Affinity Asset Protection

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This is an asset protection lecture I provide.

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Affinity Asset Protection

  1. 1. Real Estate Investment Network, Inc. Presents by Gust G. Sarris, M.B.A., J.D. Affinity Law Firm, P.L. Tidal Title, L.L.C. September 6, 2007 Asset Protection
  2. 2. Who am I? <ul><li>Business Development Specialist / Consultant </li></ul><ul><li>Bachelor of Science from PSU </li></ul><ul><li>MBA (Technology/ Business Dev) </li></ul><ul><li>Jurist Doctorate (Florida Coastal) </li></ul><ul><li>Mortgage Broker License, Real Estate, Securities, Insurance 6, 63, Nursing Home Administrator </li></ul><ul><li>Title Agent / Closing Attorney </li></ul><ul><li>Entrepreneur / Investor </li></ul><ul><li>Professional Student </li></ul>
  3. 3. Disclaimer <ul><li>I cannot give legal advice from a podium </li></ul><ul><li>This legal information is correct 99%??? </li></ul><ul><ul><li>Common Law </li></ul></ul><ul><ul><li>Statutory Law </li></ul></ul><ul><ul><li>Incorrect facts / bad judgments </li></ul></ul><ul><ul><li>Human error </li></ul></ul><ul><li>I am not soliciting you – I am not selling anything in a package! </li></ul>
  4. 4. What is an asset (to most)? <ul><li>Hard assets – Real estate, personal property </li></ul><ul><li>Soft Assets – Clientele, lists, processes, relationships, goodwill </li></ul><ul><li>I.P. – Patents, knowledge, recipes </li></ul><ul><li>Future – Income, inheritances, retirement securities </li></ul><ul><li>Mixed – Businesses, “Cash”, etc. </li></ul>
  5. 5. Protection? <ul><li>Lawsuits </li></ul><ul><li>Bad Marriages </li></ul><ul><li>Partner / Associates </li></ul><ul><li>Government TAXES / Liens </li></ul><ul><li>Family Disputes – Probate / Contests </li></ul><ul><li>WHEN? </li></ul><ul><li>Now </li></ul><ul><li>Future </li></ul>
  6. 6. Insurance Protection? <ul><li>Do you have adequate </li></ul><ul><ul><li>Car Insurance </li></ul></ul><ul><ul><li>House Insurance </li></ul></ul><ul><ul><li>Life Insurance </li></ul></ul><ul><ul><li>Business Insurance </li></ul></ul><ul><ul><li>Umbrella Insurance </li></ul></ul><ul><li>Legal Protection </li></ul>
  7. 7. Balances in life… <ul><li>Risk vs. Reward </li></ul><ul><li>Paranoia? </li></ul><ul><ul><li>Legal </li></ul></ul><ul><ul><li>IRS </li></ul></ul><ul><ul><li>Health </li></ul></ul><ul><li>What is important? </li></ul><ul><li>Your goals? </li></ul>
  8. 8. Companies
  9. 9. Company Protections <ul><li>LLC </li></ul><ul><li>Corporations </li></ul><ul><ul><li>Chapter “S” </li></ul></ul><ul><ul><li>Chapter “C” </li></ul></ul><ul><li>Limited Partnerships </li></ul><ul><li>Exotic – LLLP, P.L. etc. </li></ul>
  10. 10. Why form an “entity” <ul><li>Protection </li></ul><ul><ul><li>Unknown Creditors </li></ul></ul><ul><ul><li>Lawsuits </li></ul></ul><ul><ul><li>Governmental Protection </li></ul></ul><ul><ul><li>No protection from known creditors! </li></ul></ul><ul><li>Tax advantages </li></ul><ul><ul><li>Write offs </li></ul></ul><ul><ul><li>Pre-tax advantages </li></ul></ul><ul><ul><li>See your CPA! (not me) </li></ul></ul>
  11. 11. A “Legal Entity” should have: <ul><li>Formation or Incorporation as per Florida rules, laws and statutes </li></ul><ul><li>Completing required Federal paperwork including obtaining a Federal Employee Identification Number for the IRS. </li></ul><ul><li>Electing the Proper Taxation Structure </li></ul><ul><li>Initial Minutes (required for corporations) </li></ul><ul><li>Formation of an Operations Agreement </li></ul><ul><li>Resolutions for Opening Bank Accounts (Banking Resolutions) </li></ul><ul><li>Issuance and Recording of Stock or Unit Distribution </li></ul><ul><li>Certified Copy from the State </li></ul><ul><li>Certificates of Status from the State </li></ul><ul><li>Stock Certificates </li></ul><ul><li>Seal </li></ul><ul><li>Custom Official Binder (with all corporate documents properly assembled) </li></ul><ul><li>Occupational Licenses </li></ul><ul><li>Bonds if Necessary </li></ul><ul><li>Other Necessary Professional Licenses </li></ul><ul><li>Doing Business As (dba) names if necessary </li></ul><ul><li>Workman’s Compensation Information </li></ul><ul><li>Logo, Trademark and Copyright Information if Needed </li></ul><ul><li>All Required Employee Posters (Federal and Florida State Specific) </li></ul><ul><li>Registration of a Internet Domain name (optional) </li></ul>
  12. 12. Do I really Need all that??? <ul><li>What is Piercing the “Corporate Veil?” </li></ul><ul><ul><li>No actual test … but have you? </li></ul></ul><ul><ul><ul><li>Issued Stick or Units </li></ul></ul></ul><ul><ul><ul><li>Had initial formation minutes </li></ul></ul></ul><ul><ul><ul><li>Opened a “Business” account …Commingling </li></ul></ul></ul><ul><ul><ul><li>Paid taxes </li></ul></ul></ul><ul><ul><ul><li>Obtained all necessary licenses </li></ul></ul></ul><ul><ul><ul><li>Properly marketed …Do other people know? </li></ul></ul></ul>
