September 14, 2017 RE: Hurricane Irma Commemorative Edition


Asset Protection Update: The Curci Investments, LLC Case (pt. 2 of 2) by Martin Shenkman & Alan Gassman

The Beneficiary Selected Trust Company Clause by Alan Gassman 

IRS Gives Tax Relief to Victims of Hurricane Irma; Like Harvey, Extension Filers Have Until Jan. 31 to File; Additional Relief Planned 

The Irrevocable Incomplete “Living” Trust – Drafting for Protection from Undue Influence and Obligations of the Grantor’s Probate Estate, While Preventing A Taxable Gift Under Federal Tax Law by Chris Denicolo 

The 3 Questions Every Business Owner Must Ask by David Finkel

Richard Connolly’s World


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

This report and other Thursday Reports can be found on our website at


The hurricane season began on June 1st and does not end until November 30th.  A Hurricane Preparedness List can be viewed by CLICKING HERE.

Please think not only of your family, but of three other people who might not be prepared.  Please buy more than what your family needs, in case you might be prevailed upon or inclined to share with others.

Please also know what your route out away from a storm will be, under the assumptions that bridges will be closed, and what we can do for people in Houston.

The Hurricane Irma Red Cross Disaster Relief Fund can be viewed by CLICKING HERE.



Asset Protection Update: The Curci Investments, LLC Case (pt. 2 of 2-Click HERE for Part 1) 

by Martin Shenkman & Alan Gassman 

The authors thank Steven J. Oshins, Esq. for his thoughtful comments and guidance in this area.

The creditor claimed that the debtor held virtually all the interest in the investment LLC personally, controlled the investment LLC’s actions, and appeared to be using the investment LLC as a personal bank account. The creditor argued that under these circumstances it would be in the interest of justice to disregard the separate nature of the investment LLC and allow the creditor to access the investment LLC’s assets in order to satisfy the judgment against the debtor, Baldwin. Practitioners are well aware that no trust or entity should be used to pay personal expenses, and certainly not as the equivalent of an “incorporated pocket book” (or the trust or LLC equivalent). Practitioners should insist that clients desiring any asset protection benefit from planning have at least an annual review meeting with appropriate advisers so that each adviser is aware of the plan and collectively all advisers can help police the proper administration of that plan.

The lower court cited an earlier case and held that reverse veil piercing was not available in California. On appeal, the creditor asserted that this earlier case, Postal Instant Press, is distinguishable (in good part because the decision noted that the creditor had the remedy of attaching the shareholder’s stock, as opposed to being limited to only having a charging order), and urges the court to conclude that reverse veil piercing is available in California and appropriate in this case.vii The appeals court determined that the prior case was distinguishable, and that reverse veil piercing is possible under certain circumstances, and thus remanded for the lower court to make a factual determination as to whether the investment LLC’s veil should be pierced.

Alter Ego

The court noted that ordinarily a corporation is considered a separate legal entity, distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. The same is true of a limited liability company (LLC) and its members and managers. That distinction can be disregarded by the courts if being used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose. The distinction can also be disregarded under an alter ego doctrine when the actions of the entity are deemed to be those of the equitable owner. One of the most significant advantages of the LLC format is also one of its disadvantages in the context of asset protection planning. Corporations should have bylaws, a shareholders’ agreement and annual minutes. LLCs were designed for simplicity, but that simplicity may prove seductively dangerous as clients operating under LLCs may lack many of the independent legal documents that might serve to corroborate the independence of a corporate entity in the corporate context. Florida estate planning and corporate lawyer Robert C. Burke, Jr. often says that “For every complex problem there is a simple answer . . . and it is the wrong answer . . . complex problems call for complex solutions.” Practitioners should encourage clients with LLCs not to rely on state default rules and instead have them craft appropriate operating agreements. Meetings ideally should be held and those meetings should, if feasible, be corroborated with written and signed minutes or consents. 


The distinction between owners and entities may be disregarded if there is such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. There must also be an inequitable result if that distinction is recognized. Piercing the entity veil will be permitted when justice requires. This is a fact-sensitive analysis. Reverse veil piercing arises when the request for piercing comes from a third-party outside the targeted business entity. The court noted that the debtor had spent five years trying to collect on the debt. As with all fact-sensitive analysis practitioners should endeavor to document and corroborate the independent nature of the client’s LLC. As noted above, annual meetings are a useful means of doing so. The mere fact that the managers and members of the LLC meet with all their advisers may itself help demonstrate that the entity is not a mere alter-ego for the members.

