Asset Protection

Wednesday, November 1, 2017

A Primer on Irrevocable Trusts

A Will is one way to plan for the distribution of your assets after death, however, a comprehensive estate plan also considers other objectives such as planning for asset protection and long-term care. Therefore, you should consider utilizing an irrevocable trust.

Read more . . .

Monday, July 3, 2017

Issues to Consider When Gifting to Grandchildren

Issues to Consider When Gifting to Grandchildren

Grandparents, Aunts, Uncles, or others who want to give gifts to their grandchildren, nieces, nephews, etc. may not be aware of a few issues related to what many consider to be a simple gift. If you are considering making a significant gift to a child, you should consult with a qualified attorney to guide you through the legal and tax issues that are involved.

Making a Lifetime Gift or a Bequest:  Before making a gift, you should consider whether you want to make the gift during your lifetime or leave the gift in your Will. If you make the gift as a bequest in your Will, they will receive the gift upon your death.

Read more . . .

Tuesday, September 6, 2016

What is an Estate Tax?

While the terms "estate tax" and "inheritance tax" are often used interchangeably, they are not synonymous. Let's try to clarify the difference.

The main difference between estate taxes and inheritance taxes is who pays the tax. The clue is in the name.  Estate taxes are paid by the deceased person’s estate before the money is distributed to their heirs.
Read more . . .

Thursday, August 15, 2013

Family Foundations: What, Why, and How

Families with significant net worth who have a tradition of philanthropy often consider establishing a charitable foundation as part of their estate plans.   While there are a number of advantages to using family foundations as a philanthropic vehicle, families need to seek guidance from estate planning and tax professionals to ensure it is the best option for achieving their objectives.

According to The Foundation Center, there are over 35,000 family foundations in the US, responsible for more than $20 billion in gifts per year.   While some foundations have tens of millions in assets, more than half report holdings totaling less than $1 million.  


Minimizing various tax burdens is one benefit of creating a family foundation.  However, if tax issues are your primary concern, then a different asset management and distribution vehicle will probably better suit your needs.  While it is true that family foundations offer certain tax advantages—both in terms of current income tax obligations and future estate tax burdens—family foundations are also under many legal and regulatory obligations. These ongoing obligations mean that your family should choose to build a family foundation only if ongoing philanthropic giving is an enduring family goal.

Non-tax-related benefits of a family foundation include the following:

  • Managing the foundation may provide employment for one or more family members
  • A family foundation allows founders to involve family members in family wealth management, especially those who lack interest in the family business
  • The foundation founder can maintain influence over recipients of charitable giving for generations to come
  • A family foundation makes an excellent repository for all charitable giving requests.  A formal process can be established to ensure grant applicants are not arbitrary.
  • A family foundation can serve as a formal manifestation of a family’s philanthropic culture.

Types of Family Foundations

There are many different types of family foundations, each with certain advantages, disadvantages, and tax and regulatory obligations.  The main types of family foundations include:

  • Private non-operating family foundations which receive charitable donations from the family, invests those funds and makes gifts to other charitable organizations or individuals.
  • Private operating family foundations which actively engage in one or more philanthropic activities, as opposed to making donations to other foundations that perform active charitable work.
  • Supporting organizations which are designed to provide financial support to one or more specific public charities
  • Publicly supported charities can be seeded with family philanthropic funds but then also take donations from the public. Publicly supported charities must meet specific Internal Revenue Service requirements to maintain their status as publicly supported charities.

Issues to Consider when Establishing a Family Foundation 

  1. How much money do you plan to give to the foundation at its inception?
  2. Do you anticipate volunteer help from your family to run the foundation, or will the foundation need to pay one or more salaries?
  3. Does your family wish to support one or more specific charities, or do you want to fund a foundation which can ultimately choose among other charities in specific fields of philanthropic work?
  4. Does your family want to actively engage in philanthropic work or make gifts to other organizations that are already engaged in such work?
  5. Does the foundation founder prefer to exert strict control over gifts the foundation makes, or only to generally specify the types of philanthropic work he or she wishes the foundation to support?

Once you and your family have carefully thought through these considerations, you should consult with an estate planning attorney and other tax advisors to determine which type of family foundation most effectively meets your family’s giving objectives.

Monday, May 16, 2011

How to Protect and Pass On Artwork, Antiques, and Other Valuable Assets

Some assets—such as real property, stocks and savings—are fairly straightforward when it comes to leaving them to your beneficiaries; other assets—such as valuable artwork or antiques—are not always so easy.  How do you will an asset to a loved one when there is no deed or title of ownership?  And just as importantly, how do these paperless assets figure into the size and administration of your “taxable estate”?

