; The Gifting Allowance Remains at Only $14,000

by Alan Gassman and Seaver Brown

Many planners do not have great concern when a single client in the $2 million to $3 million net worth range or a married couple in the $4 million to $7 million range present themselves for estate and estate tax planning, but this can be a grave error.

The estate tax exemption increases with the Consumer Price Index, but clients who are in the saving and investment mode may be expected to have their investments more than double every ten years.

The Rule of 72 allows an investor to quickly calculate the number of years it would take an investment to double in value at a fixed interest rate. This calculation is done by simply dividing the number 72 by the expected annual rate of return. For example, it provides that $10 invested at 10% would take roughly 7.2 years to double in value.

Those who may want to see some sample numbers and/or rules of thumb with respect to potential growth, without adding to savings, may want to use the following charts. These charts illustrate the potential growth of $1 million, $3 million, and $5 million at growth rates of 3% (which may reflect future increases in the estate tax exemption growing at the Consumer Price Index), 7.2% (which is not far from the average rate of return that a typical stock and bond based portfolio has earned over the past fifty years), and 10% (which is below what many of our clients have historically earned on their investments in a number of privately held businesses and entities.) The results of these charts can be startling.

Charts 1

Charts 2

The only way to responsibly plan for an estate that may significantly exceed the estate tax exemption is to start early through the use of gifting, discounting, installment sales for long-term low interest notes, and other devices.

We are currently working on an article that will be published in January of 2016 entitled “The Eight Portability Mistakes.” The article will highlight a number of errors that many planners are making with respect to assumptions and strategies when electing portability. One of these errors is to assume that the portability allowance that a surviving spouse will receive (to the extent that the first dying spouse does not use his or her entire basic exclusion amount) will be sufficient coverage to help assure that the surviving spouse will not have an estate tax issue.

In the process of writing this article, we have come across a number of poorly publicized planning considerations that may pose significant problems in the future. Moreover, we typically find that these issues and considerations are almost never mentioned in literature, during client conferences, or otherwise.

Many misconceptions result from an assumption that there will be greater income tax savings on the death of the surviving spouse if a credit shelter trust is not funded on the death of the first spouse. Nearly every responsible planner representing a married couple, where there is a substantial possibility of estate tax exposure, should be posturing his or her client’s plans to enable the surviving spouse to have the credit shelter trust funded to some extent after the first death and to have a Clayton QTIP arrangement in place. This will be described in greater detail in a later edition of the Thursday Report.

For now, let us simply say that we hope our readers will review and find value in this upcoming article, which will be profiled in eight Thursday Reports in the New Year as we review “The Eight Portability Errors” and other considerations.

We welcome any and all questions, comments, and suggestions on this series going forward.

Excessive Executive Compensation Can Be a Breach of Fiduciary Duty

Can a claim for breach of fiduciary duty be based on excessive executive compensation?

Yes. Such a claim may succeed if the petitioner can show that excessive executive compensation equated to corporate waste. To be considered corporate waste, the compensation must lack a reasonable relationship to the services rendered. A three-tiered inquiry determines if a reasonable relationship exists:

(1) Did the corporation benefit?

(2) If so, was the compensation commensurate to the services?

(3) If so, did the compensation spring directly from the services?

A positive response to all three questions is needed to dispense of a corporate waste claim. The paragraphs below briefly discuss the line of reasoning from Florida’s corporation statutes and the business judgment rule to corporate waste and reasonable relationship doctrines.

The court in International Ins. Co. v. Johns, 874 F.2d 1447 (11th Cir. 1989) examines Florida law on executive compensation plans and golden parachutes. Per the Johns court, the fact-finder must first recognize the push-and-pull between Florida corporations’ directors’ ability to fix their own pay (Fla. Stat. § 607.0801) and Florida courts’ acknowledgment of the business judgment rule.[1]

The presumptions of good faith and fair dealing inherent in the business judgment rule will be overcome only if the circumstances show evidence “of abuse of discretion, fraud, bad faith, or illegality.”[2] Without one of those factors, the court will defer to the boards’ or director’s decision-making.[3]

In order to apply the business judgment rule to director and/or officer compensation systems, the Johns court held that the compensation must equate to corporate waste.[4] This comparison leads to a long line of analytical steps that the court must take: corporate waste requires payment without adequate consideration; what constitutes consideration is up to a corporation’s directors. Courts cannot overrule such a decision by the directors unless the compensation does not bear a “reasonable relationship” to the services rendered. Such a reasonable relationship exists if the payment “insures that the benefit provided by the services rendered will inure to the corporation.”[5]

But the inquiry does not end there. Now the court must apply the 3-step “reasonable relationship” test discussed above. A negative answer to any of the three questions is indicative, if not probative, of corporate waste.

The court in AmeriFirst Bank v. Bomar, 757 F. Supp. 1365, 1378 (S.D. Fla. 1991) found that a director or officer’s statutory fiduciary duty towards the corporation and its shareholders was “independent of his contractual obligations arising out of the employment contract.” So holding, it allowed the plaintiff to proceed with the claim of tortious conduct by the director defendants by way of accepting “grossly excessive compensation in violation of federal regulations.”[6]

Similar activity by directors can be argued to violate Fla. Stat. § 607.0830 – General Standards for Directors – and impose personal liability upon directors per § 607.0831 – Liability of Directors.

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[1] Id.
[2] Id at 1461 (referencing Lake Region Packing Assoc. Inc. v. Furze, 327 So.2d 212, 214 (Fla. 1976)).
[3] Id.
[4] Id (citing Rogers v. Hill, 289 U.S. 582, 591-592 (1933)).
[5] Id (citing Kaufman v. Shoenberg, 91 A.2d 786 (Del. Ch. 1952)).
[6] Id.

The Future of Health Care
by Pariksith Singh, M.D.

Santa 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.

As one reviews the landscape of health care that is shifting significantly over the last few years, one sees some changes that are seismic and some that are only a variation on the status quo. Fundamentally, the model of health care does not change, i.e., that of a personalized service that focuses on healing. Any variation on this basic value of health care would be disastrous. Machines cannot replace the doctor’s touch, presence, smile, kind words, and compassion, nor can protocols or algorithms transplant intuition and sensitivity.

But there are aspects of health care that can be turned from service into product, following the lines of development of the information-age companies. Also, the provider can be enhanced by supplying him data, analytics, machine learning, and cognitive computing. These are aspects of health care where we are seeing the biggest changes, where the digital is fast replacing the analog.

Michael Porter has noted that there are essentially two kinds of value that a business provides: the product or the service. In that sense, health care is a service. However, with this service are aligned an array of products and other services such as billing, coding, contracting, financial and legal services, and health information technology. All, or at least several, of these services can be turned into products and automated. The goal of these products is to enhance the essential service, and that is the engagement of humans with humans to facilitate healing.

The future of health care, in my view, will see a greater need for the human to human engagement and the dynamic of healing. Holistic medicine and integral healing reflect this growing need and trend. A research into nutraceuticals and herbaceuticals and not pharmaceuticals alone will happen, driven not by big pharmacy, but the empowerment of disruptive business and individuals. Research itself will get transformed and will not be function only of big labs or academic institutions whose sole drive is to get published for acclaim or financial returns. The research into the various paradigms of diverse health care approaches, such as Ayurveda, yoga, naturopathy, homeopathy, unani, siddha, and Bach therapy on their terms and accepting their own paradigms is also a future that I foresee.

The true healing, that which evokes the essential inner health of each individual, was called ‘svaasthya’ in Sanskirt, meaning being established or seated within oneself. This healing will happen only when the psychological and spiritual development of the person is no longer divorced from the physical, nor the mental from the emotional or vital. This would be the true integral healing the world needs, and one might envisage a future where this will be natural and organic.

At the same time, the products that support the back office or side office or front office need to be made extremely efficient and effective. At present, the electronic medical records (EMRs) are slow and inefficient. The analytics are weak because a true Health Information Exchange has not been created. This, too, is a development for the future.

In the same vein, creating a support system for providers that helps them become better healers via education, coaching, feedback systems, rating systems, and partnerships with patients as crowd or communities is another step that needs to happen. A true Physician Information System is in order.

We talk of big data, but big data is meaningless unless it is also fast data, right data, and effective and efficient data that is meaningful, real-time, actionable, and pooled from all the sources available in an easy-to-use format. In short, the ability of the systems to speed where one needs to speed up and slow down where one needs to slow down. This is the need of future medicine.

As a physician, I want to spend more time with the person and less time entering data into the EMR or digging through mountains of information to find the things I need. This is the end-use that all health care products and services have to aim for. As a physician, I want to be enhanced as a healer, and I want my patients to be protected, empowered, and healed. This is where the future of health care needs to head.

Announcing the Alan Gassman Channel with InterActive Legal

Alan & Interactive for website

InterActive Legal and Gassman, Crotty & Denicolo are pleased to announce the January inauguration of the Alan Gassman Florida Law Channel on InterActive Legal.

Subscribers to this channel will have unlimited electronic computer access to a wide range of useful and informative materials, including the following:

  • Gassman & Markham on Florida & Federal Asset Protection Law
  • Florida Law for Tax, Business, and Financial Planning Advisors
  • Eight Steps to a Proper Florida Trust and Estate Plan
  • The Florida Power of Attorney & Incapacity Planning Guide
  • A Practical Guide to Anti-Kickback and Self-Referral Laws for Physicians
  • Relevant and related Florida statutes
  • The JEST (Joint Exempt Step-Up Trust) Guide, Charts, and Trust Provisions
  • Coleslaw & Fried Chicken Straight from Your Computer (if you turn your monitor to the East at a 45 degree angle)
  • And more!

The books on this platform are fully digitized, with an interactive table of contents, links to related cases, and the ability to search for key terms and ideas throughout the text.

Please visit the InterActive Legal booth at the 50th Annual Heckerling Institute on Estate Planning from January 11-15, 2016, check out the channel, and be one of the first to subscribe!

Heckerling Show Special: Be one of the first to sign up for your one-year, $129.40 subscription and receive a printed copy of any one of the above books at no additional charge!

Please consider enhancing your practice and your Florida legal and planning library with the Alan Gassman Florida Law Channel with InterActive Legal.

Special thanks goes out to Michael Graham, Jonathan Blattmachr and George Brittingham of InterActive Legal for risking their entire operation on the success of this channel. Special thanks also to Howard Stern for his support and advice.

And while you’re there, be sure to stick around for Alan’s 15 minute speech on Have Gun Trust, Will Travel. His bullet points will be very useful and give you ammunition to help make your gun trusts more explosive than ever! We expect this talk to be right on target, so take off your silencers and come to see this important, thorough, and detailed 15 minute talk. This talk will be presented at the InterActive Legal booth on Wednesday, January 13, 2016 at 10:40 AM.

See you there!

Gassman, Crotty & Denicolo to Match All Ruth Eckerd Hall
School Time Donations Through December 31, 2015!

REH Bus

The Marcia P. Hoffman Institute recently announced its 2015-2016 School Time Field Trip Series. This program brings live theater to young students through educational performing arts experiences, which include classroom reinforcement in math, reading, and science, and touches the lives of more than 15,000 students each year, 75% of whom qualify for free or reduced lunches. To see a brochure for this program, please click here.

Providing 15,000 kids with free performances and free transportation requires $50,000 in donations. Last week, through a generous anonymous challenge pledge and the contributions of many other donors, Ruth Eckerd Hall made it halfway to that donation goal in only 24 hours.

This week, Ruth Eckerd Hall board member Alan Gassman has pledged to match all donations to the School Time series up to $10,000. Alan found out that children who were unable to bring in 5 dollars to cover the cost of the field trip were not permitted to go, which he found unacceptable.

All donations made through December 31, 2015 of up to $10,000 will be matched by Gassman, Crotty & Denicolo, P.A.

Click Here to Donate Today
or email Alan Gassman at agassman@gassmanpa.com to donate!

To be sure your donation is matched, please provide a donation amount and select “Year End Giving” from the initiative drop-down menu.

Richard Connolly’s World
Year-End Extenders & IRS Budget Cuts

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 “2015 Extender Bill May Throw Out 831(b) Captive Baby with the Bathwater” by Jay Adkisson. This article was featured on Forbes.com on December 9, 2015.

Richard’s description is as follows:

There is no dispute that in recent years, the 831(b) election has been abused by tax shelter promoters, and either Congress or Treasury (or both) need to take action to stop these abuses.

However, Congress now appears ready to address the problem by using a hammer instead of a scalpel, and in the process, may hurt America’s small businesses.

In the numerous 2015 year-end extenders, as found in H.R. 34 (offered by Hon. Rep. Kevin Brady of Texas), we find Section 262, which relates to “Modifications to Alternative Tax for Certain Small Insurance Companies,” which, of course, means the 831(b) election.

The proposed legislation does basically four things, all limited to insurance companies that have made the 831(b) election:

  • It practically eliminates the ability of small insurance companies to meet the tax tests for risk distribution through risk pooling arrangements;
  • It eliminates the so-called “estate planning benefit” of small captives that are owned, directly or indirectly, by the heirs of the business owner so as to accomplish a “free” transfer for federal estate and gift tax purposes;
  • It eliminates the ability to many small captives to meet the tax tests for risk distribution by changing the attribution rules; and
  • It increases the premium limit of 831(b) from $1.2 million to $2.2 million and adjusts that latter number upwards to correspond to inflation.

Please click here to read this article in its entirety.

The second article of interest this week is “The IRS is Losing Hundreds of Criminal Investigators” by David Voreacos. This article was featured in Bloomberg Business on December 3, 2015.

Richard’s description is as follows:

Tax cheats can breathe a little easier. The gun-toting Internal Revenue Service investigators who send felons to prison are retiring in droves, and there’s no one to replace them.

Since 2010, when Republicans won control of the House, the IRS budget has been cut $1.2 billion to this year’s $10.9 billion. One consequence of those cuts is that many of CI’s best investigators are retiring at the first chance they get.

By the end of next year, the number of criminal agents is projected to fall by 21 percent since 2011.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Sayings of the Week

Signs 1

Signs 2

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In the News
by Ron Ross

Republicans respond to “The Big Short,” the new Brad Pitt – Steve Carrell movie about the 2008 financial crisis. They said, “This movie is an attempt to push more legislation based on the false, unproven belief that drops in the market are caused by human behavior.”

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Global warming deniers block agreement in Paris until they all watch the tragic ending to the Frosty the Snowman special. Says one official, “If we hadn’t raised global temperature through human industrial growth, that lovable snowman would still be alive, not just coming back someday!”

Snowman

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Anthropologists have determined that the cave paintings of Europe are actually menus for a trendy, prehistoric high-protein restaurant. The images next to the animals on the walls indicate prices. You could get bison for 20 spear points, horse for 30 arrow heads, antelopes for the secret of fire, and if you have to ask for the price of bear, you can’t afford it.

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Kentucky for Christmas

Americans don’t typically think of fried chicken as a food to be had on Christmas Day, but did you know that not only fried chicken, but Kentucky Fried Chicken, is the Christmas meal of choice in Japan?

Christmas isn’t a national holiday in Japan, as only a small percentage of the population is estimated to follow the Christian religion, and turkey is not a common meat in Japan, so Kentucky Fried Chicken saw a marketing opportunity, and a tradition was born in the winter of 1974.

The first KFC Japan opened in 1970 and quickly gained popularity. The franchise introduced their first Christmas meal in 1974, chicken and wine for $10. Today, that meal has expanded to fried chicken, cake, and champagne, and sells for about $40. Many of these meals are ordered months in advance because the lines in KFC restaurants on the holiday itself can reach up to two hours long.

The Financial Times reports, “Japan is well-known for taking foreign products and ideas and adapting them to suit domestic taste, and Christmas is no exception. A highly commercialized and non-religious affair, lots of money is spent annually on decorations, dinners, and gifts. KFC is arguably the biggest contributor, thanks in part to its advertising campaign.”

The advertising campaign, “Kurisumasu ni wa kentakkii!” (“Kentucky for Christmas!”) was launched in 1974 with the restaurant’s original Christmas meal. The catchphrase “Christmas = Kentucky” caught on and is now paired with television commercials.

To learn more about this fun tradition, please click here.

Upcoming Seminars and Webinars

Calendar of Events

LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Annual Florida Bar Health Law and Tax Section 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 ORLANDO PRESENTATION:

HECKERLING INSTITUTE – INTERACTIVE LEGAL TALK

Alan Gassman will present a 15 minute speech at the InterActive Legal booth at the Heckerling Institute for Estate Planning on HAVE GUN TRUST, WILL TRAVEL. His bullet points will be very useful and give you ammunition to help make your gun trusts more explosive than ever! We expect this talk to be right on target, so take off your silencers and come to see this important, thorough, and detailed 15 minute talk.

