Wealth Preservation, Trusts and Estates

Family Limited Partnerships

A family limited partnership can clearly be a great estate and business-planning tool but if it is drafted or implemented incorrectly it could cost you money and headaches.  Family Limited Partnerships allow families to own and operate a business or series of investments as part of an executor estate plan to protect both parents and children. In addition, it offers the owners of real estate and closely held business a powerful tool for protecting whole businesses from dissolutions, excess taxes, and claims in divorce or lawsuits.

2011 Pennsylvania Estate Planning News:

In the Estate of E.V. Jorgenson the decedent (the person who just passed away) transferred substantial assets to two family limited partnerships and claimed that the retained powers and interests were minimal. The IRS assessed an estate tax deficiency and Tax court found that the decedent had retained the economic benefits and control of such property and that the transfers did not involve a bona fide sale for full consideration. Estate of E.V. Jorgensen, 2011-1 USTC

Why did the taxpayer lose?

Because she had written checks on partnership accounts to pay some personal expenses and make some family gifts.

What does that mean?

Because she maintained too much control of these assets and used them for personal purposes  the value of the family partnership assets were taxed in her estate.

The estate tried to argue that the amounts involved were so small that she really did not have control of the assets but the court did not agree and believed she had access to the funds.

To find out more about tax planning options that could offer significant family tax relief click here to read $ 5 Million Gift Tax Exemption Makes Gifting of Small Business Easier.

What does this mean for you and or your family limited partnership (FLP)?

Transfers of marketable securities, cash or other assets to family partnerships need to have a significant non tax purpose or the court, as it did here, will not consider them a bona fide sale for adequate and full consideration and they will remain in your estate. You and your attorney need to be aware of the heightened scrutiny involved in transferring this type of asset into Family Limited Partnerships FLP’s and its tax and other consequences. The FLP should have a bonafide business purpose and retained control should be minimal.  Using such assets to pay personal expenses will likely cause the technique to fail.

Here are a few questions to think about in considering creating an FLP or transferring or funding your FLP:

• If you were considering funding the FLP with residential or vacation real estate do you want to continue to be able to use that real estate? If so this is not the right tool.  Think instead about a qualified personal residence trust or an outright gift since property values are at historic lows.

• Do you instead need a qualified personal residence trust to implement your above desires?

• What powers or sources of income can be retained without including the FLP in your estate?

• Should you consider a GRAT – Grantor Retained Annuity Trust where some of the assets can be returned to you for your personal use?

If you are not sure of these answers or want to find out more about family limited partnerships contact a wealth preservation attorney to discuss what might work best for you and your unique situation.

Family Limited Partnerships can be a useful tool if they are created and implemented correctly. Figure out what you want to do and then think about the questions above and talk to your attorney or seek an attorney who specializes in wealth preservation to give you all the options available and what possible consequences each of those options may pose.

David M. Frees III, JD For more information about these techniques, call:
610-933-8069  or email dfrees@utbf.com

Share and Enjoy

Property Tax Appeals Can Lower Taxes of Over Valued Homes and
Commercial Real Estate.

In this environment, many of our
clients in Delaware, Chester, and
Montgomery Counties believe that
their homes are now overvalued
for real estate tax purposes.

If you feel that you’re being taxed on
a value that’s simply too high
in today’s market you might be
wondering if such a property tax
appeal is right for you and what the
pros and cons of such an appeal might be.

However, you probably don’t want to pay someone to find out the answers
to those questions.  And you should know that……

…..Tax Appeal Deadlines Are Approaching
So Time Is Of The Essence.

For all of those reasons, my partner and I got together with
the partner who runs the section of the firm handling
property tax appeals – not just for big companies- but also
for individual homeowners.

And, we have made an arrangement with him to offer our
readers a free consultation.  That way, you can find out if the
appeal makes sense for you.

Our partner also assured us, that there is no fee to you,
unless you authorize him to pursue the appeal and, he
gets you a tax reduction.

So, if you think that you might benefit from a property tax appeal
and you want to get it done by a professional to maximize savings
without an up front fee, then read on.

We have created some resources for you and they are available
through:

www.PaPropertyTaxAppeal.com.

In the alternative, if you already want the appointment or
consultation please call Donna, Denise, or Beth and Mention
this code: UTBF TAX APPEAL to get your free consultation.

So, again, if you’re not a “do it yourselfer, ” you might just
prefer to have a free consultation that Doug and I have arranged
for our clients and our readers who want to know if a property
tax appeal would help you.