According to this article by Bonnie Kraham, how you dispose of these assets can be extremely important to the administration and taxation of your estate.  One particularly dangerous method is referred to as “the empty hook” method, wherein “When the collector dies, the beneficiaries simply remove the artwork (from the hooks) in accordance with name tags on the items for the intended recipients. Thus, the estate is left with "empty hooks" of what may be part of a sizable taxable estate for estate tax purposes.”

The problem that arises with the “empty hook” method is that wealthy families who collect artwork or antiques as investments often have records of their purchases and sales, as well as a list of valuable items for insurance purposes.  Any of these documents and records would be reviewed during probate or administration of the estate. “If you don't fully disclose the value of your art collection, or don't properly plan to gift art in compliance with estate tax rules and regulations, you can pass on tax fraud, instead of art, to your beneficiaries.”

Perhaps the best way to hold and legally dispose of your art or antiques collection upon your death is to transfer ownership of these valuable assets into a trust. “Transferring your art collection to a trust may be the most effective, efficient and transparent way to administer your estate after death . . . Trusts are private documents and, although the tax reporting remains the same for trust assets, trusts protect the privacy of an art collector or artist, which can be an emotional protection for the beneficiaries.” Additionally, keeping valuable artwork in trust can provide an extra layer of protection from divorce or lawsuits during your lifetime.

Contact our office, or your own local estate planning attorney, for more information.

Friday, April 8, 2011

Royal Couple Has Many Asking “How Effective Are Prenuptial Agreements?”

It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th.  Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?

The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more.  Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts.  But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.

Neither party must be signing under duress.  The more time each party has to review the agreement before the wedding the better.  Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.

The agreement should include full disclosure of income and assets.  If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.

Each party should have their own legal representation.In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed. 

Details regarding children or child support in a prenuptial agreement may or may not be enforced by the courts.Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.

Of course, every couple hopes that a prenuptial agreement will never come into play, but these tips and many others can help ensure that your agreement will be considered valid by a court if the worst should happen.  Contact our office if you have any questions about prenuptial or marital agreements, we’d like to help.

Friday, December 3, 2010

Are Misconceptions Keeping You From Planning for Retirement?

Planning for retirement can be tricky business.  When we discuss our clients’ estate plans and assets with them we can’t help touching on retirement plans, so we hear a lot about the worries that go along with preparing for an uncertain future.  There are many variables and unknowns that can crop up between starting out in your 20s or 30s and your eventual retirement at 60 or 70; and there are a lot of myths about retirement which are daunting, discouraging, or just plain misleading.

U.S. News and World Report recently published an article which attempts to address some of these myths and set readers back on the right track to retirement.  We hope that all of our readers are already saving for retirement, but because we know just how important it is to save early and save often we’d like to list some of the myths here for our readers:

#1 You don’t make enough money to save for retirement.

#6 You need to be debt free before you can invest for retirement.

#8 Social Security benefits will be enough to retire on.

#9 You have to retire at age ___.

These are only 4 of the 10 myths covered in the article.  Click on the link above for a full list of commonly-held assumptions about retirement that may be preventing you from making the most of your retirement savings.

At our office we help our clients protect and plan for the future, retirement is often a part of that future.  If you have any questions about how to protect your retirement investments, or how to ensure that they transfer properly to your heirs if anything should happen to you, please call our office.

Monday, November 15, 2010

Family and Future: The Keys to Top Notch Estate Planning

We write a lot on this blog about what estate planning is truly about: it’s about laws, taxes, assets, and documents of course; but deep down, estate planning is about relationships.

As estate planners and advisors, an important part of what we do is creating the best estate planning or asset protection vehicle we can for our clients; but achieving this goal involves far more than simply writing a document—it also involves listening to our clients, reading between the lines of sensitive family interactions, and it often involves looking into the future to catch potential problems before they happen. 

A recent article in the Wall Street Journal describes the unorthodox lengths to which advisors will go to help clients achieve their goals.  “For the family with the gridlocked siblings, [their financial advisor] arranged a session of personality-type charting with an outside expert. The tests showed one of the brothers-in-conflict to be a hard-driver who loved to make decisions on the fly. His brother was more analytical, and needed time to reach conclusions... Establishing that these conflicting traits are permanent characteristics has helped the brothers understand each other’s work habits and function better as a team. “

Our firm may not yet have had to arrange personality-type charting sessions, but this “running interference” or acting as a mediator and guide is exactly what we do. Evaluating goals, assessing relationships, identifying priorities and facilitating productive discussions is part and parcel of being a good estate planner and a great family attorney and advisor.