While at the InterActive Legal booth, see the new Alan Gassman Channel and get a free book of your choice by being one of the first to sign up for this new, monthly, interactive, computer-based library featuring several of Alan’s books, many forms, charts, and even exclusive video webinar presentations. $129.40 per year gets you this and a bucket of Kentucky Fried Chicken if you sign up before January! (Mashed potatoes are extra.)

Special thanks to Michael Graham and George Brittingham of InterActive Legal for risking their entire operation on the success of this channel.

Date: Wednesday, January 13, 2016 | 10:40 AM

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

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

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Essential Elements webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS AND PLANNING FOR THE INCOME TAXATION OF ESTATES AND TRUSTS.

Blattmachr - Updated

This is a free webinar series being presented by Bloomberg BNA. We will have the full schedule available in a future Thursday Report. Save up so you can afford it!

Date: January 21, 2016 | Replay on January 26, 2016

Location: Online webinar

Additional Information: For more information or to register, 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 to 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 COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ESTATE PLANNING BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, February 17, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Practical & Creative Planning webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS, FINE POINTS, AND INNOVATIVE STRATEGIES FOR LIFE INSURANCE AND USE THEREOF.

Bloomberg BNA will charge for this webinar and this series of webinars, but we believe it is well worth it! We will have the full schedule available in a future Thursday Report.

Date: February 25, 2016 | Replay on March 1, 2016

Location: Online webinar

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

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ASSET PROTECTION BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, March 16, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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. Be sure to bring an extra pair of socks because the first pair will get knocked off by Jonathan’s talk!

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.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of EQUITY STRIPPING AND OTHER ADVANCED ASSET PROTECTION IDEAS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, May 11, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or 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.

Dec. Federal Rates

The Thursday Report – 12.17.15 – Better Late Than Thursday

Posted on: December 17th, 2015

New Online Procedure for Obtaining Estate Closing Letters

Summary of the New Congressional Spending and Tax Compromise

Classifying Independent Contractors and Employees Under the Fair Labor Standards Act, Part II

Barrett Family Foundation Awards Exceptional Math and Science Teachers

Richard Connolly’s World – IRAs and Taxes

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

“All motivation is self-motivation. The best way to induce that is to make people feel good
about themselves. Appreciation power trumps all.”

– Tom Peters

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.

New Online Procedure for Obtaining Estate Closing Letters

The following was sent to us by Paul T. Horgan, CPA extraordinaire:

New Online Procedure for Obtaining Estate Closing Letters: The IRS announced earlier this year that for all estate tax returns Form 706 filed on or after 6/1/15, closing letters will be issued only when requested by the taxpayer. Instead, the IRS said it would provide taxpayers with an alternative to receiving estate closing letters that would provide the same level of assurance that the Form 706 had been accepted as filed or that the required adjustments were completed. The IRS has now said that it will include a special code on account transcripts as an acceptable substitute for the estate tax closing letter. Transaction Code 421 indicates that Form 706 has been accepted as filed or that the examination is complete. If Code 421 isn’t shown, the tax return is still under review. For more on this new procedure and how to access account transcripts for estate tax returns, see www.irs.gov/irspup/Businesses/Small-Businesses-%26-Self-Employed/Transcripts-in-Lieu-of-Estate-Tax-Closing-Letters#tds.

Thanks, Paul, for sharing this information with us!

Summary of the New Congressional Spending and Tax Compromise

On December 15, Congress released a spending and tax compromise. Specifically, the legislation contains provisions called “tax extenders,” a series of tax provisions that have been repeatedly reinstated over the last ten years. The new legislation is entitled the “Protecting Americans from Tax Hikes (PATH) Act,” and will allow for popular tax breaks to become permanent provisions. Other tax breaks would be extended into the New Year. PATH would combine an omnibus spending bill with the tax provisions. The bill will make research credit, increases on Section 179 expensing limitations, and the exclusion of 100% gain on qualified small business stock all permanent provisions. The bill will also extend bonus depreciation and the discharge of qualified principal residence indebtedness excluded from income extended through 2016.[1]

The legislation is currently in the rule-making process but is expected to pass in the agreed-upon form in a matter of days.

Improvements to Section 529 Accounts

Congress wishes to extend 529 plans to allow for more qualified expenses for higher education purposes. The improvements to section 529 accounts are as follows:

Section 269. Improvements to section 529 accounts. The provision expands the definition of qualified higher education expenses for which tax-preferred distributions from 529 accounts are eligible to include computer equipment and technology. The provision modifies 529 account rules to treat any distribution from a 529 account as coming only from that account, even if the individual making the distribution operates more than one account. The provision treats a refund of tuition paid with amounts distributed from a 529 account as a qualified expense if such amounts are re-contributed to a 529 account within 60 days. The provision is effective for distributions made or refunds after 2014, or in the case of refunds after 2014, and before the date of enactment, for refunds re-contributed not later than 60 days after the date of enactment.[2] Through this proposed legislation, qualified expenses, such as tuition, fees, books, and supplies, will not include any computers and related technology necessary for education. Section 529 plans also provide a special tax break if five years’ worth of annual gift tax exclusions are front-loaded. Section 529 plans allow contributions of up to $70,000, or as much as $140,000 if the gift is split with a spouse.[3]

Modifications to Alternative Tax for Certain Small “Captive” Insurance Companies

Under present law, the taxable income of a property and casualty insurance company totals the amount earned from underwriting and investment income, and certain companies may elect to be taxed on the investment income under section 831(b) of the Internal Revenue Code.[4] The election is available to the companies with net written premiums or direct written premiums, whichever is greater, that do not exceed $1,200,000.

The proposed provision changes are as follows:

Section 262. Modifications to alternative tax for certain small insurance companies. The provision increases the maximum amount of annual premiums that certain small property and casualty insurance companies can receive and still elect to be exempt from tax on their underwriting income, and instead be taxed only on taxable investment income. The provision increases the maximum amount from $1.2 million to $2.2 million for calendar years beginning after 2015, and indexes it to inflation thereafter. To ensure that this special rule is not abused, the provision also requires that no more than 20 percent of net written premiums (or if greater, direct written premiums) for a tax year is attributable to any one policyholder. Alternatively, a company would be eligible for the exception if each owner of the insured business or assets has no greater an interest in the insurer than he or she has in the business or assets, and each owner holds no smaller an interest in the business than his or her interest in the insurer. The provision would be effective for tax years beginning after 2016.[5]

The change will modify section 831(b) in a multitude of ways. First, the proposal increases the amount of $1,200,000 to an amount of $2,200,000 and indexes the amount for inflation.[6] Second, in order to prevent abuse of this section, for a casualty insurance company to be eligible for an 831(b) election, no more than twenty percent (20%) of its net written premiums or direct written premiums, whichever is greater, can be attributable to any one policyholder.[7] The entire proposed provision will become effective following the 2016 tax year.

Enhanced Child Tax Credit

The child tax credit is $1,000. Further, to the extent that the child tax credit exceeds the taxpayer’s tax liability, the taxpayer is eligible for a refundable 15% credit of earned income in excess of a threshold dollar amount. The provision has been changed to permanently setting the threshold amount at an unindexed $3,000.

Enhanced American Opportunity Tax Credit

In the past, post-secondary students were eligible for a scholarship credit covering tuition and related expenses for the first two years of post-secondary education in the amount of $1,800, which is indexed for inflation. The scholarship credit phased out at an adjusted gross income of $48,000 for individuals and $96,000 for married couples. Now, however, the American Opportunity Tax Credit permanently increases the scholarship credit to $2,500 for four years of post-secondary education, and the credit is phased out at an adjusted gross income beginning at $80,000 for individuals and $160,000 for married couples.

Enhanced Earned Income Tax Credit

Low and moderate income workers and their families could be eligible for earned income tax credit. The earned income tax credit was increased for those with three or more children, and the marriage penalty has been reduced.

Schoolteacher Expense Deduction

The above-the-line deduction for eligible expenses of elementary and secondary school teachers has been modified to index the previous $250 cap to inflation. The deduction will also include any related professional development expenses.

With the conclusion of this tax legislation, it is unlikely that there will be any more tax laws until the next election. There is therefore still potentially significant future tax reform legislation that may occur in the coming years.

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[1] The full text of the PATH bill can be found at http://docs.house.gov/billsthisweek/20151214/121515.250_xml.pdf.
[2] Id.
[3] Comm. On Ways & Means, Section-by-Section Summary of the Proposed House  Amendment to the Senate Amendment to H.R. 34: The “Tax Increase Prevention and Real Estate Investment Act of 2015,” § 269 (Dec. 7, 2015), http://waysandmeans.house.gov/wp-content/uploads/2015/12/WM-extenders-2015-2016-summary-12-7-2015-FINAL.pdf
[4] Joint Committee on Taxation, Description of the Chairman’s Mark Relating to Modifications to Alternative Tax for Certain Small Insurance Companies (JCX-21-15), February 9, 2015. This document can also be found on the Joint Committee on Taxation website at www.jct.gov.
[5] Id.
[6] Id.
[7] Id.

Classifying Independent Contractors and Employees
Under the Fair Labor Standards Act, Part II

by Alan Gassman and Alyssa Eberle

The Fair Labor Standards Act (FLSA) of 1938 introduced the forty-hour work week, established minimum wage, guaranteed overtime for certain jobs, and prohibited child labor.[1] More recently, however, the FLSA has been the pinnacle of new lawsuits settling in the millions. Last week, we looked at the factors that were considered when classifying independent contractors and employees under the FLSA and what the legal definition of each type of worker is. To review Part I of this article, please click here http://gassmanlaw.com/the-thursday-report-12-10-15/. This week, in the conclusion of this article, we will look at tipped employees, including tip pools and requirements for tipped employees, as well as problems with the minimum wage.

II. Tipped Employees

Tipped employees are employees who customarily and regularly receive more than 30 dollar per month in tips. A tipped employee designation is the middle-ground between independent contractors and employees. Commonly, tipped employees are those involved in the restaurant industry, though they exist in other industries as well.

Tips are the property of the employee. The employer may not use an employee’s tips for any reason other than as credit against its minimum wage obligation to the employee, also called a “tip credit,” or in furtherance of a valid tip pool.

Tip Credit

Section 3(m) of the FLSA allows an employer to use a tip credit toward its minimum wage obligation for tipped employees. This is permitted so long as the credit is equal to the difference between the required cash wage and the federal minimum wage. The required cash wage for tipped employees must be at least $2.13. The federal minimum wage is currently $7.25. Therefore, the maximum tip credit that an employer may claim under FLSA is $5.12 per hour.[2]

Note: The new minimum wage for tipped employees is now $5.03/hr in Florida. The rate is calculated as equal to the tip credit ($3.02) subtracted from the state minimum wage ($8.05).

Tip Pool

Even though it is a requirement under FLSA that the employee must retain all tips, it does not preclude a valid tip pool or sharing arrangement among employees who do not customarily and regularly receive tips.[3] If the employer wishes to establish tip pooling in their business, the employer must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.[4] The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools.

Tipped Employee Requirements

An employer must provide the following information to the tipped employees prior to the employer using a tip credit:

  1. The amount of cash wage that the employer is paying the tipped employee must be at least $2.13.
  2. The amount claimed by the employer as tip credit cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25).
  3. The tip credit claimed by the employer cannot exceed the amount of tips received by the tipped employee.
  4. All tips that are received by the tipped employee are to be retained by the employee except for the purpose of a valid tip pooling arrangement limited to employees who customarily and regularly receive tips.
  5. The tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.[5]

The employer may provide oral or written notice to its tipped employees regarding numbers 1 through 5 above. If an employer fails to provide the above information, the employer cannot use the tip credit provisions and must therefore pay the tipped employees at least $7.25 per hour in wages and allow the employee to keep all of the tips received.

If the employer elects to use a tip credit provision, the employer must be able to show that the tipped employees receive at least the minimum wage when cash wages and the tip credit are combined. If the numbers do not equal minimum wage, then the employer must make up the difference.

Retention of Tips

A tip is the sole property of the tipped employee, regardless of whether or not an employer takes a tip credit.[6] It is prohibited to establish an arrangement between the employer and the tipped employee where any part of the tip received automatically becomes the property of the employer. Therefore, even in instances when the tipped employee receives the minimum wage amount directly from the employer, the employee may not be required to turn over his or her tips.[7]

Service Charges

A compulsory service charge is not a tip. They are part of the employer’s gross receipts.[8] While the amount distributed to the employees from service charges cannot be counted as tips, they may be used to satisfy the employer’s minimum wage and overtime obligations.

Minimum Wage Problems

If an employee does not receive sufficient tips to make up for the difference between their cash wage payment and minimum wage, the employer must make up for the difference.

Further, if a tipped employee is required to contribute to a tipping pool that includes employees who do not necessarily regularly and customarily receive tips (i.e. busboys, etc.), the employee is owed all the tips he or she contributed to the pool and the full amount of minimum wage.[9]

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[1] 29 U.S.C. §201-219.
[2] U.S. Dept. of Labor, Wage and Hour Division, Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act
[3] Id.
[4] Id.
[5] Id.
[6] Oregon Restaurant and Lodging Ass’n et al. V. Solis, 2013 WL 2468298 (D. Or. 2013).
[7] Fact Sheet #15.
[8] For example, an automatic “service charge” of 15% may be added to the bill, and it will not count as a tip under the FLSA.
[9] Id.

Barrett Family Foundation Awards Exceptional
Math and Science Teachers

Barrett

The Barrett Family Foundation awarded six $10,000 awards to exceptional Math and Science teachers from select private high schools in Pinellas and Hillsborough counties for the 2015-2016 school year. The awards ceremony was held at Admiral Farragut Academy in St. Petersburg.

This year, the six recipients of the award were Nicole Costa from Keswick Christian School, Jenna Cummings from Canterbury School, Sari Deitche from Admiral Farragut, Amy Hoag from Lakeside Christian School, Anthony Napodano from Shorecrest Preparatory School, and Martha DeWeese from Berkeley Prep.

Mr. Jeff Brandeis, State Senator, handed out the checks to the six winners, while on-air personality Jenn Holloway from Channel 8 TV introduced the key note speaker, St. Petersburg College President Dr. William Law. Dr. Law had previously arranged for the four-person judging panel for the awards and commented that this was the best thing he has seen in education in a very long time.

Mr. Thomas Ma, a math teacher at Admiral Farragut and one of last year’s award recipients, spoke about how and why the award improved his teaching since 2014, while Dr. Jack Barrett, co-trustee of the foundation, commented that it was his hope to replicate this in other Florida metropolitan areas.

The Barrett Family Foundation is a non-profit based in Clearwater, Florida. Founded in 2013, the mission of the organization is to recognize outstanding math and science high school teachers from private schools in Pinellas and Hillsborough counties. The Excellence in Science/Mathematics Teacher Award was created as a vehicle to award the chosen educations. With this award, the Barrett Family Foundation hopes to honor outstanding high school teachers who share their energy and enthusiasm for science or mathematics through creative and innovative methods to cultivate student interest and ability in these fields.

To find out more about this great organization, please click here to visit the Barrett Family Foundation website.

Richard Connolly’s World
IRAs and Taxes

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 “Thousands Hit with Surprise Tax Bill on Income in IRAs” by Laura Saunders. This article was featured in The Wall Street Journal on November 13, 2015.

Richard’s description is as follows:

Under the tax code, IRAs and Roth IRAs have significant benefits, such as tax-free growth, but they come with limits. When owners use IRA funds to invest in partnerships as opposed to stocks, bonds, and funds, they owe tax on certain annual income from the partnership exceeding $1,000 because of an anti-abuse provision. This levy is known as Unrelated Business Income Tax, or UBIT, and its top rate of 39.6% can take effect at about $12,000 of taxable income.

A further, unique twist is that when this tax is due, the IRA custodian or trustee, such as Pershing or Charles Schwab, is responsible for obtaining a special tax ID number and then filing and signing an IRS Form 990-T reporting the income. The IRA owner is typically responsible for paying the tax.

Because of this complexity, experts often caution investors to avoid putting publicly traded partnerships into IRAs.

Please click here to read this article in its entirety.

The second article of interest this week is “A Tax Deduction That’s Often Overlooked” by Anne Tergesen. This article was also featured in The Wall Street Journal on November 1, 2015.

Richard’s description is as follows:

If you are withdrawing funds from an inherited retirement account, you might be overlooking a sizable income-tax deduction.

Officially called the estate tax deduction, but better known as the IRD deduction (which stands for Income in Respect of a Decedent), it is available to those who have inherited certain financial assets, including a traditional individual retirement account or a 401(k) account, from someone with an estate large enough to have paid a federal estate tax.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Sayings of the Week

Sign - Updated

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Elf Cartoon

Upcoming Seminars and Webinars

NEW EVENTS

LIVE ORLANDO PRESENTATION:

HECKERLING INSTITUTE – INTERACTIVE LEGAL TALK

Alan Gassman will present a 15 minute speech at the InterActive Legal booth at the Heckerling Institute for Estate Planning on HAVE GUN TRUST, WILL TRAVEL. His bullet points will be very useful and give you ammunition to help make your gun trusts more explosive than ever! We expect this talk to be right on target, so take off your silencers and come to see this important, thorough, and detailed 15 minute talk.