Finally, there is no charge to chat with one of our advisers
about your appeal, and there is no fee unless the property tax
appeal is successful.

So for the free report and more information visit:

www.PaPropertyTaxAppeal.com.

For an appointment to get things started at no cost to
you, just call 610-933-8069 and mention
UTBF TAX APPEAL

If you have any questions before or after visiting
www.PaPropertyTaxAppeal.com. then just call me,
Dave Frees, at 610-933-8069.

Share and Enjoy

Has Marcellus shale changed the issues faced by your family?

Do you want or need better sources of neutral information on the
issues you now face?

Families with mountain property, vacation homes, and hunting camps
located in regions rich in marcellus shale gas deposits are now faced
many difficult decisions ranging from:

* How will the drilling and fracking effect use of the land?

* Restoration of the family land and related water issues

* How to own the land and pass on the land or gas revenues, and
many related issues

* The use of trusts and other tools to minimize expenses and
taxes

Penn State has been developing information resources for
Pennsylvania residents, government, and the gas industry.

For more information on Marcellus shale resource through Penn
State, click here.

The actual Penn State Site and Source for Marcellus shale information.

For information about free well water testing click here.

For More Estate Planning Options Related to Marcellus Shale,
call 610-933-8069 and mention Marcellus Shale offer code 2011
for a free estate planning consultation with one of  our estate
planning or business section lawyers.

Share and Enjoy

Delaying Estate Planing For Law Changes?  Does That Make Sense?

DO You Delay Other Acts of Love and Responsibility?

Well, you’d expect lawyers who make
a living advising affluent clients
on issues of estate planning to be biased.

They’ll tell you to do it now.
Why wait?

Well, as it turns out, there are few good
reasons to delay and many great
reasons to get the job done now.

When done right, thoroughly, and with the right tools, estate planning
is, plain and simple, an act of love.  It really matters only if you want to
preserve your legacy and to make life better, and easier for those you leave
behind.

But I’m a trust and estate lawyer so you’d think that I would feek that way.
As it turns out, this reporter also thinks that way and review the issues
involved in effective estate planning and why delay makes no sense.

Click here for Delaying Estate Planning Is Never A Good Idea.

Want To Protect Your Spouse, Children and Grandchildren?

Call any time between April 15th and June 1st to get this
limited time Family Plan pricing.

For a limited time, now that tax season is over we will be offering
estate planning family programs.  You can get your own plan, a family
meeting (by phone or in person) and gift certificates for your heirs
to get their own estate planning done.

If you and one or more of your children and grandchildren live in
the state of Pennsylvania, this Family Plan Program might be
just what the estate planning “Doctor” ordered.

Want your spouse to stop worrying?  Want to protect your heirs
from divorce or lawsuits?

Want to mimimize taxes, trouble, and expenses if you die?

Want to make sure that your adult children do the same for your
grandchildren?

CALL 610-933-8069 and ask for David Frees to review your
estate planning and the terms of our Business Class, First Class
and Family Plan Estate Planning options

You can also email dfrees@utbf.com to request a free telephone
consultation or appointment to get one of the limited spots available
until June 1st.

Share and Enjoy

Many people use rental real estate as part of a diversified investment portfolio for growing family wealth. We explore the issues relating to the ownership of rental properties with clients as we are preparing their wills, trusts and financial power of attorney documents. We are privy to the concerns that these rental property owners voice to their advisors. On the top of the more recent concerns was 2010 Small Business Jobs Act.

Among other things, the 2010 Small Business Jobs Act required landlords to use Form 1099 to report a number of rental property expense payments equal to or greater than $600 made after December 31, 2010 and reported in 2012 and beyond. The requirement applied to virtually all landlords. Reporting requirements would have applied to payments to, among others, contractors, roofers, painters, plumbers, electricians, accountants and attorneys.

Luckily for some landlords in PA and throughout the country, on April 5, 2011 the Senate approved a bill (H.R. 4) to repeal the expanded landlord reporting on Form 1099. The next step is to President Obama for final approval of the repeal. As a result of the repeal of Section 2101 of the 2010 Small Business Jobs Act many landlords need not identify specific expenses for rental property expense reporting. Unfortunately, landlords with rental activities that are considered a trade or business would still likely have to report payments of $600 or more made to service providers.