Estate planning and asset protection may sound like it’s about things and wealth, but a good advisor knows that it is always about family and relationships.  Consider this when you’re looking for an estate planner: Do you want an advisor who is simply protecting your wealth, or do you want an advisor who is looking out for your future and your family?

Monday, October 25, 2010

“Nothing Says Romance More Than A Prenuptial Contract.”

You may have your doubts about the sentiment above (which is also the opening line of a recent article in the Wall Street Journal) but many couples are beginning to see the truth of this statement.  Younger couples, older couples embarking on second marriages, and couples with family businesses or assets to protect are coming to realize that prenuptial agreements can actually take the pressure off a relationship, making more room for romance rather than less.

A recent ruling in Britain’s Supreme Court has thrown prenuptial agreements back into the limelight, not only in the U.K. and Europe, but also here in the United States.  The above-mentioned article in the Wall Street Journal offers a few basic guidelines for couples considering drawing up a pre-nup, the most important of which include: there must be no signs of duress, each party must have their own legal counsel, and nothing concerning children can be fixed in a pre-nup. 

But if you’re on the fence about whether or not a prenuptial agreement is right for you and your spouse-to-be you may be most interested in the final paragraph of the article, which states that “Prenups are romantic... You’re making a provision for somebody. You’re saying, ‘I want you to know now that you’ll be alright’... this should be part of the process of falling in love and going forward with that commitment.”

Wednesday, October 20, 2010

Plan Ahead to Avoid Financial Pitfalls in 2011

A recent article in U.S. News and World Report points out that although “the Great Recession may technically be over... Consumers [still] don't want to spend and are still slowly digging their way out of the mountain of mortgage and personal debt that helped fuel the downturn.” Among those groups who are still struggling the most are seniors and retirees, many of whom took a devastating hit to their retirement investments and savings, and are still struggling to recover.

Unfortunately, according to the article, 2011 may bring with it some new financial concerns for seniors.  Some of the “major money issues” seniors will have to think about in the coming year include a zero cost of living adjustment from the Social Security Administration, changes to certain Medicare policies, a rise in income and capital gains tax rates, and the return of the estate tax, among others.

Although the article itself offers no particular solutions to these financial concerns—it merely gives a warning of what’s to come—there are steps you can take to avoid some of the worst financial pitfalls.  Because each individual situation will be different there is a danger to blindly following (or offering) standard advice across the board.  However, with consultation and careful planning there are a number of strategies estate planners can recommend that may help your family protect your assets now, and when the estate tax returns. Forewarned is forearmed, and taking the time to consult with your estate or financial advisor and plan ahead may be the best action you can take.  

Wednesday, September 1, 2010

You’re Never Too Young to Need a Financial Planner

Most people don’t think about visiting a financial planner until they’re old enough to have some money to manage, but if your child is a recent college graduate, or in his or her final year, you may want to consider a joint trip to your financial planner.  A recent article in the Boston Globe lists a number of very compelling reasons why even young adults with little or no savings can benefit from a little bit of planning.

1. A visit to a financial planner can help young adults learn early the importance of budgeting: “If you are living on your own for the first time you haven’t had the responsibility yet of paying bills and learning to make your paycheck last until the next payday... One of the basic tenets of financial planning is to know where your money is going.”

2. Start planning for retirement while you’re still young.The earlier you start, the better off you’ll be. “A financial planner can go over the various fund choices in your 401(k) or other retirement plan and help you choose one or more funds that suit your needs.”

3. Learn how to turn big dreams for the future into a reality.  Whether you plan to get married, buy a house, or start your own business, “A Certified Financial Planner® can figure out how much you need to save and create a plan to make saving painless.”

4. And finally, a financial planner can help young adults learn the basic tenets and terminology of borrowing, lending, saving smart and paying off loans with interest.  “Learn about interest rates and how they work, whether they are for credit cards, auto loans, student loan or other borrowing. See how compound interest can help you reach goals faster.”  An early trip to a knowledgeable professional can ensure that your child doesn’t get taken in by persuasive credit card companies.

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Schnurr Law Firm, PLLC serves clients throughout the greater Houston area, including, but not limited to Houston, Bellaire, West University, Sugar Land, Missouri City, Richmond, Rosenberg, Katy, Cypress, The Woodlands, Kingwood, League City, Webster, Clear Lake, Pearland, Angleton, and throughout Harris County, Fort Bend County, Montgomery County, Brazoria County and Galveston County.

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