While at the InterActive Legal booth, see the new Alan Gassman Channel and get a free book of your choice by being one of the first to sign up for this new, monthly, interactive, computer-based library featuring several of Alan’s books, many forms, charts, and even exclusive video webinar presentations. $129.40 per year gets you this and a bucket of Kentucky Fried Chicken if you sign up before January! (Mashed potatoes are extra.)

Special thanks to Michael Graham and George Brittingham of InterActive Legal for risking their entire operation on the success of this channel.

Date: Wednesday, January 13, 2016 | 10:40 AM

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

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

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Essential Elements webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS AND PLANNING FOR THE INCOME TAXATION OF ESTATES AND TRUSTS.

Blattmachr edited

This is a free webinar series being presented by Bloomberg BNA. We will have the full schedule available in a future Thursday Report. Save up so you can afford it!

Date: January 21, 2016 | Replay on January 26, 2016

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman will moderate a Bloomberg BNA Practical & Creative Planning webinar with special guest Jonathan Blattmachr on the topic of FUNDAMENTALS, FINE POINTS, AND INNOVATIVE STRATEGIES FOR LIFE INSURANCE AND USE THEREOF.

Bloomberg BNA will charge for this webinar and this series of webinars, but we believe it is well worth it! We will have the full schedule available in a future Thursday Report.

Date: February 25, 2016 | Replay on March 1, 2016

Location: Online webinar

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

Calendar of Events

LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Annual Florida Bar Health Law and Tax Section 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 COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ESTATE PLANNING BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, February 17, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ASSET PROTECTION BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, March 16, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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. Be sure to bring an extra pair of socks because the first pair will get knocked off by Jonathan’s talk!

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.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of EQUITY STRIPPING AND OTHER ADVANCED ASSET PROTECTION IDEAS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, May 11, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or 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.

Dec. Federal Rates

The Thursday Report – 12.10.15 – Happy Hanukkah from The Thursday Report!

Posted on: December 10th, 2015

2016 Life Insurance Risk Management Planning by E. Randolph Whitelaw

Classifying Independent Contractors and Employees Under the Fair Labor Standards Act, Part I

Eight Reasons to Consider a Corporate Trustee by Matthew Blattmachr

Seminar Spotlight: Upcoming Webinars Not to Miss!

Richard Connolly’s World – Social Security: File-and-Suspend

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.

This year, Hanukkah runs from Sunday, December 6 to Monday, December 14.
Happy Hanukkah from all of us at The Thursday Report!

Quote of the Week

“A candle is a small thing. But one candle can light another. See how its own light increases
as a candle gives its flame to the other. You are such a light.”
– Moshe Davis

Moshe Davis was a rabbi and scholar of American Jewish history. He taught at the Jewish Theological Seminary of America and Hebrew University. He is credited with the creation of the academic field of America Holy Land Studies, the field of studies that focuses on the relationship between America and Israel. He is the author of books such as The Emergence of Conservative Judaism and Israel: Its Role in Civilization.

2016 Life Insurance Risk Management Planning
by E. Randolph Whitelaw

Whitelaw

E. Randolph Whitelaw is Managing Director of Trust Asset Consultants, LLC (TAC), a Trust-Owned Life Insurance (TOLI) risk management consulting firm, and The TOLI Center, LLC (TTC), a life insurance policy administration and risk management firm. His “2016 Life Insurance Management Outlook” will be sent to clients and advisors in early January and will include the two issues discussed in the article below, as well as an overview of 5+ other issues that warrant attention in the coming year. Mr. Whitelaw can be reached at rwhitelaw@trustassetconsultants.com.

Two risk management issues should be given priority attention by policy owners and their professional advisors: (1) the need for credible policy evaluation of all inforce Equity Indexed Universal Life (EIUL) policies purchased prior to the September 1, 2015 effective date of National Association of Insurance Commissioners Actuarial Guideline 49 (‘NAIC AG 49’), and (2) the policy lapse implications of recently announced policy rate (annual policy charges) increases by several major life insurance carriers (policy issuers).

There is a well-known policy lapse and life insurance trust insolvency crisis due to the performance monitoring inattention paid to non-guaranteed death benefit products (Universal Life, Variable Universal Life, and Equity Indexed Universal Life). These two risk management issues significantly increase the probability of policy lapse and accelerate its timing. Policies with insureds age 70 and older should be given ‘priority’ risk assessment attention.

Risk assessment should take the form of ‘dispute defensible’ actuarial evaluation methodology using an experienced fee-based third-party ‘provider.’ The post-AG 49 EIUL crediting rate should consider a 3% to 5% range and employ Monte Carlo Simulation, not a linear constant rate assumption. Credible risk management tools are readily available to avoid lapse, insolvency, and life insurance ‘dark ages’ thinking.

Concerning inforce policy ‘risk assessment and management’ intervention, policy owners and their advisors are well-advised to avoid selection of either a ‘sales’ agent or third-party performance monitoring reports. Why? In addition to the issuing carrier’s policy contract and illustrations that disclaim predictive value, the Society of Actuaries, FINRA, and professional advisor associations affirm that illustrations are inappropriate for predictive value and policy comparison determinations. No different from consumer and advisor warnings for the past 25 years, the inappropriate use of illustrations (aka “ink smudges on copier paper”) remains the problem, not the solution.

Articles that discuss each issue in more detail include:

“EIUL Call to Action – The Need for Consumer Intervention Has Increased (NAIC AG49 Does Not Resolve the Misleading and Deceptive Practices Issue)”, E. Randolph Whitelaw and Charles M. “Mark” Whitelaw, Tax Facts Online, September 2015. This article can be viewed by clicking here.

“Surprise: Your Life Insurance Rates are Going Up,” Leslie Scism, The Wall Street Journal, December 4, 2015.  This article can be viewed by clicking here.

Classifying Independent Contractors and Employees Under the Fair Labor Standards Act, Part I
by Alan Gassman and Alyssa Eberle

The Fair Labor Standards Act (FLSA) of 1938 introduced the forty-hour work week, established minimum wage, guaranteed overtime for certain jobs, and prohibited child labor.[1] More recently, however, the FLSA has been the pinnacle of new lawsuits settling in the millions. Exotic dancers, IT professionals, and sales representatives have called upon the courts in numerous jurisdictions to redefine their classification from independent contractors to employees. However, is the reclassification of their position actually beneficial?

I. Classifying Independent Contractors and Employees

While many employers will classify their workers as independent contractors by asking the workers to sign an independent contractor agreement, numerous lawsuits and settlements have sprung up across the country alleging violations of the FLSA. Many courts are overlooking the independent contractor agreement due to the many other factors surrounding the employment of the worker. The IRS does not consider this agreement definitive; instead, the IRS considers the facts and circumstances for each worker on a case-by-case basis.

Independent Contractors

Independent contractors are defined by the IRS as a natural person, business, or corporation that provides goods or services to another entity under contractual terms or within a verbal agreement. Generally, a person is an independent contractor if they have a right to control and direct what type of work will be done and how it will be done. The employer may only direct how they wish the final result of the work to look. The key concept to being an independent contractor is the right to control.

Independent contractors are therefore self-employed. These individuals must therefore pay self-employment tax as well as income tax. Self-employment tax is Social Security and Medicare tax primarily for individuals who are self-employed.

Independent contractor agreements are not definitive as to the creation of an independent contractor relationship between “independent contractors” and owners. The IRS may still look past an agreement based on the facts and circumstances, such as the right to retain control on how the work is done. If the employer possesses more control, the worker looks more like an employee.

Another issue with an agreement deals with centrality analysis. For example, a business is likely not going to contract out a fundamental service. Since some independent contractors, such as exotic dancers and IT professionals, are an integral part of their employer’s business, there is higher scrutiny on whether it is an independent contractor job.

Another common mistake employers make is hiring a worker to work 40 hours a week as an independent contractor. If a worker is working 40 hours a week, the IRS is going to assume that the worker is an employee because the worker’s entire working life is occupied by a single job. Most independent contractors have multiple clients and are independent business people. It helps if the worker has multiple clients or works at multiple business locations.

To further establish an independent contractor relationship, the employer could charge rent for the use of equipment and space. Doing so would create less of an employer-employee relationship and give the workers more control over what tools they need to complete their jobs.

Additionally, the relationship should not be continuous. If a worker is with the employer for longer than six months, the business is vulnerable to liability. Long-term relationships will be better handled by a temp service relationship. The business-owner should look into hiring a temp agency to complete the hiring of independent contractors that could look more like employees to the IRS, so that the business may avoid liability.

The employer should not dictate the order in which the work is completed by the independent contractor. The more regular this is, the more it looks like employment. Also, independent contractors should not be considered at-will employees. Contractors are people who should be fired when they breach their contract and for nonperformance.

Employees

Employees are individuals who are fully employed by a business or other entity. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Employees are also entitled to additional benefits if they qualify.

Employees do not have the same right to control as independent contractors. Instead, they are hired and fired individually and must cooperate with their employer’s business practices. Employees are also entitled to receive minimum wage. Currently, the federal minimum wage is $7.25, and Florida’s minimum wage is $8.05. In states like New York, the minimum wage is as high as $8.75.

Also known as the “right to control test,” the 20-factor test is designed to evaluate who controls how work is performed. The more control an employer has, the less likely the workers are independent contractors and should instead be classified as employees.

Some employers will request an IRS Form SS-8 simply to self-audit and do not submit the form to the IRS. This could be a good idea to determine whether or not Cheetah’s workers would be considered employees through the eyes of the IRS, and the management can adjust in certain areas accordingly.

According to the manual the IRS uses to train its classification auditors, the three most important factors are:

  1. Instruction to workers. If the employer is required to follow instructions on when, where, and how work is to be done, the worker is probably an employee.
  2. Job training. If the employer provides or arranges for training of any kind for the worker, it clearly shows that work is expected to be performed in a certain way. Training does not have to be formal. It can be informal, such as requiring the worker to attend meetings. If training is provided, then the worker is an employee.
  3. Worker’s ability to make a profit or suffer a loss. Only an independent contractor can realize a profit or financial loss from their work, whereas an employee may be rewarded, disciplined, or demoted. An employee, therefore, will always get paid, whereas an independent contractor has a financial stake in the business.

Taken directly from the IRS website, the IRS provides:

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? These include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.

Type of Relationship: Are there written contracts or employee-type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue? Is the work performed a key aspect of the business?

Examples in Case Law of Misclassification

Many jurisdictions are addressing the issue of misclassification. In June of 2014, an Arkansas federal judge ruled that exotic dancers were entitled to individual damages for alleged wage-and-hour violations of the FLSA. The Court held that the “plaintiffs were not independently in the business of exotic dancing apart from the clubs where they worked.”[2] The plaintiffs in the French Quarter case were required to purchase their own costumes and cosmetics, and they were not paid an hourly rate for working their shifts. Further, any money that had been made by the plaintiffs was immediately turned over to the club, who would return the equivalent of 90 percent of tips and 50 percent of the amount received for private dances.[3]

The judge also found that the club failed to pay the dancers any set wages, in violation of the FLSA minimum wage provisions. Judge Dawson, who oversaw the case, noted that the “[d]efendants have failed to prove that they acted in good faith or had reasonable grounds for believing they were not in violation of the FLSA.”[4]

In reaching his decision, Judge Dawson used a five-prong test to determine the economic reality of whether or not the dancers were economically dependent upon the club, and whether the club’s management exercised considerable control over them. The “economic realities test” is now one of the cornerstones of analysis completed by the courts when making the determination of employee over independent contractor.

The economic realities test used in the French Quarter case must be considered when determining whether or not an individual should be classified as an independent contractor. The following five factors should be examined:

  1. The degree of control exercised by the employer over workers.
  2. The worker’s opportunity for profit and loss as well as their investment in the business.
  3. The degree of skill and independent initiative required to perform the work.
  4. The permanence and duration of the working relationship.
  5. The extent to which work is an integral part of the employer’s business. For example, if you took the worker away, would the business survive?

Courts have emphasized that not one factor is dispositive. All of these factors should be taken into consideration, and no one factor is more important than the others. If the worker does not exercise a large degree of control over their job, they may be considered employees. However, if the worker determines their own schedule, contracts with multiple businesses, and has a larger amount of control over their job, they would be considered an independent contractor.

Next week, in the conclusion of this article, we will look at tipped employees, including tip pools and requirements for tipped employees, as well as problems with the minimum wage.

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[1] 29 U.S.C. §201-219.
[2] Whitworth v. French Quarter Partners, LLC et al, 6:13-CV-6003.
[3] Id.
[4] Id.

Eight Reasons to Consider a Corporate Trustee
by Matthew Blattmachr

Blattmachr

Matthew Blattmachr is the Vice President and Trust Officer for Alaska Trust Company. He is an active member of the ATC Trust Committee and is responsible for client and vendor relationship management, reviewing and approving trust documents, performing trust and estate administration, discretionary distributions, and performing private foundation creation and administration. He holds a Master’s in Business Administration from Alaska Pacific University, a Bachelor’s degree from the University of Alaska Anchorage, a CFP designation from the College of Financial Planning, and has earned a Certified Fiduciary & Investment Risk Management Specialist designation from the Cannon Financial Institute. Matthew is committed to giving back to the community and is currently serving on the Board of Trustees for the Anchorage Senior Center Endowment Fund.

One of the many decisions that clients are faced with when creating a trust is “who will be the trustee(s) and should you use an individual or an institution?” This seemingly simple decision is one of the most important.

While the trust outlines your wishes, wants, directions, and desires, you must be confident that the person or entity tasked with carrying out these decisions will act in the desired manner. Many individuals do not fully understand the fiduciary duty that is carried with being a trustee, nor do they wish to dedicate the considerable personal time required to properly manage the trust affairs. Inadequate knowledge or failure to attend to trust matters could result in harm to your beneficiaries, expensive lawsuits and, ultimately, a failure to achieve your intended results.

For the reasons listed above, there is an argument to be made that a professional, corporate trustee can add considerable value to your trust goals. Below you will find a few of the many reasons that you should consider a professional institutional trustee.

  1. Individual Trustees May Find it Difficult to Say No.

It is likely that an individual trustee will have a long and close history with the trust beneficiaries. While this can add a helpful element to the relationship, it can also cause critical issues to arise. Individual trustees may often find it difficult to say no when necessary, such as when required by the trust document.

They might find it hard to balance the desires of conflicting interests, such as telling a beneficiary that she can’t have a distribution to invest in a friend’s business, because the trust was set up to fund her education. Individual trustees are not trained to have these difficult conversations and are put under enormous personal pressures to say “yes” when the answer should be “no.”

  1. Lack of Time and Expertise.

A corporate trustee dedicates its full attention to fiduciary services. Whereas individual trustees typically do not have the time or expertise required to properly administer a trust.

Think about the time it takes to manage your own finances. Could you take on the administration of a multi-million dollar trust with battling beneficiaries as an unpaid hobby for the foreseeable future? Each of us have other duties and concerns to which we must attend, and it can be difficult to prioritize trust matters when it is not your full-time profession.

  1. Cost.

Corporate trustees can actually reduce the overall trust administration costs. A corporate trustee will have a team of qualified people to properly administer the trust. Each member of the team will have specialized knowledge ranging from legal to investments and insurance to counseling. It is likely that an individual will have to hire professionals (attorneys, accountants, investment advisors and other agents) to do many of the tasks that a corporate trustee is already doing for other clients. Purchasing these services in a piecemeal basis can result in higher fees.

  1. Expertise Required.

A trustee should have an understanding of both trust law, federal and state trust tax rules as well as many other areas of fiduciary standards of care. These rules are often voluminous and not necessarily logical. Without this knowledge and awareness, a trustee could cause unintentional harm to the trust and its beneficiaries, such as causing it to lose beneficial tax treatment status (as in the case of a special needs trust) by failing to meet tax law requirements. Even if an individual understands and is aware of today’s legal requirements, as we all know, the rules are constantly changing. These changes require continuing education to remain aware of the rules and requirements.

  1. Individual Trustees are not Subject to any Regulatory or Audit Oversight.

In many ways, they are not accountable to anyone. A corporate trustee is periodically examined and reviewed by independent auditors and either state or federal banking regulators. Additionally, as professionals, they carry appropriate liability insurance and bonds.

Individual trustees typically do not realize the standard of care and potential liability that comes with acting as a fiduciary, thus increasing the likelihood that they will breach their fiduciary duty. Additionally, if they are unaware of the seriousness of their position, they will likely not purchase liability insurance, which can be expensive. If an unfortunate situation arose where trust beneficiaries were to sue the individual trustee, it is probable that the individual trustee would not have proper insurance. In this situation, any resulting judgment would need to be satisfied from the individual trustee’s personal assets. If the trustee could not pay the damages, there might not be a way to satisfy the judgment.