We suggest reviewing the status of your rental activities as a landlord with your income tax professionals should this appeal be finalized.

You can contact Douglas L. Kaune, Esquire at 610-933-8069 or at dkaune@utbf.com to discuss the most advantageous way to own your rental real estate when considering lawsuit, divorce and creditor protections. We can also assist with the best way to integrate the rental real estate ownership into your will and trust planning. The UTB&F offices are located in Phoenixville, Malvern and West Chester PA.

Share and Enjoy

Many clients prefer to remain in an assisted living setting rather than make the move to a nursing home. The Veteran’s Administration Aid and Attendance Benefit can help extend your or your family member’s stay in an assisted living facility and delay the transition to a nursing home.

Assisted living facilities cannot receive Medicaid payments from the Pennsylvania Department of Public Welfare (DPW). Therefore, when a resident runs out of money they must move out of the assisted living facility and into a Medicaid eligible nursing home regardless of their health status. In order to extend your ability to privately pay for an assisted living stay, residents should apply for the Veteran’s Aid and Attendance benefit when available. Generally, you or your spouse have to have served in the military in active duty during wartime. Review the Veteran’s Administration Website here for further details. You can also review this Aid and Attendance article on PAElderLawSolutions.com. The benefits for a spouse of a deceased Vet will be less than for the Vet himself or herself, but still likely in excess of $1000/month. The benefits for a husband and wife where one is a qualifying Vet will be close to $2000/month. This is a substantial benefit and one that can help you to stay in the assisted living setting of your choosing.
Please contact Douglas L. Kaune, Esq. at 610-933-8069 to discuss your case further and for assistance as necessary. Mr. Kaune is a partner with the law firm of Unruh, Turner, Burke & Frees, PC, a full service firm with offices in Phoenixville, West Chester and Malvern, PA serving Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties.

Share and Enjoy

Think Your Estate Is Now Protected From Federal Estate Tax?
According To The Tax Lawyers Studying The New Law -
Think Again

The Heckerling Institute is one of the premier estate planning programs
and “think tanks”dedicated to effective estate planning.  The lawyers
appearing  at the institute and those in attendance focus on planning
to minimize federal estate taxes and on issues of how to protect assets
and estates of all sizes for the benefit of your heirs.

After the first day of this five day intensive, David Frees’ review was
that all speakers and presenters agreed, that this year, with changes to
the federal estate tax laws being both radical and profound, the Institute
is more important than ever.

And, added Frees, “There are many many opportunities for estate tax
planning, gifting, and other planning techniques but some may be here
for a limited time only AND, many surviving spouses must now
file returns who never had to before.” Under the new law, if a
surviving spouse fails to file a 706 (estate tax return) he or she will not
inherit the deceased spouse’s remaining exemption and this can mean
much higher taxes for many families.

With several of the changes in the new law, there are unprecedented
opportunities to make gifts, to pass on wealth, to protect assets, and to
carry out your estate planning goals.  However,  according to most of
the high level estate planning lawyers in attendance, there is a mis-
perception among many people that real planning is now automatic.
and that planning, wills, trusts and good powers of attorney are no
longer needed.

However, many of the provisions of the new law may be a use it or
lose it proposition since they expire in 2 years and many people mis-
understand the “portability provisions”of the new law.

According to David Frees “Many people think that they can rely on
“inheriting” their spouse’s exemption to shelter even more assets for
their heirs. But, trusts and flexible disclaimer plans remain vitally
important to avoid taxation, lose of family wealth to nursing homes,
protection from divorce, and to making sure that taxes are minimized
and estates are protected from state inheritance taxes and even federal
estate taxes.”

Stay tuned for more specific tools and ideas for estate planning such as
new uses for the QPRT (Qualified Personal Residence Trust) and other
ways to protect assets for the next generation while protecting yourself
and a surviving spouse.

David Frees is Chairman of the Unruh, Turner, Burke and Frees -
Trusts, Estates, and Wealth Preservation Section.

He can be reached at 610-933-8069. or at dfrees@utbf.com

Share and Enjoy

I work with many clients to assist them with the estate planning and elder law issues relating to the mineral rights they own in certain real property throughout Pennsylvania and other states. The focus on the mineral rights ownership interest has increased exponentially as the Pennsylvania (PA) Marcellus Shale discoveries have broadened. Many people also refer to this as the “Pennsylvania Gold Rush.”

