Personal Finance How Not To Lose It All


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  • Seagulls in “Finding Nemo”-we think we are all unique in our own industry, but change the name (doctor, layer, CPA, and we have the same exact problems
  • Personal Finance How Not To Lose It All

    1. 1. Worst Case Scenario in Asset Protection – You Lose Everything! North American Veterinary Conference January 15, 2007 Is this who’s guarding your practice door? A tasty treat could easily defeat!
    2. 2. Speaker Information <ul><li>Mark J. M c Gaunn, CPA/PFS, CFP ® President </li></ul><ul><li>MJM Financial Advisors, LLC 114 Turnpike Road, Suite 107 Westborough, MA 01581-2861 phone: (978) 405-3133 e-fax: (978) 776-2609 e-mail: [email_address] </li></ul><ul><li>web: </li></ul>
    3. 3. Asset Protection <ul><ul><li>What it is </li></ul></ul><ul><ul><li>What it is not </li></ul></ul><ul><ul><li>What to do </li></ul></ul><ul><ul><li>What not to do </li></ul></ul>Planning that preserves wealth over time against numerous, unforeseen circumstances. We’ll discuss:
    4. 4. Asset Protection <ul><li>Well-designed plans arrange one's affairs so as to minimize the risk that one's wealth is subject to external creditor attack and frivolous lawsuits. </li></ul><ul><li>Effective plans contain multiple layers of protection. </li></ul><ul><li>Asset protection is fundamental building block of risk management. </li></ul>
    5. 5. Is common sense enough? <ul><li>Effective asset protection starts with common sense . </li></ul><ul><li>But can practice owners protect assets from: </li></ul><ul><li>Foreclosure action by secured lender(s), </li></ul><ul><li>Breach of contract or intentional act by practice employee </li></ul><ul><li>Owner’s personal actions/debts outside veterinary practice (personal guarantee on secured debt), </li></ul><ul><li>Personal creditor attaching owner’s entity(s) stock </li></ul><ul><li>Practice employee/vendor harassment </li></ul><ul><li>Pet owner/visitor personal injury. </li></ul>
    6. 6. What to get? <ul><li>Create a plan designed to offer genuine protection for veterinary practice owners: </li></ul><ul><li>not so simple you’re unprotected, but </li></ul><ul><li>not so complex it causes needless difficulty. </li></ul>
    7. 7. General Know-How <ul><li>Planner needs a broad knowledge of asset protection options-from simplistic to most complex. </li></ul><ul><li>Avoid wealth protection seminars and “boilerplate” solutions. </li></ul><ul><li>Run if someone promises way to avoid taxes. </li></ul><ul><li>Each solution tailored to each practice owner. </li></ul><ul><li>So follow these 4 rules… </li></ul>
    8. 8. Rule 1 of 4 <ul><li>Do not own significant assets in your own name </li></ul><ul><li>Not doing so equates to leaving door to practice unlocked. All assets ( real estate! ) are targets. </li></ul><ul><li>Re-titling common practice of wealthy and large corporations (high profile targets). Best and least expensive strategy. </li></ul><ul><li>Walt created Disney World in 1970’s by forming >100 land trusts (each with different undisclosed beneficiary names and trustees) to own Orlando land. </li></ul><ul><li>Estimated lawsuit savings $100 million. </li></ul>
    9. 9. Rule 2 of 4 <ul><li>Use multiple entities to own your assets </li></ul><ul><li>Use a separate entity to insulate each liability-generating asset. </li></ul><ul><li>May include revocable and irrevocable trusts, both C ( really! ) and S corporations, Limited Liability Companies (LLC) and Partnerships (LLP) </li></ul><ul><li>May include foreign and domestic asset protection trusts (APT). </li></ul>
    10. 10. Rule 3 of 4 <ul><li>Maintain assets and entities that hold your assets in different or in multiple jurisdictions </li></ul><ul><li>Multiple jurisdictions can mean simply having entities domiciled in different states, not countries. </li></ul><ul><li>John D. Rockefeller, Sr. successful vs. PA even while owning properties in NY, FL and CT (he retained them without loss) </li></ul>
    11. 11. Rule 4 of 4-Remember!!! <ul><li>Asset protection laws change constantly. </li></ul><ul><li>U.S. tax law has changed every other year since 1980. </li></ul><ul><li>New asset protection strategies come into favor (new islands and states seeing $$$) </li></ul><ul><li>Strategies fall out of favor based on case law (bankruptcies and appeals by IRS). </li></ul>
    12. 12. Veterinary Risk Management <ul><li>Practice high-quality veterinary medicine. </li></ul><ul><li>Document all care you do. </li></ul><ul><li>Document what you don’t do. </li></ul><ul><li>Apologize right away. </li></ul>
    13. 13. General Basics <ul><li>Beware of &quot;experts” and “guarantees”. </li></ul><ul><li>Maintain modest lifestyle with a low profile. </li></ul><ul><li>Avoid general partnerships. </li></ul><ul><li>Maintain more than adequate insurance coverage (Value=typically ins. co. must provide a defense. </li></ul><ul><li>Don’t do what “Stan the Man” did. </li></ul>
    14. 14. Don’t meet FBI or IRS on their turf! <ul><li>Asset protection is not illegal and is honored if done for a legitimate purpose. </li></ul><ul><li>But, an entity or entities may not be created without business purpose and personal assets transferred to them with no relationship to any business purpose, simply as a means of shielding them from creditors (see Stranghi vs. Commissioner, expert Atty. Robert J. Mintz). </li></ul>Photo source:
    15. 15. Thank You! 谢谢 Merci Danke Schon Grazie ありがとう 당신을 감사하십시오 Obrigado Gracias