Next Asset Protection Society Meeting

The next meeting of the Asset Protection society in Orange County will be on Tuesday, September 22 at 7:00 PM. The speaker will be David Shaver of Ferruzzo and Ferruzzo, LLP. David Shaver's bio can be found here: ( http://www.ferruzzo.com/staff/dshaver.asp ). David is the partner in the firm that handles all of our trust, estate, and fiduciary litigation and he will be speaking to the CPA's, Financial advisors, and any other advisor who regularly works with trustees and others who are in fiduciary roles such as these about common mistakes that people in these positions make that generate liability not only for the trust, estate, or other entity, but also for the person individually and possibly for the other advisors.

If you advise fiduciaries, trustees, executors, administrators, conservators, guardians, or anyone else who has these increased duties, then you will not want to miss this presentation. Individuals who are acting in these capacities for family members may also want to attend as there will be a time for questions and answers on what they should and should not be doing in these roles. If you are interested in attending, please feel free to contact me at mziebold@ferruzzo.com to RSVP for this event.

Speaking at NBI Seminar in Irvine on December 9, 2009

I have been asked to speak at a continuing education event on December 9, 2009, in Irvine, California on the Top Ten Estate Planning Techniques. This is held by National Business Institute (www.nbi-sems.com) and it should be a good event. I will be speaking on Charitable Giving and Grantor Retained Annuity Trusts. More information on this event will be published later as I am told where it will be held.

Other websites

Some people have asked where they can find out more information about my background and other things about me. You can find more information on these websites:

http://www.ferruzzo.com/staff/mziebold.asp

http://www.linkedin.com/in/markziebold

http://www.avvo.com/attorneys/92660-ca-mark-ziebold-119392.html

http://twitter.com/markziebold

http://www.naymz.com/search/mark/ziebold/1800194

http://lawyers.justia.com/lawyer/mark-allen-ziebold-79731/

That should get you started if you are wondering if I would be a good fit to work with on your tax or estate planning matter.

3rd meeting of the Orange County chapter of the Asset Protection Society

Tomorrow evening at my office we are hosting the third meeting of the Orange County Asset Protection Society chapter. If you are interested in attending or would like to find out more about our meetings feel free to contact me at mziebold@ferruzzo.com

Different uses for Life Insurance and Life Insurance Trusts

I had an interesting discussion with a client the other day about using life insurance for different planning techniques that you would normally perform with a different planning vehicle. For example, many of my clients retain my Firm to create private foundations or public charities so that they can govern the use of those contributed funds and obtain an income tax deduction. Many people use private foundations to accomplish this but then later shut them down when they realize how many rules there are from the IRS and how they are limited in running the organization. This specific client decided that the deduction was not the main goal, but to create a vehicle that could be used for many years by family members to facilitate gifting to other charities.

Based on this idea, we started discussing how an Irrevocable Life Insurance Trust would fulfill these goals, and at the end of the discussion the client said that of the two options where he or his family would retain full control over the assets within the trust, he was leaning towards using an ILIT instead of a private foundation. If the drafting attorney spends some time developing appropriate trustee provisions and ways for other family members to get involved (as co-trustees or on an advisory committee), you can do much of the same things with the proceeds of the life insurance trust (just without the income tax deduction).

If a client decides to be extremely creative, in many situations I will recommend that they consider using a properly drafted ILIT to further those goals or to be the main vehicle to fulfill them. Think about using Life Insurance to create a foundation type organization that is not subject to the rules of private foundations (but not free from tax), planning for death taxes in the traditional ways, using cash value in an ILIT to purchase assets from an estate (best for rapidly appreciating assets), Using insurance to fund a Health and/or educational trust in a jurisdiction like Delaware with a long rule against perpetuities so that the funds will always be available for the purposes in which you set them up for.

The client left my office with a new understanding that insurance is not just for the protection of your family anymore, but it is also a very cost effective way of leaving a legacy for yourself or your family in one or more different ways.

California State Tax Treatment of Ponzi Schemes

Today's release by the Franchise Tax Board:

Date: March 27, 2009

Subject: Franchise Tax Board News Release
tel 916.845.4800 | Public Affairs Office
cell 916.416.6931 | Brenda Voet
Brenda.Voet@ftb.ca.gov
For Immediate Release

03.27.2009

FTB Offers Tax Guidance for Ponzi Scheme Victims
Sacramento - The Franchise Tax Board (FTB) today offered guidance on theft-loss deductions for California taxpayers who had losses from investment schemes.

“Tax remedies are available for victims of Ponzi schemes,” said State Controller and FTB Chair John Chiang.

State and Federal law allow taxpayers to deduct some uncompensated losses on their tax returns. A recent IRS ruling, Revenue Ruling 2009-9, clarifies the treatment of losses from investment schemes, including the nature of such losses (theft losses), the amount of such losses to be allowed, and the year of deductibility. The IRS also plans to follow a new procedure, Revenue Procedure 2009-20, which provides an optional “safe-harbor” for determining the year in which the losses occurred and a simplified method of computing the amount of the loss. A “safe-harbor” allows taxpayers to avoid later IRS challenges.

California will follow this guidance, and FTB will accept the form provided in Appendix A to Revenue Procedure 2009-20for those taxpayers who choose to participate in the safe harbor provision for California purposes. However, a taxpayer that takes advantage of the safe harbor for federal purposes is not required to do so for California purposes.

State law differs from the Federal law in two key areas. In these areas, State law controls:

· Statute of limitations for filing a claim for refund.
· Deductibility of net operating loss (NOL) carryforwards or carrybacks. (NOL carryforwards are suspended for most taxpayers for 2008 and 2009. Carrybacks are allowable but only for NOLs attributable to 2011 or later.)

FTB will soon offer more detail on the differences in a FTB Taxpayer Notice. Interested taxpayers should check FTB’s website at ftb.ca.gov for updates.

It looks like California will also be giving tax relief to those who are victims of fraudulent Ponzi Schemes. I will update everyone once the Franchise Tax Board offers more details on their treatment.

Introduction to the Asset Protection Society

For those of you who are looking for additional information on asset protection, let me suggest the following resource. The website for the Asset Protection Society is: www.assetprotectionsociety.org . Once a potential client takes the time to review the depth of material on the website, they generally come away with some information that they do not know before visitng the website. From asset protection statutes in the various states to ratings of local advisors who practice in this field, it is a great resource to both the individual and professional.

For Orange County, we are planning the second local Asset Protection Society meeting and details will soon be mentioned on this blog. If you are an individual who would like to hear more about these topics and discuss issues with advisors in a friendly setting, feel free to email me and I will give you information on the meeting.