  1. A Fiduciary Position Carries with it Many Requirements Including the Duty of Loyalty and the Duty to Report to Beneficiaries.

Individual trustees typically don’t have the tools necessary to properly account to beneficiaries. They may not understand that certain trusts must account separately for the funds available to income beneficiaries and those funds available to the remainder beneficiaries. This could result in unequal shares or distribution of assets.

  1. Longevity.

There is a good chance that trusts are created when performing estate planning and when one is thinking about how to provide for loved ones upon their passing. This planning requires one to consider their own mortality. While it is not an enjoyable task, when considering one’s own mortality, it might be wise to consider the mortality of those around them, particularly trusted people that would be considered for appointment as individual trustees.

During their appointment, individual trustees could become disabled and will, unfortunately, eventually be unable to serve due to age, health, or death. Who will continue the trust administration of the ongoing trust when this event occurs, which can leave gaps in trust performance. A corporate trust company does not depend on any one person’s health or longevity to continue with trust administration.

  1. Best of Both Worlds.

Individual trustees can add great value to a trust relationship, such as their intimate knowledge of the beneficiaries and the family. With enough time, a corporate trustee can accomplish the same and can offer the above-listed advantages. A final point to consider is getting the “best of both worlds” by using a trustee committee. This committee can consist of an individual or multiple individuals and a corporate trustee. This committee will be in charge of all trust administration matters and can benefit from the knowledge of all those involved while enjoying the benefits of longevity and cost savings.

These are just some of the reasons your clients may benefit from a corporate trustee. To discuss a specific client or for help figuring out which trust may be right, please visit www.alaskatrust.com.

Seminar Spotlight
Upcoming Webinars Not to Miss!

It has come to our attention that a few of our webinar links below were not directing potential registrants to the correct sign in page. We have a lot of great webinars coming up this month, and next, including the following:

Next Tuesday, December 15th, Alan Gassman will present PLANNING TO PROTECT MEDICAL PRACTICE ENTITIES AND INCOME. Based on an upcoming live presentation, this webinar will provide registrants with a number of creditor protection strategies, arrangements, and items that can and should be considered and implemented while clients are in the process of protecting or planning for their medical practice. There will be two opportunities to attend this presentation.

To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here.

On Wednesday, December 16, Bill Kahn will join Alan Gassman for the second webinar in his series entitled THE SUGAR DADDY HUSTLE. This webinar will discuss what proactive, preventive steps to take when an emotional episode that may leave an elderly person susceptible to cons has occurred. This webinar will also discuss signs to look for if a family member or advisors suspects a con has already begun and what should be done to put a stop to it. There will be two opportunities to attend this presentation.

To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here.

The final webinar in the Bill Kahn series will be presented on January 27th and is entitled THE ADVOCATE. Hospital errors are now the third-leading cause of death in the United States. In a case of a medical emergency, someone might need to make quick decisions on your behalf to prevent that from being you. This webinar will describe the absolute need for a qualified advocate and how to avoid seemingly minor errors that can results in medical error deaths. There will be two opportunities to attend this presentation.

To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here.

Richard Connolly’s World
Social Security: File-and-Suspend

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 “File-And-Suspend No More?” by Mark Miller. This article was featured on WealthManagement.com on October 23, 2015.

Richard’s description is as follows:

File-and-suspend is hot. The once-obscure Social Security strategy for married couples has become almost mainstream in the past couple of years; a growing number of financial planners recommend the strategy to clients.

But planners hoping to get the benefits would be well-advised to get it while they can. File-and-suspend is at the top of Washington’s hit list for changes to retirement policy.

That’s not the only potential change to the law or tax code that could impact client retirement plans. Other candidates include an end to backdoor Roth IRAs, unstretching the stretch IRA, and tighter caps on pretax contributions to 401(k)s.

Please click here to read this article in its entirety.

The second article of interest this week is “Tax Shelters at Risk” by William Baldwin. This article was featured on Forbes.com on November 25, 2015.

Richard’s description is as follows:

Shocker: Congress cuts Social Security benefits. A budget deal at the end of October annihilates certain convoluted schemes for enhancing payouts, notably one in which you file for benefits and then “suspend” them.

There’s a lesson here. If Congress can snatch back a Social Security goodie, it can snatch anything. It can outlaw any tax maneuver that rich people are fond of. Don’t dawdle with a retirement or estate opportunity that may vanish next year.

This article reviews four tax stratagems that are at risk – ones that even a Republican president might sign away.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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In the News
by Ron Ross

Samsung released a new virtual reality headset. It’s so real, it makes reality seem fake. Put it on your Christmas list or give it to someone disappointed with this year’s violence, silly politics, and poor plays from Peyton Manning.

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Because of the United States obesity epidemic, the Department of Health is warning children not to leave cookies and milk for Santa. Santa is not taking it well.

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Self-driving cars are already complaining about the traffic and other cars that tailgate or pass on the right. Most of all, they complain about those humans they have to carry around.

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More Exciting News About the New Star Wars Movie!

Everyone’s excited about the new installment of the franchise, now produced by our most famous family entertainment corporation. Many details are still being kept under wraps, but here’s an exclusive look at the new Death Star:

Death Star

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of PLANNING TO PROTECT MEDICAL PRACTICE ENTITIES AND INCOME.

There will be two opportunities to attend this presentation.

Date: Tuesday, December 15, 2015 | 12:30 PM or 5 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 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 16, 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 ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Annual Florida Bar Health Law and Tax Section 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 WEBINAR:

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

Hospital errors are now the third-leading cause of death in the USA. Even if you go in for a minor procedure, you can become a medical error death or develop severe complications. Someone must quickly decide how to prevent that from being you, but what should be done?

There are ways to protect yourself from these problems. An Advocate can take steps to protect you from many of them and have the hospital staff go through those extra due diligence steps.

Questions to be answered during this presentation include:

  • What’s the biggest scandal in healthcare history?
  • Why has progress on patient safety been slow to develop?
  • What are a few examples of simple errors that can lead to catastrophic results?
  • How can one avoid those seemingly minor errors?

There will be two opportunities to attend this presentation.

Date: Wednesday, January 27, 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 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 COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ESTATE PLANNING BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, February 17, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ASSET PROTECTION BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, March 16, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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. Be sure to bring an extra pair of socks because the first pair will get knocked off by Jonathan’s talk!

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.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of EQUITY STRIPPING AND OTHER ADVANCED ASSET PROTECTION IDEAS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, May 11, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or 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.

Please visit the InterActive Legal booth to see the new Alan Gassman Florida Channel and get a free book of your choice by being one of the first to sign up for this new, monthly, interactive, computer-based library featuring several of Alan’s books.

Special thanks to Michael Graham of InterActive Legal for risking their entire operation on the success of this channel. 

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.

Dec. Federal Rates

The Thursday Report – 12.3.15 – Just Another Tequila Thursday

Posted on: December 3rd, 2015

Class II Gun Law Trivia

Succession Planning Requires Teamwork by Jeffrey M. Verdon, Esquire

What if You Forgot to Put Something in an Agreement that was Obviously Needed?

Richard Connolly’s World – Tax Changes You Should Be Aware Of

Thoughtful Corner – Top 25 Holiday Gift List by Linda Chamberlain

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 make a living by what we get; we make a life by what we give.”
– Winston Churchill

Winston Churchill was the Prime Minister of the United Kingdom from 1940 to 1945 and again from 1951 to 1955. He was also an officer in the British Army and a recipient of the Nobel Prize in Literature. Churchill was also awarded an honorary United States citizenship in 1963 and was the first person to receive such designation.

Anyone who did his best work in bed and in the bathtub and loved papers neatly bound by a hole in the top left corner and special binding clips would have been a great lawyer, let alone one of the most amazing leaders of the 20th century. If you have never taken the tour of 10 East Downing Street to see the small quarters that Churchill and his team lead the second strongest nation in Western Europe from in its worst modern times, you should consider making that trip. It is inspiring to see how so few led so many in such difficult circumstances, with limited technology but unlimited faith, dedication, and political prowess. It’s no wonder that Churchill has been considered one of the great leaders of all time by other such great leaders like Roosevelt and the editors of the Thursday Report.

Hoping that today and tomorrow, you make a life by what you give,
and get as a natural byproduct thereof.

Class II Gun Law Trivia
by Alan Gassman

This year, the Thursday Report has reported on a number of items concerning guns, gun trusts, and Title II firearms. To see some of our previous coverage, click here, here, here, or here. More regulations and requirements concerning Title II firearms are as follows:

Issues with Individual Ownership – Additional Requirements for Individual Owners

In addition to registering and paying the $200 tax, individuals must submit additional information to the Bureau of Alcohol so that they may conduct an extensive background check. Unlike a business entity or trust, individuals must provide photographs, a fingerprint card, and a certificate of approval from their chief law enforcement officer (“CLEO”). The certificate signed by the CLEO must state “that the certifying official is satisfied that the fingerprints and photograph accompanying the application are those of the applicant and that the certifying official has no information indicating that the receipt or possession of the firearm would place the transferee in violation of State or local law or that the transferee will use the firearm for other than lawful purposes.”

This extra requirement for the certification makes many CLEOs wary of signing the form. Many are concerned with the possible legal liability if one of these National Firearms Act items is used to hurt someone. This causes some CLEOs to not sign simply out of fear of litigation if the worst should happen.

The chief law enforcement officer can be the Chief of Police for the applicant’s city or town of residence, the Sherriff for the applicant’s county of residence, the head of the State Police for the applicant’s state of residence, a state or local district attorney or prosecutor with jurisdiction over the applicant’s residence, or another person whose certification is acceptable to the Director of the Bureau of Alcohol, Tobacco, and Firearms and Explosives.

If someone has been delegated to sign on behalf of a chief law enforcement officer, this fact must be made clear on the form by printing the CLEO’s name and title, followed by the word “by” and the full signature and title of the delegated person. The certification must be created within a year of the receipt of the form by the Bureau of Alcohol.

Oftentimes, affluent individuals report and act as if they reside in a low tax state, such as Florida or Texas, when they actually may be found by taxing authorities to reside in a higher tax state, such as New York or Massachusetts. The Bureau of Alcohol has prosecuted individuals who claim to reside in one location and actually are found to be residents of another location under 26 U.S.C. Section 5861(1), stating it is a submission of false information to the federal government.

Co-Owners

A Title II firearm owner is the only person authorized to have use and access to the firearm, and those with roommates, spouses, or periodic guests run the risk of committing a felony if they permit constructive access to the weapons to those people. Co-ownership of a Title II firearm by two or more “individuals” is not permitted. However, with a gun trust or business entity, trustees or managers can be added to the document, and these individuals are allowed to have access to and use the Title II firearms. This gives the owner the ability to add and remove people at their own discretion, thus protecting their loved ones from prosecution.

Death or Incapacity of the Individual Owner

A serious issue arises when an individual owner of these Title II firearms passes away. If the person has a will, then it may or may not specifically devise the firearms. If the person does not have a will, then the firearms will pass intestate, which means state law will determine where the property of the decedent (deceased individual owner) goes. Whenever there is a transfer of a Title II firearm, a Bureau of Alcohol Form 5 must be filled out and submitted, similar to other Bureau of Alcohol forms. The only difference is there is no $200 tax stamp for a transfer from an estate to a beneficiary. Nonetheless, the form must still be submitted and approved by the Bureau of Alcohol before a transfer is to take place. Otherwise, any transfer will be a violation of the National Firearms Act.

If the decedent has a will and it specifically dictates to whom the firearms pass, or if the will has a residuary clause that says all personal property goes to a certain person, then the personal representative of the estate will take the firearms and distribute them accordingly. This is a problem because if the personal representative does not know the law or does not understand that there are strict regulations regarding these types of firearms, then the person receiving the items will be committing a felony if the proper forms are not filled out.

If the decedent passes away intestate, meaning without a will, then the property will be distributed according to the state statute. This generally means that the next of kin will receive all the property. The same issues arise here as in the context of having a will. The personal representative may not know the rules regarding these Title II firearms or may not even know the items are regulated.

This is a serious issue because many estate planners and personal representatives, who are generally just a family member, do not understand the regulations regarding these types of firearms or the grave penalties involved with a violation. It is easy to see how a personal representative may see a rifle and give it to a decedent’s son pursuant to the will or intestate rules and not know to check and see if the rifle is fully automatic or short-barreled. The son receiving it might not even know the firearm is regulated and may take the item, thus violating the National Firearms Act. This is why it is important to use a gun trust that will specifically lay out all the rules concerning these items and give specific instructions on how to pass these expensive and highly-regulated firearms.

Besides the risk of fines, jail time, and felony convictions, there is another devastating penalty involved with an illegal transfer, which is destruction of the item. Unregistered Title II items are supposed to immediately be given to law enforcement to be destroyed. This means that $20,000+ machine guns could be destroyed. None of the items regulated by the National Firearms Act are cheap, and no one wants to see their heirlooms destroyed. These items, once unregistered by means of an illegal transfer, cannot be retroactively re-registered and must be destroyed. Thus, once they become illegal, they stay illegal.

Succession Planning Requires Teamwork
by Jeffrey M. Verdon, Esquire

Verdon

Jeffrey Verdon is Managing Partner of Jeffrey M. Verdon Law Group, LLP. He has an LL.M. in Taxation from Boston University and practices law in the areas of taxation and comprehensive estate planning. He specializes in estate, trust and income tax planning, and asset and lifestyle protection planning for high net-worth clients across the US. He is also a highly sought-after speaker in the areas of taxation and estate planning, lecturing aboard cruise ships and at top Investment Conferences internationally.

To see this article in its original form, please click here. Thanks, Jeff, for sharing this Client Alert with Thursday Report readers!

“Teamwork makes the dream work, but a vision becomes a nightmare when the leader has a big dream and a bad team.”
– American Clergyman John C. Maxwell

Paul can’t believe it’s been forty years since the night he died.

The last thing he remembered was blowing out the candles on his 20th birthday cake – then nothing. One minute, he was fine. The next minute, he was dead.

Fortunately, his death was short-lived. Paul’s nurse practitioner aunt performed CPR, and by the time the ambulance came, he was breathing on his own. Unfortunately, his prognosis was not good. Paul needed life-saving, highly experimental surgery that hadn’t been invented yet. After making hundreds of calls, Paul’s aunt found an enterprising doctor who quickly developed a special tool to help save him. This launched Paul on his life’s mission to get specialized medical devices into the hands of doctors around the world. Today, his company – one that has directly saved the lives of tens of thousands of people – is worth millions.

Because of Paul’s near-death experience, he understands the importance of business succession planning. He doesn’t want his inevitable death to also be the death of his business.

Years ago, Paul hired a key employee who is now poised to buy the company when he dies. To facilitate the transaction, Paul had his financial and tax people perform a fair-market valuation of the business, he had his lawyer draft buy-sell paperwork, and he had his life insurance agent put a life insurance policy in place to finance the terms of the agreement. Paul felt like he was making some smart moves.

But he neglected something – communication. Paul failed to insist his lawyer, his life insurance agent, his financial planner, and his tax advisor coordinate with each other. This might not seem like a big deal – after all, these professionals are paid good money to answer all the “what ifs” we could never think of on our own.

But “what if” our professional advisors aren’t answering the same “what ifs?”

Without communication and coordination among his professionals, Paul’s plan might not take into account hundreds of tiny little details that could cause the failure of the business succession plan. Former Laker’s coach Phil Jackson said, “The strength of the team is each individual member. The strength of each member is the team.” In succession planning, this statement could not ring more true.

Take the recent case of Broeferdorf v. Bachelor, No. 15-2117 (U.S.D.C.E.D.P.A. Sept. 14, 2015), as a perfect example. In this case, Amy Bosich, the owner and founder of Flying Nurses International, executed a right of first refusal buy-sell agreement with her longtime employee, Robert Bachelor, funding his potential right to buy the company with a life insurance policy, which he owned and could control. Unfortunately, this was not a one-way buy-sell agreement, and the insurance policy terms allowed Bachelor to unilaterally change the beneficiary of the policy to himself without informing Bosich. To complicate matters, the buy-sell agreement gave Bachelor the right to refuse to exercise his option to buy the company. In the end, this is exactly what Bachelor did, declining to buy FNI and cashing in the $1M life insurance policy for himself. Boisch’s executor sued under a number of different legal theories, but there is one, inescapable fact: failure of the team members to coordinate Bosich’s succession plan resulted in a failed succession.

That would be one of Paul’s worst fears.