Steven J. Oshins, Esquire of Oshins & Associates, LLC shared the following with the authors:

This case is illustrative that there is no such thing as bullet-proof asset protection planning. There will always be exceptions to exceptions, and it will often depend on which judge you get and in which court. This case definitely won’t stop planners from utilizing charging order protected entities as a part of their repertoire, but it will make them realize that although this planning will almost always result in a favorable settlement or judgment, a few plans won’t work as planned. Asset protection is often a game of probabilities. You lose some and you win most. 


LLC and limited partnership planning for multiple member entities needs to be carefully structured and managed to help protect legitimate non-debtor members from having their interests in the entities damaged by reverse veil piercing and alter ego challenges. LLCs that are basically the personal checking account of their 99% member and 1% owner spouse cannot expect to be respected in situations where creditors are unduly taken advantage of or mislead in inequitable circumstances. While clients often ask for (if not demand) a simple fix, using a one-dimensional plan, advisers should be cautious to advise that based on Curci and other negative developments noted in earlier footnotes, that an overly simplistic single layered plan may not succeed. Further, for clients insisting on lower cost, practitioners might advise that the failure to follow up annually with all their advisers, even if costs are incurred, could torpedo any possible planning benefits. The law often changes, and cases like Curci remind practitioners that no one strategy should be relied upon by any person or family. More often, a combination of strategies and categories of creditor protection arrangements will be in the family’s best interest. This case also points out the advantages of using offshore structuring well in advance of creditor situations occurring for those clients who are willing to bear the costs of compliance while acting honorably and honestly in their dealings with possible creditors and general conduct.


Special Notre Dame Announcement

Please click here to see the amazing Notre Dame Tax and Estate Planning Institute agenda and  schedule for the dates in 2017 in South Bend, Indiana. This starts with a late Wednesday 2-hour presentation on What You Need to Know About Bankruptcy Law by Alan Gassman, and wraps up late Friday, followed by the Fighting Irish of Notre Dame vs. NC State on Saturday the 28th.

Alan thanks bankruptcy lawyers Al Gomez and Michael Markham of the Johnson Pope Law Firm for helping to critique and stand upon the outline for this presentation.  Stay tuned for the below webinars and please sign up.

The DoubleTree hotel adjoins the convention center, and the Thursday evening cocktail reception that is held there should not be missed. We’ll buy drinks after the Wednesday presentation for anyone who mentions the Thursday Report at the DoubleTree bar.


The Beneficiary Selected Trust Company Clause

by Alan Gassman

Oftentimes, clients are comfortable naming an individual or individuals to serve as Trustees, but beneficiaries and their advisors may be disappointed with respect to how the Trustee complies with or ignores their duties.

The following “boiler plate” clause may save trust assets and beneficiaries from significant problems, or even catastrophes that could otherwise occur:

The Primary Beneficiary or sole beneficiary of an trust herein established may require that the individual or individuals serving as Trustee must select and appoint a Co-Trustee which must be a licensed trust company as defined in Section 1.0__ of this Agreement.  The individual Trustee must designate and make best efforts to have a licensed trust company chosen and serving within thirty (30) days of when such notice is sent, and the beneficiary who has given notice may select a licensed trust company to serve if one has not been selected and put into place by the acting Trustee or Trustees as set forth above.

If the beneficiary requesting the Trustee is able to afford to pay the Trustee fees incurred, then distributions that would otherwise be paid to such beneficiary (other than any income required to be paid under a trust which has qualified or expected to qualify for the federal estate tax marital deduction) will be reduced by the Trustee fees.  The licensed trust company chosen shall prepare a report within sixty (60) days of being appointed with respect to the Trust investments, the administration of the Trust that has occurred while the individual acting Trustees have been serving, and with respect to recommendations of the trust company as to tax planning, investment planning, distribution planning, and as the trust company otherwise deems to be appropriate.

For purposes of this provision, the definition of licensed trust company under Section 1.0__ of this Agreement will not include any individual or any trust company not registered formally as a trust company with one of the States of Florida, New York, Delaware or California, unless explicitly permitted by the beneficiary who has given notice.  It is recognized that there could be a deadlock between the individual Trustee or Trustees and a licensed trust company, and a resulting court or arbitration proceeding to help assure that the Trust is administered in a professional, conscientious, and appropriate manner.  If there are multiple individual Trustees, then the applicable licensed trust company shall have an equal number of votes with the individual Co-Trustees to enable it to require a deadlock as to any material issue.