  13. 13. LLC vs Corporation <ul><li>Easier to maintain </li></ul><ul><li>More flexibility </li></ul><ul><li>Preferred by Lawyers </li></ul><ul><li>Similar costs </li></ul><ul><li>Must pay “reasonable wages” </li></ul><ul><li>Units of Ownership </li></ul><ul><li>More regulated </li></ul><ul><li>Well established law </li></ul><ul><li>Preferred by Accountants </li></ul><ul><li>May have tax advantage </li></ul><ul><li>Stock </li></ul>
  14. 14. Not a Good Structure Sole Proprietor Or “ Owneer”
  15. 15. A Good Structure <ul><li>Form a Corporation or LLC </li></ul><ul><li>Put assets in Company as needed </li></ul><ul><li>Have Corporate and Personal Insurance </li></ul><ul><li>Be careful of Lawsuits and keep Legal! </li></ul>Major Pitfall You can be sued as a company and an individual
  16. 16. YOU PARTNER LLC Or Corporation A Good Structure
  17. 17. Better Structure <ul><li>Form an LLC or Corporation for each business </li></ul><ul><li>Form an LLC that you are a member of which owns ALL assets… conduct no outside business from this entity </li></ul><ul><li>Have personal and business insurance </li></ul>
  18. 18. YOU PARTNER LLC Hold ALL Assets No outside Business Business #1 Corp or LLC Better Structure Business #2 Corp or LLC Business #3 Corp or LLC
  19. 19. Questions on Companies (904) 398-9510 www.affinitylawfirm.com
  20. 20. Estate Plans
  21. 21. <ul><li>What will happen to my property? </li></ul><ul><li> + </li></ul><ul><li>Durable Power of Atorney </li></ul><ul><li>Pre-Need Guadianship </li></ul><ul><li>Health Care Surrogate </li></ul>Estate Plans We all need one!
  22. 22. Wills
  23. 23. Wills <ul><li>Very inexpensive way to dispose of estate at death???? Or is it? </li></ul><ul><li>Are often contested! </li></ul><ul><li>Have limitations </li></ul><ul><li>Don’t work for “larger” estates </li></ul>
  24. 24. Questions on Wills (904) 398-9510 www.affinitylawfirm.com
  25. 25. Trusts
  26. 26. <ul><li>Real Estate Trust </li></ul><ul><li>Living Trust </li></ul><ul><li>AB Trust </li></ul><ul><li>QTIP Trust </li></ul><ul><li>Life Insurance Trust </li></ul>Trusts
  27. 27. Trusts Overview What they are How they work Benefits
  28. 28. Most CommonTrust Terms <ul><li>Trustee – Person who controls </li></ul><ul><li>Grantor – Person who created the trust </li></ul><ul><li>Res – The property of the trust </li></ul><ul><li>Beneficiary – Person who receives benefit </li></ul>Mini - Disclaimer This is an overview of the type of Trusts and not designed to give you the complete knowledge of tax benefits and your unique situation. This presentation is to familairze you with some common trusts only.
  29. 29. Real Estate Trusts <ul><li>Protects Privacy </li></ul><ul><li>May not show “break in title” </li></ul><ul><li>Should not be used to deceive (fraud) </li></ul><ul><li>Provide protection to other properties (they are owned by a different entity) </li></ul><ul><li>Provide protection to the investor </li></ul>
  30. 30. What they are? <ul><li>Seperation of Interest </li></ul><ul><li>Beneficial </li></ul><ul><li>Legal </li></ul><ul><li>Benefits </li></ul><ul><li>Control / Protection </li></ul><ul><li>Tax Consequences </li></ul>
  31. 31. Living Trust Revocable control of assets Estate Beneficiaries Receive Assets from trust and surviving spouse Owner Transfers Assets to Trust Managed According to Owner’s Desires Estate Disposition A surviving Spouse may have use of assets Upon the death of the estate owner, assets pass easily without probate Plan may include marital deduction and remainder trusts to limit estate taxes in ultimate transfer to beneficiaries
  32. 32. Smith Estate $4,000,000 Spouse Receives $2,000,000 in assets Distribution Recipients Beneficiaries Receive Assets from trust and surviving spouse Marital Deduction Portion Controls all assets $2,000,000 exemption amount passes to trust Spouse receives income and support from this trust Upon surviving spouse death, assets pass estate tax free to beneficiaries Upon Death, assets pass to beneficiaries Using trust for exclusion amount limits impact of estate taxes
  33. 33. Let me Stray off the Subject Most common trust problem! <ul><li>Fraud – Don’t have to lie! </li></ul><ul><li>RESPA / Reg Z / Bad HUD </li></ul><ul><li>Not properly formed- No res, out of order </li></ul><ul><li>Deceptive Business Practices </li></ul><ul><li>Signing of Blank Documents </li></ul><ul><li>Issues with ENTIRE Transaction </li></ul>
  34. 34. ALL Questions? (904) 398-9510 www.affinitylawfirm.com
  35. 35. Thank You! Gust G. Sarris Affinity Law Firm, P.L. Tidal Title, L.L.C. (904) 398-9510 www.affinitylawfirm.com

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