Paul schedules a group meeting with all of his professional advisors. He asks each of them to explain to each other what they’ve contributed to his business succession plan, and then he voices concerns about whether it will all work together. Each professional is understandably proud of their individual work and defensive about Paul’s sudden case of “what ifs,” but as they all discuss the details of the plan, they slowly discover that it actually might contain some potentially fatal holes. None of these defects would have been detected by the individual professionals, but together, they were able to get a 360 degree view of the plan and detect where problems might arise.

Energized with a renewed urgency, Paul asks his professional advisors to coordinate a comprehensive strategy to ensure the success of his business succession objectives. As the plan takes shape, each of his advisors’ respective strengths enhances its viability. Score one for teamwork.

Our law firm works with professional advisors and their clients to develop comprehensive business succession plans and obtain that important 360 degree view. After all, teamwork really does make the dream work. Put us to work for your dreams so they don’t die when you do.

What if You Forgot to Put Something in an Agreement
that was Obviously Needed?
by Alan Gassman

The “Parties Will Cooperate to Make this Agreement Enforceable” Clause

Oftentimes, an agreement is read years after it was written, and one or more parties realize that there are legal requirements not fulfilled by the language of the agreement. This can easily be repaired by a short amendment.

While parties to any agreement have an obligation to act in good faith, what happens if an agreement that was fully negotiated and would otherwise be enforceable is unenforceable by reason of there not being two witnesses to a signature, or the agreement invokes long-term lease rights, or if it is not clear whether a signature was real or forged?

Consider the following clause, or something similar thereto, for your future agreements:

(f) Further Assurances. Each party shall executive any reasonable additional documents or instruments which are provided to the party by another party or parties and which are reasonably necessary to (i) carry out or facilitate the understanding represented by this Agreement or (ii) more clearly establish the rights of one or more parties under this Agreement, provided that any such additional documents, instruments, or amendment hereto will not deprive any party hereto of substantive legal or economic rights that were not intended to be limited or reduced under this Agreement. This will include resigning of this Agreement if there is any question as to the genuineness or validity of any signature, a need for witnesses and notarization, or to add a provision that is necessary to make some or all of the obligations set forth herein enforceable pursuant to applicable law. Any dispute with respect to whether this provision should be applicable shall be resolved by mediation if possible, or arbitration if necessary, pursuant to the terms of Section (o) below, or may be determined by a court of competent jurisdiction if there is any reason that a mediation or arbitration is not conducted.

Please also do not forget that an agreement can be stricken entirely if any one component of it is inadvertently illegal. Consider a severability clause for this:

(n) Severability. If any one or more of the provisions contained in this Agreement for any reason are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

Richard Connolly’s World
Tax Changes You Should Be Aware Of

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 “Americans: Pay Your Taxes – Or Lose Your Passport” by Laura Saunders. This article was featured in The Wall Street Journal on November 20, 2015.

Richard’s description is as follows:

Congress is poised to enact a law denying or revoking passports for U.S. citizens who haven’t paid their taxes.

Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.

Please click here to read this article in its entirety.

The second article of interest this week is “IRS Urged to Focus Audits on Wealthiest” by Richard Rubin. This article was featured in the Wall Street Journal on November 22, 2015.

Richard’s description is as follows:

The Internal Revenue Service spends too much time and effort auditing people who make $200,000 to $400,000 and too little going after the very wealthiest Americans, according to an inspector general’s report.

In response, the IRS said it is re-examining its decision to consider $200,000 a “high income” for auditing purposes and look at indexing that threshold to inflation. In an era of declining budgets, the move could lead to employees of the tax agency who specialize in the complex returns of the rich to focus on the super-wealthy instead.

Please click here to read this article in its entirety.

Thoughtful Corner
Top 25 Holiday Gift List
by Linda Chamberlain

Linda with Quote

Gift giving is fun for me! When I do have time to go shopping, I’m on the lookout for items my family or friends may enjoy. Ideas for gifts come from all different directions. I find listening closely to the person helps me identify gifts that will be useful and often become items they love.

I have personally used or have given all of these gifts to someone who has loved them! I have organized the gifts under headings to help you sort through them easily and perhaps find just the perfect gift.

Tech and Gadgets: Open-It

I can’t remember when I first found the “Open-It,” but I sure am glad I did. It seems like so many packages today are hard to open. One of the things I’ve noticed is that my hand strength is not what it used to be. The Open-It tool prevents any pain in my hand and cuts through fairly thick plastic, cardboard, etc.

Self-Improvement Gift Ideas: Clarins Restorative Wake-Up Lotion

I’m not sure what the active ingredient is in this lotion, but it definitely wakes up your skin in the morning and brings some light to your face. It’s easy to apply, absorbs quickly, and is the perfect moisturizer for under your tinted moisturizer or foundation.

Comforting Holiday Gifts for Seniors: Anti-Fatigue Kitchen Mat

This anti-fatigue kitchen mat from Frontgate has helped tremendously in decreasing the pain from standing and often eliminates the pain from standing all together. The mat is attractive in the kitchen and provides nice padding to stand on, therefore giving your back a break and less chance for pain to develop.

Gifts for Health and Wellness: Chill Pal

This is an awesome gift for the exercise person in your life. I have given this to many of my friends and family. It is perfect in the heat! You can make the Chill Pal cloth wet with cold water, snap the extra water out, and wrap it around your neck to bring you immediate coolness.

Gifts for Foodies: Killer Brownie

Dorothy Lane Market baked goods are amazing. One of my favorites is their Killer Brownies, which you can order and have delivered whenever you would like. As far as I know, these Killer Brownies have never killed anyone, but there may be a few fights in the house over who is going to get to eat the last one! You can choose the Killer Brownie you might like the best: the original chocolate caramel, peanut butter, cream cheese, Blonde Ambition, Brookie Killer, German Chocolate, PB&J, and Not a Nutter, or, better yet, try them all!

Linda has 20 more holiday gift ideas for you. Click here to find out what they are! 

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Cartoon 1

Cartoon 2

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Did you ever have the feeling you had déjà vu, but it turned out you didn’t?

If this has happened to you before, it’s one thing, but if it is just a feeling and you are not sure whether or not it has happened to you before, then it’s vu ajed.

Have you ever seen the words vu ajed?

If so, you may need to have your Estate Planning updated.

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Nuclear physicist and Renaissance octogenarian Bill Kahn will join Alan Gassman for a free webinar on the topic of CREATIVE BUSINESS SECURITY – PROTECTING YOUR COMPUTER DATA FROM INTERNET CRIMINALS.

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, 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:

Alan Gassman will present a free, 30-minute webinar on the topic of PLANNING TO PROTECT MEDICAL PRACTICE ENTITIES AND INCOME.

There will be two opportunities to attend this presentation.

Date: Tuesday, December 15, 2015 | 12:30 PM or 5 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 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 16, 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 ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present two talks at the 2016 Annual Florida Bar Health Law and Tax Section 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 COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ESTATE PLANNING BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, February 17, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.
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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of ASSET PROTECTION BASICS FOR BUSINESS OWNERS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, March 16, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or for more information, please contact Alan Gassman at agassman@gassmanpa.com.
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LIVE BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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. Be sure to bring an extra pair of socks because the first pair will get knocked off by Jonathan’s talk!

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.

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LIVE COMPLIMENTARY MAUI MASTERMIND WEBINAR:

Alan Gassman will present a free, 45-minute webinar on the topic of EQUITY STRIPPING AND OTHER ADVANCED ASSET PROTECTION IDEAS.

This webinar will be specially made for and presented in partnership with Maui Mastermind. There will be two opportunities to attend this presentation.

Date: Wednesday, May 11, 2016 | 12:30 PM or 5 PM

Location: Online webinar:

Additional Information: To register for this presentation or 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.

Please visit the InterActive Legal booth to see the new Alan Gassman Florida Channel and get a free book of your choice by being one of the first to sign up for this new, monthly, interactive, computer-based library featuring several of Alan’s books.

Special thanks to Michael Graham of InterActive Legal for risking their entire operation on the success of this channel.

 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.

Dec. Federal Rates

The Thursday Report – 11.26.15 – Gobble, Gobble, and Avoid Legal Trobble!

Posted on: November 25th, 2015

Correction to Last Week’s “Can I Get a Witness?: A Grantee as Witness to a Deed”

Will 529 Plans Distort Your Client’s Estate Plan?

Being Thankful for Mistakes Avoided: The Most Common Errors in Physician Planning

12 Productivity Hacks to Get Control of Your Business Day by David Finkel

Richard Connolly’s World – A Brighter Future for the Legal Profession

Thoughtful Corner – Being Thankful for People in Particular, Not Everything in General

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

“Gratitude can transform common days into thanksgivings, turn routine jobs into joy, and change ordinary opportunities into blessings.”
– William Arthur Ward

William Arthur Ward is one of the most-quoted American writers of inspirational maxims. He was a Captain in the United States Army and served as assistant to the president of Texas Wesleyan College. Over 100 of his articles, poems, and meditations were published in magazines and periodicals. He is also one of the most frequently quoted writers in the pages of The Quote, an international weekly digest for public speakers.

Correction to Last Week’s “Can I Get a
Witness?: A Grantee as Witness to a Deed”

Last week, in an article by Dena Daniels and Alan Gassman, we reported that Florida Statute §689.01 requires a deed be signed by the grantor (the individual conveying the property), grantee (the individual receiving the conveyance), and two witnesses.

The above information is incorrect. The grantee does not sign the deed. A deed must only be signed by the grantor, two subscribing witnesses, and a notary public.

We have corrected this error on our website, and we thank James M. Flick and James J. Flick for bringing this mistake to our attention. To see the corrected article, please click here.

Will 529 Plans Distort Your Client’s Estate Plan?
by Alan Gassman

Commonly, clients want all assets divided equally among children, but what about 529 Plans that may be set aside for younger children or children who have not yet been educated?

Do you specifically ask the client whether they want everything equally divided, or should the 529 Plans be above and beyond the equal division? Another question to consider is who the owner of a 529 Plan will be if the client dies.

The following language can be useful to explain and provide for the mechanics associated above:

FOR A CLIENT EXPLANATION LETTER, ADD:

We have put in a special provision that provides for having the 529 Plan designated for each child kept separate and apart for that child and not included in the total value of assets that will be divided by three to otherwise determine what is placed in trust for each child.

IN THE DOCUMENT, ADD:

Notwithstanding the above, I recognize that my spouse and I have funded 529 Plans that presently exist for one or more of our children, and that we wish to have the 529 Plan or Plans designated for each child held for the sole benefit of the designated child, without having the share of such child otherwise reduced or impacted as a result thereof. Therefore, the Trustee shall make adjustments as appropriate to facilitate fulfilling this intention. For example, if on the death of the survivor of myself and my spouse, there is a $100,000 529 Plan designated for one child, a $150,000 529 Plan designated for a second child, and $3,000,000 of other assets, then each child’s Trust described below will be funded with $1,000,000, with such child additionally having the sole and exclusive benefit of the 529 Plan designated for him or her, in a manner as determined appropriate by the Trustee to fulfill the above intentions.

Being Thankful for Mistakes Avoided: The
Most Common Errors in Physician Planning
(originally published in the 11.27.14 Thursday Report)
by Alan Gassman

The following list of common physician planning errors can be read as an entire article by clicking here, or you may prefer to read only 1 or 2 of the sections by clicking each title and its brief introduction.

This commentary reviews eleven avoidable mistakes that can be the cause of fatal errors for medical practices and physician well-being.

While different physicians and groups of physicians tend to make more mistakes in one area than another, each common mistake area should be reviewed and understood with appropriate advisors. These common errors, which can be viewed in more detail by clicking on each mistake, are as follows:

1.) Failure to Maintain and Appropriately Use Independent Professional Advisors

Many of the calamities described in this section will be avoided if a medical practice has experienced advisors on board. The practice should consult with its advisors when making major practice decisions and periodically confirm that appropriate procedures and safeguards are in place.

2.) Failure to Maintain Medical Law Compliance

A great many physicians are annihilated financially when Medicare and/or private insurance carriers request hundreds of thousands of dollars in refunds because the physician has used inappropriate billing practices or financial arrangements with third parties. In many cases, these problems are reported to the government by employees who can earn a 15% “whistle-blower fee.”

Many physician clients simply do not realize that they use improper coding, do not maintain sufficient patient file back-up, or bill for items that are inappropriately unbundled or altogether un-billable.

3.) Failure to Maintain Proper Malpractice Insurance

While malpractice insurance is not inexpensive, it is necessary in order to protect physicians from the significant legal fees, expert witness costs, and liability exposure associated with defending lawsuits. The proliferation of the personal injury lawyer industry shows no sign of slowing down, and a sympathetic jury system, coupled with experts willing to testify that a doctor committed malpractice under complicated circumstances that a jury can never understand provides good cause for maintaining appropriate malpractice insurance coverage.

4.) Failure of Multiple Physician-Owned Practices to Have Appropriate Buy-Sell and/or Shareholder Agreements in Place

Many successful medical practices are run on a handshake or a long-forgotten and now archaic agreement, but when problems or changes in circumstances arise, the results can be catastrophic and quite lucrative for the legal profession.

5.) Failure to Procure and Maintain Proper Insurances

There are a myriad of insurances required to appropriately safeguard a medical practice from the normal risks of doing business, particularly in view of the American trial system. Fortunately, most of these risks can be reasonably handled on an affordable basis, assuming that proper coverage is in place.

6.) Failure to Make the Medical Malpractice and Doctor Judgment-Proof

There are many ways that a medical practice and a doctor can work to make themselves a less-attractive target for a plaintiff’s lawyer.

7.) Failure to Theft-Proof the Practice’s Monies and Accounts Receivable

We regularly receive at least one phone call per year from a very upset physician who has had tens of thousands of practice dollars stolen by an employee. This employee has often been with the practice many years and, most of the time, is the most-trusted person in the practice other than the physicians themselves. As such, the employee is able to obtain physical possession of checks made payable to the practice by one or more payer sources and/or has written checks on the practice accounts for bogus expenses.

8.) Using Greedy Investment Advisors

There are a number of different investments and life insurance and annuity arrangements that can be sold to doctors and their practices in the financial world. The quality of each particular investment vehicle can vary dramatically in terms of actual financial safety, conservative versus aggressive orientation, likelihood of being acceptable to the IRS in the event of an audit, and the amount of commissions paid to advisors who may suggest such arrangements.

9.) Unbalanced Investment Portfolios

Statistical studies show that a diversified portfolio of investments will generally out-perform a non-diversified portfolio with significantly less risk. Many successful clients own investment real estate, mutual funds allocated among the various classes of stock investments, and bond funds or CDs. It almost never makes sense for anyone to put all of their eggs in one basket.

10.) Doing Business with the Wrong People

Unfortunately, crime and deceitful or misleading behavior can be lucrative for the “bad or careless actor,” and these individuals are often found courting doctors to do business and investment transactions or to provide consulting services.

Since the overwhelming majority of doctors are very honest and do not have formal business training, it is not difficult to market “unique propositions” to doctors and to eventually find a handful of doctors who may succumb to participate in a recommended arrangement.

11.) Failure to Have Anyone in the Practice Pay Attention to Contracts with Third Parties

Quite often, medical practices get into disputes or find themselves stuck in agreements as a result of a trusting nature or lack of attention to details associated with contracts they enter into with third parties.

We hope that this list helps you to help yourself and others, whether you are a lawyer, a physician, or the owner and operator of a Kentucky Fried Chicken franchise!

12 Productivity Hacks to Get Control of Your Business Day
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.

If you’re pulled in too many directions, you’ll enjoy these 12 productivity hacks to help take back control of your day. Thank you to our business coaching clients for both contributing ideas and being the test cases to try these out.

1.) Start your day by asking what ONE thing could you do today that, in 30 minutes or less, would have the biggest impact on your business? Then, do that one thing before you do anything else.

I caution you to be ruthlessly realistic about what you can get done in 30 minutes. Chunk down a larger project into the one piece you could bite off and get done in just 30 minutes of focused time.

2.) Set aside one 4-hour (half-day) chunk of time each week for high value focus time. To create value, we need blocks of time. Yet, as business owners, our time is increasingly fractured into smaller and smaller units.

Pick one day each week that you’ll carve out a 4-hour block to work on your highest value work. During this time, turn off your email, close your door, and perhaps even leave your office altogether and work from a remote, distraction-free location.

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

Richard Connolly’s World
A Brighter Future for the Legal Profession

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 “Law Schools and Industry Show Signs of Life, Despite Forecasts of Doom” by Steven Davidoff Solomon. This article was featured in The New York Times on March 31, 2015.

Richard’s description is as follows:

Law school enrollment has plummeted to the lowest level in decades. If a bottom has been reached, is now a good time to go to law school?

Some say no – not now and possibly not ever. The legal market, they argue, has fundamentally changed, meaning that many of the legal jobs of years past are gone forever.

Several new studies, however, point to signs of vigorous life in the legal job market, at least toward the higher end.

Please click here to read this article in its entirety.