IRS Gives Tax Relief to Victims of Hurricane Irma; Like Harvey, Extension Filers Have Until Jan. 31 to File; Additional Relief Planned

IR-2017-150, Sept. 12, 2017

WASHINGTON –– Hurricane Irma victims in parts of Florida and elsewhere have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

Today’s relief parallels that granted last month to victims of Hurricane Harvey. This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that run out on Sept. 15.

“This has been a devastating storm for the Southeastern part of the country, and the IRS will move quickly to provide tax relief for victims, just as we did following Hurricane Harvey,” said IRS Commissioner John Koskinen. “The IRS will continue to closely monitor the storm’s aftermath, and we anticipate providing additional relief for other affected areas in the near future.”

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Parts of Florida, Puerto Rico and the Virgin Islands are currently eligible, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 4, 2017 in Florida and Sept. 5, 2017 in Puerto Rico and the Virgin Islands. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period.

This includes the Sept. 15, 2017 and Jan. 16, 2018 deadlines for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected including the Oct. 31 deadline for quarterly payroll and excise tax returns. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2016 extensions run out on Sept. 15, 2017 and calendar-year tax-exempt organizations   whose 2016 extensions run out on Nov. 15, 2017. The disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page for the time periods that apply to each jurisdiction.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit

For information on government-wide efforts related to Hurricane Irma, visit


The Irrevocable Incomplete “Living” Trust – Drafting for Protection from Undue Influence and Obligations of the Grantor’s Probate Estate, While Preventing A Taxable Gift Under Federal Tax Law 

by Chris Denicolo


Many clients are best served by having their living trusts made irrevocable due to the client having diminished capacity or being a target for possible undue influence.

One solution is to provide for a “safety latch” clause under the client’s living trust, whereby the client is unable to amend, modify or revoke the trust unless he has the consent of specified third parties or licensed physicians indicating that the client is of sound mind.  This provision can also provide that the client may only withdraw up to a certain amount of assets per calendar month unless he or she has the consent of one or more specified individuals or licensed trust companies.

This approach can be effective during the client’s lifetime to protect against nefarious efforts of third parties who attempt to get him to change the terms of his trust, or to withdraw trust assets and to provide for disposition different from what is contemplated under his last will and testament and other testamentary documents.

A greater degree of protection can be provided by making the client’s living trust irrevocable, which eliminates the possibility that the client will attempt to amend the trust.  The trust can be drafted to appoint a committee of independent trust protectors who can have the power to amend the trust after it is made irrevocable.

If significant assets are held under the trust, then it is important to assure that the trust affords the client with certain powers over the trust assets in order to avoid the imposition of a gift for federal gift tax purposes.  Otherwise, making the trust irrevocable could cause a considerable reduction in the client’s estate tax exemption amount (despite the assets of the trust possibly being included in the client’s gross estate for federal estate tax purposes upon his later death), or could even trigger federal gift tax.

One approach to prevent the occurrence of a taxable gift would be to give the client the power to appoint assets under the trust to the creditors of his estate upon death.  However, this could cause the assets to be subject to creditor claims against the client’s probate estate after his death, which could include obligations under documents signed or promises made by the client as a result of undue influence.

Florida Statute Section 733.707(3) provides that a trust over which a decedent held a “right of revocation” (a “733.707(3) Trust”) is responsible for obligations of the decedent’s estate.  Subsection (e) of Section 733.707(3) provides that “right of revocation” includes any trust over which the decedent had the power to: (1) amend or revoke the trust and revest the principal of the trust in himself, or (2) withdraw or appoint the principal of the trust to or for his benefit.

A solution to this issue is to instead provide the client with the power upon death to shift benefits among the current beneficiaries of his living trust, and also the power to veto any distributions from the trust during his lifetime.  This will prevent the client from being considered as having made a completed gift for federal income tax purposes under Internal Revenue Code Section 2511 and the Treasury Regulations thereunder, while also prevent the trust from being considered as a 733.707(3) Trust under Florida law that would be liable for the obligations of the client’s probate estate.

In many situations, it is imprudent to give the client such power to shift benefits without requiring that any exercise of such power must be approved by certain parties (such as trust protectors) who would be in a position to prevent misuse of the power.  Treasury Regulation Section 25.2511-2(e) provides that if the grantor of a trust has a power to shift benefits amongst beneficiaries or a power to veto distributions, and such power is exercisable only with the consent of one or more persons who do not have a substantial interest in the trust (i.e., other beneficiaries of the trust), then the grantor is considered as having such power himself.