Tremendous wealth can result from the ownership of the mineral rights in a property containing large natural gas reserves. The wealth will only be realized after the mineral rights owner signs a lease with a natural gas company or with the government. The negotiation and structure of this oil and natural gas lease is the key to protecting the property owner and will help to insure a successful and lucrative transaction. Landowners should have legal representation during this negotiation and lease structuring period. Your future relationship with the natural gas company or government entity will be shaped in these beginning stages and many of your potential problems can be averted by having legal counsel. There are also hurdles to be considered and overcome that relate to the Pennsylvania Department Of Environmental Protection (PA DEP). Read the Marcellus Shale Page at the PA DEP website by clicking here.

Legal counsel will negotiate, among other legal concerns: 1. A lump sum “signing bonus,” 2. Amount and payment schedule of ongoing royalties, 3. Clauses to discourage the energy company from misusing or destroying the land (Read this article on point), 4. Receipt of free natural gas or oil products, 5. Payment to compensate for loss of property value as a result of mining/extraction.

Please contact me with any questions regarding the oil and gas lease preparation and negotiation process at either 610-933-8069 or at dkaune@utbf.com. Unruh, Turner, Burke & Frees, P.C. is a full service law firm serving clients in Chester, Montgomery, Delaware, Philadelphia, Berks and Bucks counties. The firm is capable of assisting you with all aspects of of the mineral rights leasing process for properties located throughout the State of Pennsylvania.

Share and Enjoy

I know that the title to this article: “Resources for Building and Protecting Your Estate and Your Estate Plan” is both long (imagine that, a long winded lawyer) and apparently silly.

How do I know that it sounded silly?

This is a suggestion for a resource sent to me by one of my sons when he read the draft of the title-

“Get a battle team then when hordes of marauding lawyers attempt to raid your party you can fight them with karate and such techniques.”

Well Josh, true enough. But I really do have some great resources for the readers that don’t maintain “battle teams.” but who want to avoid financial fraud and marauding hoards of lawyers.

I have always maintained, that an estate plan that focuses only on what happens to your assets when you die is, while important, a boring estate plan and one not likely to be of much help to you and your family while you’re alive.

For that reason, many of the resources and ideas we provide are designed not only to help you with your will and trust, but also to help you to build, protect and to maintain your assets and your lifestyle.

In that vein, I recently came across a new government blog site that seems to have some great information for consumers.

In this installment, I have selected a few resources for you related to avoiding financial fraud.

Just click the links below for more on each topic related to protecting yourself from financial fraud:

Notices and information about types of fraud

Protecting yourself from identity fraud

Protecting Yourself from tax fraud and other types of fraud

How to report fraud

Keep an eye out for more installments of resources to build and protect your assets and your estate plan right now.

David M Frees III is an attorney with law offices in Phoenixville, Malvern, and West Chester Pennsylvania serving the communities of the Main Line as well as the West Chester, Exton, Downingtown and surrounding areas.

Frees is a partner of and Chairs the Trust, Estate, and Wealth Preservation Section of Unruh, Turner, Burke and Frees – Telephone and in person consultations are available by calling 610-933-8069.

Share and Enjoy

Family Limited Partnerships, The IRS, and Your Estate Planning
By: David M. Frees III, Esq.

Many affluent families use family limited partnerships as part of their business succession planning, business continuity plans, and as a legitimate part of estate planning.

Limited partnerships allow a person or family own owns real estate, a family business, or even concentrated positions of publicly traded stock companies to accomplish a number of important things. By using a FLP (Family Limited Partnership) the family can divide the ownership of the company or assets from the management. So, a senior generation can continue to operate the business and mentor the next generation while allowing growth in the value of the company to occur in the children’s names.

The interests in FLPs are easy to divide and different family members can own different fractions of the total asset base or business.

The FLP can help to prevent a dissolution of the company upon the death of a senior family member and can provide for continuity of management.

And, when done properly, and when carefully documented, the FLP structure can result in a diminished value of the gift to children or grandchildren.

FLPs can be used in conjunction with both trusts created during your lifetime, or under a will and can also offer some significant asset protection.

The new York Times recently published a great overview of the pros (some of the benefits mentioned above), the cons (IRS scrutiny for one), and what to do to make sure that the FLP works as intended.

Click here to read this great NY TIMES article on Limited Partnerships and the IRS.

Unruh, Turner, Burke and Frees maintain law offices in Phoenixville, Malvern, and West Chester, Pennsylvania.

Share and Enjoy