The second article of interest this week is “Better Times for Law Firms, With More on the Horizon, Says Report” by Ashby Jones. This article was featured in The Wall Street Journal on February 12, 2015.

Richard’s description is as follows:

Citi Private Bank Law Firm Group has some very welcome news to report to the nation’s largest law firms and the people who run them: things are looking up.

The bank, which has access to the financials for a number of large law firms, issued its Full Year 2014 Legal Industry Results. The results were mostly positive. According to the report, net income was up 6.0% over that of 2013, and profits-per-partner were up 5.7%.

“Firms across the board are doing better,” said John Wilmouth, a senior client advisor with the bank.

Please click here to read this article in its entirety.

Thoughtful Corner
Being Thankful for People in Particular, Not Everything in General
by Alan Gassman and Stephanie Herndon

Each November, it is easy to get caught up in the spirit of Thanksgiving and express gratitude towards all of the good fortunes you’ve experienced in your life. Here at the Thursday Report, this year, it is our wish that this year to slow down and remember to be thankful for specific gestures and contributions from important people in your life. We hope that everyone who cares deeply about the Thursday Report will take some time this week to call (or at least email) and leave a personal and real message thanking someone for something they have done for you, whether that was in childhood, recently, or in combination thereof.

In addition, for your parents and other significant people who helped to bring you up, consider the Gratitude Awareness Enhancement System (GAES) which you can view by clicking here and actually write down what important things someone did for you, what you have learned since then, and what you could do next to best remember and best honor the kindness they have shown you and the wisdom they have shared.

Also, this Thanksgiving, please enjoy all of your relatives and close friends, whether you really like them or not. You could always just be thankful that you don’t have to be with them all year long!

Please also be thankful for mashed potatoes, gravy, cole slaw, and onion rings. The pilgrims didn’t have any of these things!

May there be minimum fear and loathing in your Thursday and your Thanksgiving, a tiger in your tank, and two mints in one before all your kisses. May your spring be Irish, and may your re-entry into the working world on Monday go as smoothly as John Glenn’s re-entry in 1962 when he became the fifth person in space and the first American to orbit the Earth and return safely on the Friendship 7 mission.

This Thursday Report is dedicated to the memory of John Glenn and all of the others that came before and after him to help us and those that we try to help by enriching our lives and increasing our knowledge of the world around us.

This Thanksgiving, don’t forget to thank someone who has enriched your life as well.

Happy Thanksgiving from the Thursday Report and all of us at Gassman, Crotty, & Denicolo, P.A. We hope you have a wonderful holiday.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Happy Thanksgiving from Gassman, Crotty & Denicolo, P.A.
by Alan Gassman
(without the assistance of Tina Arvin, Carl Jenne, and Colonel Sanders)

Every Thanksgiving
We focus on gratitude,
Gathering with family,
Enjoying a holiday interlude.

We must first thank our readers,
Then our writers and our staff,
And for those who are still working,
Collecting time and a half.

Looking forward to the future,
Of Thursday Reports to print,
The next improved edition,
After our readers comment (and relent).

And thanks to the turkeys,
Who put their necks on the line,
To allow us to promote the Thursday Report,
By this holiday poem and line.

Let us not forget to thank Col. Sanders
As we carve the turkey with cheer,
For the chicken we enjoy
The rest of the year.

Let’s welcome the holiday season
With joy and with mirth,
Whatever that is,
And for all that its worth.

May you have a great meal,
With those you hold close,
May your holiday season
Include many a warm toast.

And remember that no gift
Is complete without love,
Unless it has value
Of $50 or above.

We thank all our staff,
With great warmth and affection,
Better that they are off on Friday,
Than having a staff infection.

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Cartoon

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Keith Hodgdon and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES BUSINESS OWNERS MAKE THAT REDUCE OR DAMAGE THE ABILITY TO SELL THEIR BUSINESS OR PRACTICE.

There will be two opportunities to attend this presentation.

Date: Wednesday, December 2, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5 PM webinar, please click here. For additional information, please email 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, 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:

Alan Gassman will present a free, 30-minute webinar on the topic of PLANNING TO PROTECT MEDICAL PRACTICE ENTITIES AND INCOME.

There will be two opportunities to attend this presentation.

Date: Tuesday, December 15, 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 16, 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 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 BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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.

November Rates

The Thursday Report – 11.19.15 – Instant Thursday Report: Just Add Water!

Posted on: November 19th, 2015

What to Do When Clients Want to Change the Trusteeship of an Irrevocable Trust that Prevents Them from Appointing Themselves, Relatives, or Employees

Can I Get a Witness?: A Grantee as Witness to a Deed

IRA Loses its Bankruptcy Exemption Due to Loan Transaction by Chuck Rubin

Richard Connolly’s World – All About Trusts

Thoughtful Corner – Three Acts to a More Powerful Presentation by John Graden

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

“Don’t let the good things crowd out the best things – Make sure that the best things are pursued fully before spending any time or energy on the good things.”
– 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.

What to Do When Clients Want to Change the Trusteeship
of an Irrevocable Trust that Prevents Them from
Appointing Themselves, Relatives, or Employees
by Alan Gassman

Alan

You can’t get what you don’t ask for.

Oftentimes, we will review an Irrevocable Trust with clients who would like to have their children or other relatives or an employee become Trustee or Co-Trustee at some point in time.

We have to explain to the client that the language of the Trust prevents them from appointing relatives and employees, but that they can request that a court order be obtained upon certain events and also provide that if everyone does not cooperate to get the court order, then they can designate that “Attila the Hun” will be pointed to serve as Trustee.

Language that may be used for this would be as follows:

The undersigned, JOHN SMITH and MARY SMITH, as Grantors of the Smith Gifting Trust do hereby request that after neither of us is living or competent with respect to our ability to replace the Trustee or Trustees of the Trust, that all Beneficiaries of the Trust and involved individuals shall agree by binding contract, or by court action if necessary, to make the Trusteeship of such Trust our daughter, SHERRY SMITH, with MIKE JONES, CPA as First Alternate and PAUL BROWN as Second Alternate, provided that in such event, such Agreement or Court Order shall also provide that by unanimous consent of our children, the Trusteeship shall be equivalent to the Trusteeship set forth under Section 6.03 of our Revocable Living Trust.

We recognize that under Section 6.04 of the Smith Gifting Trust, we are not able to appoint Successor Trustees, other than individuals or institutions not related to us or employed by us, and therefore make this non-binding request and this binding designation to the extent applicable, provided that if such request is not effectuated by cooperation to facilitate a court order as requested above, then Attila the Hun shall be appointed to serve as Co-Trustee with his choice of Hagar the Horrible or Donald Trump, and we encourage that no distributions whatsoever be made to any beneficiary who has been disrespectful to our memory and values.

Can I Get a Witness?: A Grantee as Witness to a Deed
by Dena Daniels and Alan Gassman

Grand Funk were not the only individuals who needed a witness to attest to how their baby was Some Kind of Wonderful. Florida requires that a plethora of documents be witnessed, with one of those documents being a deed. As you know, a deed is a document that transfers the ownership of real estate. Under Florida Statute §689.01, the deed, or instrument reflecting a conveyance, must be signed by the grantor (the individual conveying the property) in the presence of two witnesses.

The statute requires that the witness be subscribing witnesses[1], and it is important to note that a deed that is not properly witnessed may cause a defective deed and invalidate the conveyance.[2]

Now that it’s clear that two subscribing witnesses are required for a valid transfer, let’s take a look at who can, in fact, be a witness to a deed. The first prerequisite for a witness is that he or she be competent, meaning that he/she must be legally competent to testify. A person who lacks competency is a disqualified witness and is therefore not able to be a subscribing witness to a deed.

Another disqualifying factor for a witness to a deed is whether or not the witness has an interest in the conveyance. Dating back to 1886, in Linddon v. Honett, 22 Fla. 442 (1886), the Florida Supreme Court held that a grantee cannot witness a deed. However, a deed that is defective because of a lack of proper witnesses may still be validated by the curative statutes. In regards to curative statutes, §21 of Florida Jurisprudence provides that:

Such statutes may validate a recorded deed in regular form that shows upon its face a clear purpose and intent to convey land notwithstanding the fact that it was not under seal, was not attested by subscribing witnesses, and was not separately acknowledged by the grantor’s spouse as required by law.[3]

Under Florida Statute §95.231(1), a defective deed is cured five (5) years after the recording if the deed is executed in accordance with Florida Statute §689.01 and if it appears that:

The person owning the property attempted to convey, affect, or devise it, the instrument, power of attorney, or will shall be held to have its purported effect to convey, affect, or devise, the title to the real property of the person signing the instrument, as if there had been no lack of seal or seals, witness or witnesses, defect in acknowledgment or relinquishment of dower, in the absence of fraud, adverse possession, or pending litigation.[4]

Although there is a possibility that a deed that is defective as a result of the grantee being a witness may be held valid, this is a risk that both the grantor and the grantee should not gamble on.

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[1] “A subscribing witness is one who witnesses or attests the signature of a party to an instrument, and in testimony thereof subscribes his own name to the documents, or who sees a writing executed, or hears it acknowledged, and at the request of the party thereupon, signs his names as a witness.” American General Home Equity, Inc. v. Countrywide Home Loans, Inc., 769 So. 2d 508, 509 (Fla. 2000).
[2] In American General Home Equity, Inc. v. Countrywide Home Loans, Inc., 769 So. 2d 508, 509 (Fla. 2000), it was held that, “a deed which lacks two subscribing witnesses is insufficient to convey title.”
[3] 319 Fla. Jur. 2d Deeds § 21.
[4] Florida Statute §95.231(1)

IRA Loses its Bankruptcy Exemption
Due to Loan Transaction
by Chuck Rubin

Chuck Rubin

Charles (Chuck) Rubin is a board certified tax attorney and a managing partner of Gutter Chaves Josepher Rubin Forman Fleisher Miller, P.A., a tax, trusts, and estates boutique law firm in Boca Raton, Florida. Chuck has published numerous treatises, manuals, and articles, including two BNA Tax Management portfolios. He also authors a popular tax blog at www.rubinontax.blogspot.com. He was also named the 2015 Attorney of the Year by Best Lawyers in Tax Law for the Miami metropolitan region.

This article originally appeared as Steve Leimberg’s Employee Benefits and Retirement Planning Email Newsletter Issue #650

Executive Summary:

The Internal Revenue Code bars loan transactions between an IRA and a disqualified person. A recent Bankruptcy Court case illustrates that these tax prohibitions may be of more interest to bankruptcy trustees than the IRS.

Facts:

An IRA was an investor in a partnership. The IRA participant declared bankruptcy. The bankruptcy trustee desired to void the bankruptcy exemption usually available to IRA accounts so as to be able to reach the IRA assets.

Code § 4975(c)(1)(B) prohibits loan transactions between an IRA and a disqualified person. If an IRA engages in a prohibited transaction with the beneficiary or creator of the account, the IRA will lose its exempt status under Code § 408(e)(2).

Generally, IRAs are exempt assets in bankruptcy proceedings and are thus, beyond the reach of the bankrupt’s individual creditors. This exemption in the Bankruptcy Code is tied to the tax-exempt status of the IRA. 11 USC § 522(d)(12) provides an exemption to “[r]etirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section…408…of the Internal Revenue Code of 1986.” Thus, if a bankruptcy trustee can prove the IRA engaged in a prohibited transaction, such as a loan with a disqualified person, the IRA is no longer exempt from income tax and thus, ceases to also be exempt from the reach of bankruptcy creditors.

In Kellerman v. Rice, a bankruptcy trustee was able to successfully show that funds transferred by the IRA to the partnership (a disqualified person) were transferred via loan and not a capital contribution. This characterization as a loan is a question of fact. The trustee was able to prevail since the partnership itself went into bankruptcy and on one of the schedules submitted to the court it showed the IRA as an unsecured creditor. This disclosure tipped the balance to the trustee, and the trustee was able to prove the advanced funds were a loan.

Comment:

Kellerman demonstrates that while the IRS may seek to find a prohibited transaction on audit to collect penalties and terminate the income tax deferral of an IRA, bankruptcy trustees often (and perhaps more often than the IRS) seek to find prohibited transactions for the purpose of voiding the bankruptcy exemption of the IRA.

Bankruptcy trustees have even sought to characterize 60 day rollover transactions as prohibited loans to the participant. Code § 408(d)(3)(A)(ii) allows a participant to receive a distribution from an IRA without including it in gross income if such distribution is rolled over to an IRA within 60 days. Interestingly, the rollover can be made back to the same IRA that the distribution came from. See e.g., PLR 9010007. In In re Willis, a trustee was able to convince the bankruptcy court that distributions out to a participant that were paid back to the IRA within the 60 day rollover period were nonetheless prohibited loans. This is a questionable result since the bankruptcy court effectively voided the statutory 60 day rollover period granted in Code § 408 by converting that transaction into a prohibited loan transaction that voided the IRA’s exempt status. Notably, the bankruptcy court cited to no cases, regulations, or rulings in support of its decision – it relied solely on the prohibited transaction definitions of the Code.

Thereafter, In re Rudd took on the same issue as Willis and rejected the loan treatment of a 60-day rollover back to the same IRA. It expressly noted the above Code argument that to “read 26 U.S.C. § 4975(c)(1)(D) as broadly as the trustee does effectively do away with the 60-day rollover rule, rendering 26 U.S.C. § 408(d)(3) and 11 U.S.C. § 522(b)(4)(D)(ii) inoperative.” The Court in Rudd also noted guidance in Publication 590 and in private letter rulings that such withdrawals and recontributions are permissible. In attempting to reconcile Willis with Rudd, that the participant in Willis was also engaged in check-kiting arrangements with the IRA may serve to place Willis as an outlier that should be applied only when under egregious facts there are transactions likely to injure the plan (an absence of likely injury was noted in Rudd.) Some guidance by the IRS on such rollovers would be helpful to taxpayers engaged in rollover transactions to avoid the risk of a bankruptcy trustee seeking to rely on Willis. As Kellerman and Willis demonstrate, bankruptcy trustees are not shy in aggressively seeking to use the prohibited transaction rules to void the bankruptcy exemptions of IRA accounts.

Richard Connolly’s World
All About Trusts

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 “The Ins and Outs of Trusts that Last Forever” by Paul Sullivan. This article was featured in The New York Times on December 5, 2014.

Richard’s description is as follows:

In the last several decades, states have begun competing with one another for the business of perpetual trusts, which are designed to last forever, or at least 1,000 years, in the case of Wyoming.

People have been putting their millions and billions into them, eschewing traditional trusts, which typically end after 100 years.

But now a Harvard Law School professor, Robert H. Sitkoff, has written an academic paper making the case that perpetual trusts are unconstitutional in some of the very states that have tried hardest to persuade people to establish them.

Even people who set up perpetual trusts in states where they are legal could find themselves in trouble. Lawsuits brought in a state where the trusts are prohibited could result in those out-of-state assets being counted in any settlement.

Please click here to read this article in its entirety.

The second article of interest this week is “Interest in Irrevocable Trust is a Martial Asset” by Jillian Hirsch, Leiha Macauley, and Darian Butcher. This article was featured on WealthManagement.com on September 9, 2015.

Richard’s description is as follows:

On August 27, 2015, the Massachusetts Appeals Court held in Pfannenstiehl v. Pfannenstiehl, Nos. 13-P-906, 13-P-686, & 13-P-1385, 2015 Mass App. LEXIS 123, that a husband’s interest in an irrevocable trust with an ascertainable standard is a “vested beneficial interest subject to inclusion in the marital estate.” This is a significant decision that could impact the way in which estate planning practitioners in Massachusetts draft estate plans for clients concerned about divorce protection.

At issue in the case is an irrevocable trust established by the husband’s father for the benefit of the husband and his siblings, as well as their children. The trust contains an ascertainable standard, which obligates the trustees to make distributions of income and principal “to provide for the comfortable support, health, maintenance, welfare, and education of [the beneficiaries.]” The trust also contains a spendthrift clause, which prohibits the assignment or attachment of trust assets to creditors of any beneficiary.

The trial court ordered the husband to pay 60 percent of the value of his 1/11th share to the wife in 24 monthly payments totaling $1,133,047.79.

Please click here to read this article in its entirety.

Thoughtful Corner
Three Acts to a More Powerful Presentation
by John Graden

John - Edited

As I entered his office in St. Petersburg, my attorney started waving some pages in the air. He smiled and said, “This is the best brief I’ve ever read. It reads like a novel.” He was referring to a brief written by my other attorney, who was based in Oklahoma.

Over the following three years, we received many equally compelling and, dare I say, entertaining briefs. He authored his briefs in a style that was easy to understand, and it worked.

When I finally met with him, I asked him point blank, “Why don’t other attorneys write that way?” His response was, “They probably never thought of it.”

While my discussion with him that day was about his writing style, the lesson applies to all levels of communication.