Therefore, the client’s power to shift benefits among the current beneficiaries of his living trust upon death can be subject to the approval of one or more independent parties who can decline to consent to any such exercise.  This power, coupled with providing the grantor with a power to veto any distributions from the trust during his lifetime, will provide the client with sufficient dominion and control over the trust assets to not cause the assets under the trust being treated as a completed gift for federal tax purposes when the trust is made irrevocable.  It also should remove the trust from being responsible for the obligations of the client’s probate estate after his death.



The 3 Questions Every Business Owner Must Ask 

by David Finkel


Have you ever found yourself wanting to grow your business, but holding yourself back because you were afraid you’d have to sacrifice your life to do it?

Feeling as if your only two choices were to grow the business by working harder, longer hours, or to settle for less but at least get some of your time back?

I know I used to feel that way.

In fact, I can remember journaling back in 2001 about how hard it felt like I was working, and how close I was to burning out.

At that time I was working 70 hours a week, and on the road teaching workshops 10 days a month.  I loved the way the business was succeeding, but I hating feeling like if I ever stopped running on the treadmill the whole thing would come crashing down.

Plus, as we grew, it felt like I was just adding to my overhead and responsibilities, all of which just increased the pressure I felt.

It was right at this time in my life that one of my business mentors asked me three questions that changed my business perspective forever.  I want to share these three questions with you in the hopes that they jar you into seeing your choices fresh.

Question One:  “David, what is it that you really want?”

I told him that I really wanted the business to continue growing, but not to feel like it was all up to me to drive that growth.  I shared that I felt proud of the impact our company was having on the lives of our clients and their families, but that the pressure was smothering me.

Question Two:  “David, what are you really afraid of happening?”

That was easy, I told him that I was afraid that if I didn’t closely manage all the details of my business then things would fall through the cracks and it would cause serious harm to the company.  Clients would leave us; vendors would overcharge us; and our reputation would be permanently damaged.

I shared that I was afraid that not only would things start to fall apart, but now that we had a larger staff and higher fixed overhead, I was afraid that it would mean the financial ruin of the company.

He stayed silent a little longer as if willing me to look deeper.  It was then that it hit me like a ton of bricks—what I was most afraid of was the feeling of losing control.  I feared that by trusting others in my business I would be out of touch with what was going on, and in that cloudy space of not knowing my business would crash and burn.  As I said this, I realized how emotionally loaded and extreme my response was.

Question Three:  Finally my mentor asked me, “David, isn’t there a better way to do this than trying to do it all yourself?  What would have to happen for you to feel comfortable letting go of more and more responsibility inside your company?”

At this point I was open and got it.  I realized that if I had strong systems that my team understood, and if my team knew what was expected of them and grew their ability to make decisions and solve problems themselves, reporting progress on a consistent basis so I felt in the loop, then I could still make sure the business was safe without keeping such a tight grip on everything.

So I started building my business, and my own “muscles” of intelligently letting go of direct control.  My team flourished; the business flourished – growing at an annual rate of 100% per year for the next 4 years before I sold the company.

These three questions sparked me to change my approach to building companies.  Now it’s your turn…

Answer these same three questions:

  1. What is it you really want from your business?
  2. What is it that you’re really afraid would happen if you let go of more and more of the direct control of your business?
  3. What would have to happen in order for you to feel comfortable letting go of more and more of the direct day-to-day control of your business?

You can grow your business and get your life back.  And the way you do that is by stop focusing on what you personally produce, and instead focus some of your time on getting your business (your staff, systems, and internal controls) to produce more.

This is exactly the journey our business coaching clients find themselves on – incrementally growing their businesses as they continue to operate them.  The surprising truth is that the only way to truly scale and grow your company is to reduce its reliance on you, the owner.

Done right, you get growth AND you get your life back.

I hope this short article challenged your past thinking and stretched your sense of what’s possible for you.

If you enjoyed the ideas I shared, then I encourage you to download a free copy of my newest book, Build a Business, Not a Job.  Click here for full details and to get your complimentary copy.


Richard Connolly’s World

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

This week, the article of interest is A Judge Wants a Bigger Role for Female Lawyers.  So He Made a Rule by Alan Feuer.  This article was featured in The Wall Street Journal

Richard’s description is as follows:

Democrats and Republicans often don’t see eye-to-eye on the nation’s tax code, but they have perhaps the most fundamental disagreement over the estate tax. So any proposal to drastically alter the estate tax stands to obliterate the already-slim chances of a bipartisan overhaul effort, and the issue has become the first major disagreement Democrats and the White House have had on tax reform since Congress returned from recess.

A large majority of the Senate Democratic caucus — 45 of the 48 members — is opposed to any tax cut for the wealthy.  To View the Full Article Click Here