It turns out that my Oklahoma attorney was a movie buff and took some creative writing classes in college. He always looked for the story within the case and attempted to make his brief follow the traditional three-act structure commonly used in film scripts, plays, or books.

Psychology 101 tells us that humans respond best to stories. Here is how he made his stories more effective and persuasive:

Act One was the introduction to set up the story. This describes what the situation was for his client prior to the incident that led to the hearing. In writing, this is known as establishing “normal life.” The normal life is best described in a manner that your audience can relate to. It’s also where you start to make a ninja-like emotional connection in a fact-based legal brief.

Act Two is the incident or change in situation that has brought the court action. This is the “confrontation.” It’s when things changed. This is the meat of the story. Here is where he presented his arguments both in fact and real talk. Without going overboard, he simply explained the case in legal and human terms. Rather than recite law, he painted a vista.

He then finished with a strong Act Three, where he argued for the outcome he sought in a manner most sympathetic to his client and least sympathetic to the other side. In writing, Act Three is the “resolution” or, in a court case, an argument for resolution.

His three-act presentation style worked in writing and his verbal presentations. His structure of storytelling helped him break down resistance and made it much harder to simply “tune him out.”

Where in your communications can you tell a stronger story? How can you help a judge or jury to understand your argument beyond the legal one? What can you do to make a more powerful, human connection in your presentations?

The three-act story has worked from the days of Aristotle to modern-day Hollywood. It’s a powerful tool that will work for you as well.

John Graden is the author of The Art of Marketing Without Marketing, which can be viewed by clicking here. He will be teaching presentation skills at the Professional Acceleration Workshop in Clearwater. He can be contacted at john@generatemoreleads.com, 727-664-3384, or via his website, http://www.generatemoreleads.com/.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign - Edited

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Cartoon 1 - Edited

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Cartoon 2

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Keith Hodgdon, John McDonald, and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES BUSINESS OWNERS MAKE THAT REDUCE OR DAMAGE THE ABILITY TO SELL THEIR BUSINESS OR PRACTICE.

There will be two opportunities to attend this presentation.

Date: Wednesday, December 2, 2015

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5 PM webinar, please click here. For additional information, please email 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, 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:

Alan Gassman will present a free, 30-minute webinar on the topic of PLANNING TO PROTECT MEDICAL PRACTICE ENTITIES AND INCOME.

There will be two opportunities to attend this presentation.

Date: Tuesday, December 15, 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 16, 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 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 BOSTON PRESENTATION:

INTERACTIVE LEGAL ESTATE & ELDER PLANNING SUMMIT: SUBSTANCE, PROFITS, AND PRACTICE

Alan Gassman will be presenting at the InterActive Estate & Elder Planning Summit on a topic to be determined.

Other speakers include Jonathan Blattmachr, Michael Graham, Pope Francis, Mother Theresa, Thomas Jefferson, and others.

Date: April 20-22, 2016 | Mr. Gassman’s presentation time is TBD.

Location: Courtyard Marriott Boston Downtown | 275 Tremont Street, Boston, MA 02116

Additional Information: For more information, please visit http://ilsummit.com/ or contact 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.

November Rates

The Thursday Report – 11.12.15 – Don’t Miss David Finkel in Clearwater on December 2nd!

Posted on: November 12th, 2015

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

Scaling a Medical Practice: Three Concepts of Scaling by Dr. Pariksith Singh

The 5 Most Costly Hiring Mistakes by David Finkel

Seminar Spotlight – Dynamic Problem Solving for the Successful Business

Don’t Miss This Webinar! – Asset Protection Checklist Items You Have Not Thought About

Richard Connolly’s World – The Wallets of the Super-Rich & the Best Law Schools for 2016

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

“If two wrongs don’t make a right, try three.”
– Laurence J. Peter

Laurence J. Peter was a Canadian educator best known for The Peter Principle. The Peter Principle is a concept in management theory in which the selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities relevant to the intended role. This concept is often illustrated by the popular saying, “Managers rise to the level of their incompetence.”

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

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. Part I of the transcript can be viewed by clicking here, Part II can be viewed by clicking here, and the conclusion is as follows:

Randy Zipse: The next thing that you guys write about in your article is historical performances of whole life or use of universal life and the importance of historical values when looking at the performance of a contract over time. Alan, when trying to determine what rate of return is a reasonable expectation from an insurance contract, could you talk a little bit about the proper ways to determine what might be a proper rate of return or a reasonable rate of return?

Alan Gassman: Well, again, this goes back to educating yourself and educating the client as to what the underlying rate of return is expected to be on how the policy credits and trying to gauge what the real, probable expenses are that are going to reduce that rate of return. So there are two different aspects of that education. The first is what’s the rate of return before expenses?

It is useful to show not only an illustration of what the product you buy today is expected to be in the future but also, illustrations of what’s happened in the past for the carrier. It’s pretty interesting to clients when I say to them, “Well, you know, this same carrier issued a very similar policy to another client of mine six years ago, and we did spreadsheet it. Let me show you how it actually performed.”

When you look at that, you get an idea of how this works and what is involved. That’s a client who’s going to be much less disappointed later if things take a turn for the worse since they at least went in understanding that the risk was there.

Randy Zipse: And, Alan, one of the other things that I find when I speak with agents and I see agents talk to their clients and I spend a lot of time out in the field is a lot of times, the spreadsheeting of life insurance contracts is simply showing IRR (internal rates of return) at death, and when they look at the IRR at death, they oftentimes ignore the cash value of that contract during life.

Certainly, having cash value is an important consideration. If you’re a fiduciary, how important is that consideration if you’re going to hold the policy until death? How much consideration should you give to the liquidity that the policy has prior to death?

Alan Gassman: Well, given the high rate of families who buy a policy and then, a few years later, wish they hadn’t, it’s very important in the communications process to make sure the family understands that in exchange for a fairly high death benefit rate of return, they are giving up liquidity in the policy, and, oftentimes, the death rate of return expectation will be exaggerated.

In fact, Barry and I had a pretty intricate situation. The agent was certainly well-meaning and told the family, “If your mom dies at her life expectancy, this is going to be a 6% rate of return. I can’t get you bonds at that rate of return, so this is a great deal,” but I think he inadvertently used the wrong life expectancy table.

When we went to the table used by the American Society of Actuaries, we found that for a normal person her age and health, it would’ve been a 5.08% rate of return, and then we found the Society of Actuaries has another rate table you use for people who buy policies over $1,000,000 because those people tend to live longer – probably because they have more fun.

So we found the probable rate of return was 4.31%, so it’s not only showing the family that if you give up the liquidity, you’re getting a higher rate of return, but it’s also making sure they understand what that rate of return means because the longer the mom lives, the lower the rate of return. I don’t know how great it is to hope that your grandma dies early so you get a higher rate of return, but sometimes, that’s what happens.

Randy Zipse: Any last comments you’d like to make? Anything else that you’d like to add? If not, we can adjourn for now, and there’s so much in this article, we could come back to some of these points at a later date.

Alan Gassman: Randy, thanks so much for letting us talk on your show. It’s a fantastic platform to allow advisors who are involved with insurance and estate planning to be educated on what needs to be looked at and what needs to happen when life insurance is placed and evaluated. I really appreciate the opportunity to talk to you about this today.

Randy Zipse: Thanks, Alan. It’s always a pleasure to work with you, and again, “10 Questions to Ask About a Clients’ Life Insurance and Planning” is coming out in November. It’s a very, very good article; as you could tell from the show, there was a lot of content in there. There are a lot of issues to look at. It’s very, I think, appropriate. It’s a good read, an important read for agents and fiduciaries. So, again, thank you for your time.

Scaling a Medical Practice: Three Concepts 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.

Previously, Dr. Singh discussed 10 Lessons in the Art of Scaling. That article can be viewed by clicking here. Today, Dr. Singh discusses three essential concepts to scaling your business.

There are three essential concepts to growth that seem to describe what it means to scale. After many years of errors and learning, this is what true growth seems to mean. Blind and erratic growth is deleterious, even calamitous, for an organization, but this growth, if made to happen with the soul and integrity of the seed organization intact, can be wholesome and beneficial to all including the entrepreneur, the employees, the customer, and all business affiliates.

The three concepts are as follows:

Height is scale. I recently read of the concept of ‘phase conversion’ in physics. When a liquid is heated, the molecules get more energized and move more freely and intensely. This energy, as it keeps increasing with greater heat, brings the molecules to a boil (literally) until the molecules can no longer bear the kinetic intensity. At this point, a sudden transformation in the very state or nature of the liquid happens, and the substance turns to gas. This is the point of breakthrough, the radical shift. I find this physical description very apt to the state of an organization.

The other way to look at this is the concept of evolution: a brilliant concept, if one truly understands it. If one would discard the spurious controversy between creationists and evolutionists, what one comes across in the increase in specialization and organizational complexity of the entity or physical organism until it is transformed into a new species, an organism that moves in an entirely new set of conditions, rules, and principles. This is when the true shift happens into an entirely different mode of being. Whether one agrees with Darwin or not, this principle is real and must be understood clearly.

The only and best way for an organization to scale, in my mind, is to take an ascent into a transformative level, a quantum leap where one transcends the usual competition and struggles and is able to see new horizons. That is when one has ‘scaled.’

Core is scale. The whole idea of scaling is moot if the core is lost or sacrificed (unless one transforms it to a new core.) In the ancient Indian concept of svadharma, this is elaborately described. One’s svadharma is one’s way of being, one’s central being, one’s nature and potentiality, or, as modern management might call, the core competence. Svadharma is more than core competence. It is the very essence of one’s existence.

This is a principle we often forget. In human development and upskilling, we find that an individual is most successful when he or she does what is most dear or central to his heart or core passion. Jim Collins describes it beautifully in his book Great by Choice as one of the three circles of an organization. Just like the three circles of an organization, there are three circles of an individual: what the individual has the greatest passion or love for, what he or she does best, and what he or she does for a living. If these three circles coincide and become one, not only is the individual happy and fulfilled, the results of the work speak for themselves. This is when utmost potential becomes utmost manifestation and utmost realization. When each individual in the leadership finds these three circles overlapping, they are in a mode of constant reward, creativity, fun, and learning.

An organization needs to stay true to its core constantly, through all the upheavals, transformations, shifts, and mutations. The core cannot be sacrificed. As one grows, it is the central function, value, or practice that must be protected, nurtured, and preserved. That will ensure the survival of the entity. If the core is lost, with its financial strength or value basis, the organization is lost. This core must be reviewed constantly with the leadership, and they must be reminded of it, whether in the framing of the organization’s vision and mission statements, credo, or policy and procedures manual. This core is the soul of who one is. It cannot be reiterated or revisited too often.

Depth is scale. I recently came upon the concept of a T organization, one that grows deep into the mastery of some function or specialty or expertise and also grows wide in reach. In this day and age, when knowledge travels faster than though, and competition is fiercer than ever, the time between disruption of business models and the explosive success of organizations is shorter than ever. The business cycle between boom and bust has shrunk dramatically. In these challenging times, where no one can rest on their laurels and the very manner of doing business is changed rapidly with the advent of digital technology, mastery is the sole protection.

As one looks further, this is the only way to distinguish an organization, adapt quickly, and disrupt the business one is in. Without mastery of facts, data, systems, processes, technology, or know-how, survival is extremely difficult and well-nigh impossible, but if one pursues excellence as one’s way of being, then depth is scaling.

If these three concepts are understood and implemented, the organization stays lean, alive, vital, and intense. It is able to weather all storms and able to shift strategies and implementation on a dime. If these three concepts are integrated as one in an organization, that entity becomes unassailable.

Dr. Singh can be reached at psingh@accesshealthcarellc.net.

The 5 Most Costly Hiring Mistakes
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.

One of the most important functions you and your leadership team are responsible for is the selection, hiring, onboarding, and integrating of your top level talent. Yet most business owners repeatedly make poor hiring decisions that come as a direct result from falling afoul of one or more of these top five hiring gaffs.

Considering that the true costs of a bad hire can be in the hundreds of thousands of dollars, and the value of a strong hire can be the same or more, each year, your company needs you to avoid making these all too common hiring mistakes.

As you read through the list, ask yourself, “Which of these hiring mistakes are we guilty of making, and what are we prepared to do about it?”

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

Seminar Spotlight
Dynamic Problem Solving for the Successful Business

Finkel - 12.2.15 Event

Don’t Miss This Webinar!
Asset Protection Checklist Items You Have Not Thought About

Alan

Based upon a recent live presentation and corresponding worksheet, this webinar will provide practitioners with a number of fairly simple, but not so obvious, creditor protection strategies, arrangements, and checklist items that often can and should be implemented, or at least offered, to clients in the process of estate and financial planning.

Those who attended the recent presentation were extremely complimentary of the ideas and checklist worksheet that all participants will receive.

This webinar will take place on Tuesday, November 17, 2015.

Register for the 30-minute, 12:30 PM webinar presentation

Register for the 30-minute, 5:00 PM webinar presentation

Richard Connolly’s World
The Wallets of the Super-Rich & the Best Law Schools for 2016

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 “When the Super-rich Die, Here’s What’s in Their Wallets” by Richard Rubin and Josh Zumbrun. This article was featured in The Wall Street Journal on October 30, 2015.

Richard’s description is as follows:

Estate tax data recently released by the Internal Revenue Service shows what the wealthiest Americans possess when they die – and where the money goes.

First, a few basics. The returns in the data sample were all filed in 2014, which means they came largely from the estates of people who died in 2013. That year, the tax applied to estates of individuals exceeding $5.25 million, with a top rate of 40 percent, up from 35 percent the year before.

The most important thing to remember about the estate tax is that almost no one pays it anymore.

That leaves the very wealthiest sliver of the country. Fewer than 12,000 estate tax returns were filed in 2014, and more than half of those returns didn’t yield any tax for the federal government.

The data breaks down what assets people hold at death, offering a glimpse into the holdings of the ultra-wealthy.

Please click here to read this article in its entirety.

The second article of interest this week is “2016 US News Law School Ranking: the Highlights” by Jacob Gershman. This article was featured on The Wall Street Journal Law Blog on March 10, 2015.

Richard’s description is as follows:

US News & World Report released the latest edition of its ranking of America’s best law schools. For the most part, institutions that have dominated the list for years still rule, but other schools lost or gained substantial ground. One reason is a new scoring methodology that punishes schools for employing their own graduates.

This article explains the new ranking criteria and provides an updated list of the Top 25 Law Schools, as ranked by US News.

Please click here to read this article in its entirety. 

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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This week’s Thursday Report is brought to you by Kentucky Fried Chicken and their new fragrance, “The Colonel’s Cologne.” Now you can smell like the famous 11 herbs and spices all the time!

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Exciting News About the New Star Wars Movie!

Sources have learned of another character returning to the beloved series. Jar Jar Binks will be appearing in Episode Seven: The Force Awakens, and this time, he’s a lawyer! Sources also report that frantic editing is taking place after sneak previews with a test audience indicate that Jar Jar Binks is now somehow less likeable than in the earlier Star Wars films.

Upcoming Seminars and Webinars

Calendar of Events

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 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.

November Rates

The Thursday Report – 11.5.15 – Deep Thought for the Self-Taught

Posted on: November 5th, 2015

A Reminder of What Needs to Happen When Wholly-Owned Subsidiaries are Referring to One Another Under a Medical Practice

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

You’ve Prepared Your Assets for Your Heirs. Have You Prepared Your Heirs for Your Assets? By Jeffrey M. Verdon

Richard Connolly’s World – Protecting Clients Before and After Death

Thoughtful Corner – Agreements Between Inheritors

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

“If you want something new, you have to stop doing something old.”
– Peter Drucker

Peter Drucker was a writer, professor, management consultant, and self-described “social ecologist” who explored the way people organize themselves and interact in a manner similar to how an ecologist would observe and analyze the biological world. Drucker was called “the man who invented management” by Business Week and is best known for his book The Effective Executive: The Definitive Guide to Getting the Right Things Done, which can be viewed by clicking here.

A Reminder of What Needs to Happen When Wholly-Owned Subsidiaries are Referring to One Another Under a Medical Practice

A client recently asked us about the issue of self-referral between two medical practices. We consulted with Lester Perling, who sent us the following email:

Alan,

The client needs to be aware of disclosure requirements when referring patients between entities. Here is the primary requirement that applies to an owner, violations of which subject practitioners (any sort, including MD, DO, ARNP, PA, etc.) to misdemeanor prosecution and license disciplinary actions:

  1. A health care provider shall not refer a patient to an entity in which such provider is an investor unless, prior to the referral, the provider furnishes the patient with a written disclosure form, informing the patient of:
    1. The existence of the investment interest.
    2. The name and address of each applicable entity in which the referring health care provider is an investor.
    3. The patient’s right to obtain the items or services for which the patient has been referred at the location or from the provider or supplier of the patient’s choice, including the entity in which the referring provider is an investor.
    4. The names and addresses of at least two alternative sources of such items or services available to the patient.
  2. The physician or health care provider shall post a copy of the disclosure forms in a conspicuous public place in his or her office.

Additionally, MDs and DOs who are employees are subject to the following, as are owners, violations of which subject the physician to felony prosecution and licensure discipline:

Referring any patient, for health care goods or services, to a partnership, firm, corporation, or other business entity in which the physician or the physician’s employer has an equity interest of 10 percent or more unless, prior to such referral, the physician notifies the patient of his or her financial interest and of the patient’s right to obtain such goods or services at the location of the patient’s choice. This requirement does not apply to referrals within a physician’s own practice, whether he or she is a sole practitioner or part of a group, when the health care good or service is prescribed or provided solely for the physician’s own patients and is provided or performed by the physician or under the physician’s supervision.

Not that referrals between entities would not constitute the physician’s own practice, in my opinion.

I recommend putting a signed copy of any disclosure in the patient’s medical record.

Please let me know if you have any questions.

Lester J. Perling
lperling@broadandcassel.com

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

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. Part I of the transcript can be viewed by clicking here. Part II is as follows:

Randy Zipse: Can you talk a little bit about if, in your views, there is anything besides term that is appropriate, and if so, what are some of the other product choices that are out there, and how should you look at this when you’re considering term versus permanent?

Alan Gassman: Well, one thing I’m going to add just from a practical standpoint as an estate planning advisor is when clients come in and they need more life insurance, I know that they need more death benefit. Therefore, I strongly encourage them to look at the term policy rates in my office and make a commitment to at least buy a certain amount and call their agent and get the physical ordered. I don’t want them in a debate for a year over what kind to buy in case they’re not insurable by the time they make their decision.

It’s worked well for me, and I think it’s worked well for the insurance advisors that I work with, to have the client be able to say that they tentatively decided to at least buy this much death coverage. They know they can afford this much in premiums, and then the agent can work with them to show them the differences while they’re waiting for their carrier quotes.

Randy Zipse: Can we talk about the conversion deadline issue with term policies?

Alan Gassman: Whenever I sit down with clients, we talk about what their conversion deadline is on their term policies. I always ask them, and they never know. Every once in a while, a client will come in and say, “Boy, since I bought that insurance, I can’t get a new policy because I had a little heart attack four years ago,” and then I’ll say, “Okay, well, what’s your conversion deadline?” The client’s response is usually, “Oh, I don’t know.”

Well, for that particular client, the conversion deadline was a year before he came to see me but three years after the heart attack because no one ever told him he had a conversion. Everybody thinks that you can convert up to the last year, but, as you guys know, quite often, depending on the carrier, you can’t.

Randy Zipse: Term is an interesting product. I mean, certainly, there are a lot of purposes for term, and to be perfectly honest, I own term. I’ve got young kids at home, and I have a lot of term insurance on my life, but you know, there’s just a specific need.

One of the things I don’t think most people even think about, and I haven’t seen any new study done on this in some time, but at one point in time, it was about 2% to 3% of term policies actually paid claim, which is, of course, why term insurance can be priced much less expensively than a permanent contract.

The extra cost that you have to pay to get the conversion right on a term contract, in my mind, is one of the best bargains that’s out there in a life insurance contract, so if you’re going to start out with term, make sure you know the quality of the carrier that issues the policy, how many products in the portfolio they allow the conversion to, and how long that conversion right runs.

All those things, I think, are really significant when you’re looking at a term contract, and opting to buy conversion rights should certainly be a big part of the thought process.

Alan, when and where is this article going to be featured?

Alan Gassman: It’s going to be in the Bloomberg Estate and Gift Tax Quarterly in November.

Randy Zipse: Great, and as we said earlier, there are a lot of ways to split life insurance contracts up. You can look at it as permanent versus term. Once you get into the permanent environment, you can look at it as index universal life versus variable universal life versus whole life versus – there’s just a lot of ways to split this up.

At the end of the day, I think one of the things that isn’t always understood by consumers and by advisors – and when I say advisors, I am really referring to the insurance agents as well as the attorneys and accountants who work with the clients and the agents – is under what circumstances can the premiums change and by how much? There’s so much spreadsheeting that is done on life insurance. Life insurance agents constantly spreadsheet, and I understand that you have to compare products against each other, and costs are one way to do that and, probably, the most understandable way from a client’s standpoint, so spreadsheeting is a popular way to look at products.

Understanding where that premium could go over the years – I don’t know how often that is done, and when it’s done, how well it’s done. Can you talk a little bit about the circumstances that can cause premiums to change and how much that impacts the decision making that fiduciaries should do when they’re buying a life insurance contract?

I think that certainly there’s, from a fiduciary standpoint, a lot of agents out there that are simply looking at spreadsheets and determining which have the most hypothetical cash value and/or the most hypothetical cost-efficient premium structure, and that isn’t going to meet any kind of fiduciary test.

Alan Gassman:  I can agree that a spreadsheet is not going to directly correlate to the fiduciary test, but I have been accused by many of being one of the geekiest people who ever saw life insurance, and I do find that showing a client a column-by-column spreadsheet, which provides rates of return for each year and shows what goes in, what comes out, and what the performance is expected to be as illustrated and as guaranteed, is a very good educational tool for the client.

The client really doesn’t understand what the policy is. All they see are these columns that come with the illustration, and those don’t really mean a lot to the client. The agents who go the extra mile and put this on a spreadsheet and show the rate of return following FINRA and state insurance commissioner guidelines, I think, are doing a good service for their clients and a good service for the advisors. It certainly teaches you more about what’s going on mathematically, but we also, of course, have to stress to the clients that numbers are only as good as their source and their prediction. It’s certainly not a way to compare two different policies from two different carriers, but it might be a good way to help the client understand how these policies work.

Randy Zipse: When we were talking about this, and I had used the term ‘spreadsheeting,’ in my mind, I was thinking about the spreadsheets I saw insurance agents use, which simply have a list of carriers and premium amounts for carriers and cash values or carriers and internal rates of return (IRR) that are simply showing which one of that list is the best, depending on what they’re trying to show, whether it’s cash value or whether it’s IRR at death or whether it’s the amount out-of-pocket for fixed, but that’s the spreadsheeting that I had in mind.

What Alan is talking about is actually sitting down and looking at charges and how the products work inside. It’s really breaking the product down and understanding how that product works, so I guess, to kind of circle back where I started from, fiduciaries who are merely looking at a spreadsheet in the context of what I said, which is just showing the least expensive product, that doesn’t mean much, but breaking the product down the way Alan talked about – that’s the type of exercise I’m assuming that a fiduciary should be doing and needs to be doing in order to be meeting their standards under the prudent investor rules.

Alan Gassman: I agree completely.

Stay tuned next week for the conclusion of Alan Gassman’s interview with Randy Zipse. We will also have more information regarding the “Ten Questions to Ask About a Client’s Life Insurance and Planning: What Every Estate Planning or Tax Planning Advisor Should Know” article in future Thursday Reports.

You’ve Prepared Your Assets for Your Heirs.
Have You Prepared Your Heirs for Your Assets?

by Jeffrey M. Verdon, Esquire

Verdon

Jeffrey Verdon is Managing Partner of Jeffrey M. Verdon Law Group, LLP. He has an LL.M. in Taxation from Boston University and practices law in the areas of taxation and comprehensive estate planning. He specializes in estate, trust and income tax planning, and asset and lifestyle protection planning for high net-worth clients across the US. He is also a highly sought-after speaker in the areas of taxation and estate planning, lecturing aboard cruise ships and at top Investment Conferences internationally.

To see this article in its original form, please click here. Thanks, Jeff, for sharing this Client Alert with Thursday Report readers!

The Loaded Question

“Dad, are we rich?”

Ethan’s father drops his fork mid-bite. “That’s an unusual question,” Roger carefully responds.

Ethan, who just turned 16 and still fears his father’s disapproval, hesitates before continuing. He knows there is an unspoken rule in his family to never speak about money. Despite his nerve, he plows on, determined to get to the bottom of the wild claims his classmates made.

“So the guys said I didn’t need to get a summer job, and I was like, ‘yeah, right,’ and then they asked if I had ever Googled you – I mean, us, as a family – which I hadn’t. So I did.”

“Ah,” responds Roger. “So you want to know if it’s true.”

Ethan shrugs, embarrassed. “I guess,” he mumbles, eyes locked onto his plate.

Roger sets down his fork, gently folds his large hands, and looks Ethan in the eyes. “Yes, it’s true, son. But that changes nothing. You are to work, you are to study hard, and you are to go to college. You are to find a career – any career – and you are to live a productive life. An inheritance changes nothing. I know from experience. Understand?”

Ethan nods.

“Now that this nonsense is cleared up, we will never speak of it again,” Roger says, and true to Roger’s word, he didn’t.

The Fallout

Unfortunately, just eleven short years later, Roger and his newest wife die in an airplane accident on their honeymoon, and Ethan suddenly inherits the responsibility of his late father’s estate.

What Ethan quickly learns is that an inheritance does, in fact, change everything.

Ill-prepared, Ethan must suddenly shoulder a nearly half-billion-dollar empire consisting of several closely held businesses, a myriad of trust funds for his multiple half-siblings, step-siblings and cousins, and properties around the world about which he wasn’t even aware. He fails to fend off vultures purporting to give advice and guidance under the guise of feigned concern, which he realizes too late are really efforts at grabbing as much cash from his family as possible. His family’s businesses slide downhill as key personnel jump ship without the consistent vision of a well-prepared leader, and, because money is a magnifier of all things, family infighting leads to mistrust, lack of communication, and eventual lawsuits.

Feeling that his father threw him like a screaming lobster into a pot of boiling water, Ethan drops out of veterinary school to try to manage the estate. He’s not dumb, so he should be able to learn on the go. But as lawsuits mount and his family falls apart, Ethan becomes clinically depressed. Furious at being forced to change his life for the unexpected, stressful burden, Ethan blows through money like water, supporting a lavish lifestyle with several marriages and overly-entitled children. In defiance of everything his father wished, Ethan, who knows nothing about his family’s history, lets the estate’s businesses fail and real estate investments depreciate. At this rate, the next generation will be lucky to inherit anything.

Think something like this can’t happen to you or your loved ones? Think again.

Wealth Transfer Today

The United States is currently experiencing the largest wealth transfer in history. According to the Boston College Center for Retirement Research, two-thirds of baby boomers will inherit family money over their lifetime to the collective tune of $7.6 trillion, and over the next 46 years, the Boston College Center on Wealth and Philanthropy (CWP) estimates that over $59 trillion will change hands. Yes, that’s trillion with a “T.”

So affluent families should expect to inherit huge estates that will keep generations rolling in it for years to come, right?

Wrong. Worldwide, including the United States, 70% of all wealth transitions fail. Used in this context, “wealth transition failure” means that financial “reversals” remove the estate’s assets – involuntarily – from the control of the beneficiaries. These reversals can occur due to poor financial or legal planning, taxes, economic downturns, litigation, mismanagement, inattention, incompetence, family feuding, and simple financial loss. Furthermore, 70% of heir families lose family cohesion after receiving an inheritance, and only one-third of family businesses successfully make the transition from one generation to the next. This consistent failure rate gives rise to the phrase “shirtsleeves to shirtsleeves in three generations.”

Ethan’s story doesn’t sound so unique after all, does it?

Researchers at the family-wealth consultancy firm The Williams Group in San Clemente, California, conducted a study of over 3,250 affluent families and asked why the 70% failure rate was so consistent around the world. Their results are eye-opening.

The reasons for wealth transfer failure most often cited by lawyers and financial planners – high taxes and poor investments – surprisingly only account for 5% of all failures. In fact, the single biggest factor of wealth transfer failure in 60% of all cases is poor trust and communication among family members. Additionally, the failure of parents to prepare their heirs for their wealth resulted in 25% of wealth transfer failures, and the failure to have a “family mission” resulted in an additional 10% of failures. Doing the math, a full 95% of wealth transfer failures are due to family dynamics rather than poor legal and financial planning.

So it’s not enough to prepare your assets for your heirs. You must also prepare your heirs for your assets.

Talking about wealth transfer means talking about death and money, which are, admittedly, two of the most highly sensitive and uncomfortable subjects for families, but not talking about it risks your entire estate. Don’t let Ethan’s story become your own.

Richard Connolly’s World
Protecting Clients Before & After Death

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 “Protecting Deceased Clients from Identity Theft” by David H. Lenok. This article was featured on WealthManagement.com on August 19, 2015.

Richard’s description is as follows:

Even though potential identity theft is likely the last thing on a family’s mind when trying to process the death of a loved one, there are, nonetheless, some simple steps advisors, in concert with a client’s relatives, can take to discourage any unscrupulous individuals.

Many identity thieves start by gleaning personal information from funeral homes and obituaries. Make sure your client’s family pays special attention not to reveal too much information in publicly available materials. General age of the deceased, for instance, is fine, but spelling out his birthday isn’t. Innocuous seeming items, like the deceased’s mother’s maiden name, can also do a great deal of damage (just think of how many password recovery “secret questions” you have set up currently that ask for that information!)

Please click here to read this article in its entirety.

The second article of interest this week is “Estate Planning Tips: Before & After a Client’s Death” by Martin Shenkman. This article was featured on Financial-Planning.com on March 17, 2015.

Richard’s description is as follows:

There has been a fundamental shift in advisors’ main estate planning concerns in recent years. With estate tax exemptions considerably higher, there’s less need to worry about estate tax minimization. Instead, there is a greater emphasis on income tax considerations and an opportunity to offer a different array of valuable planning ideas.

This article contains a few key ways advisors can add value for elderly clients, as well as for their heirs.

Please click here to read this article in its entirety.

Thoughtful Corner
Agreements Between Inheritors

Oftentimes, an elderly person with assets will exhibit symptoms of dementia, which can include favoring certain children over other children, thinking that one or more children are doing them harm or have done them harm in the past, promising inheritances beyond what is possible, such as promising the same piece of jewelry to three different people at three different times, and refusing to pay for expenses that are in the best interest of the elderly person, such as nursing assistants, monitoring and alarm systems, drivers, and housekeepers.

By the following Agreement, two or more children of the same person can agree that all inheritances will be shared equally, that any gifts given to the parent will come back to the child who gave the parent that gift, and that one or more of the children can pay expenses for the parent as a gift that will increase that child’s inheritance as a kind of repayment.

Many adult children do not realize what their parents are doing, or how to handle this. Also, adult children are often, for many reasons, the last people to realize that a parent has dementia.

The following Agreement may be helpful in such situations:

We agree that with respect to any inheritance any one or more of us who have gifted items of value such as jewelry, iPhones, iPads, health devices, and other items to Mom, will receive those items back as our inheritance, above and beyond one-half (1/2) of remaining assets.

We also confirm that one or more of us have told Mom that we will pay for certain expenses that we think assist her, such as part-time helpers, transportation, a monitoring system, and possible other benefits like a concierge doctor, expenses for travel, and otherwise.  We will keep each other posted on amounts gifted, and unless there is a written objection, each of us who has gifted amounts from this time going forward will receive the amount gifted back as his or her inheritance, before the remaining assets are divided equally as described below.

We further agree that Mom’s intent has always been that we would inherit equally, and to the best of our knowledge, all Will, Trust, and any pay on death and beneficiary designation accounts and arrangements provide for equal inheritance between us, and that if one of us dies before Mom, our descendants would receive our share.

We hereby agree between ourselves that if for any reason the equal inheritance arrangements assumed above do not exist, or for any reason Mom intentionally or unintentionally makes changes to how our shares are to be divided, such as if she were to become angry at one of us for telling her not to drive and disinherit that person, then we will nevertheless make appropriate adjustment so that each of us inherits equally, to the extent that this is feasible.

We further agree that our respective inheritances will be reduced to the extent that our respective descendants receive inheritances in greater proportion as between us.  For example, if the children of one child receive $20,000 more in the aggregate, than the children of another child, then that other child would receive $20,000 more, to keep or to distribute among his or her descendants.

We further agree that if there is ever a dispute with respect to our inheritance that ________________, CPA, or alternatively _________________, Esquire, will serve first as a mediator to attempt to enable us to agree and resolve any disagreement, and if that is not successful, then such person shall serve as an arbitrator, or upon request of any of us will appoint an arbitrator and designate the rules of arbitration to apply.  We will equally bear the expense of any such mediation and/or arbitration process.

We will also keep each other posted on communications with Mom, Mom’s whereabouts, and expenses incurred for Mom, by e-mail or otherwise.

This Agreement shall be construed under Florida law and the situs of any mediation or arbitration will be in Pinellas County, Florida, and will be binding upon your successors and assigns.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Cartoon 1

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Upcoming Seminars and Webinars

Calendar of Events

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 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.

November Rates

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

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