Living In A Bubble

I was surprised recently to see an email from the owner of the financial services firm with whom I have been trying to work for years. When I opened it, I discovered he was inquiring about a client we shared. He was questioning the irrevocable trust I had done for the client that allowed the client to serve as trustee. He was further confused by my instruction to the client that the irrevocable trust I entered for him did not need a tax identification number. He asked me if the client understood me properly or whether I had made an error.

My immediate reaction was, wow! Is this guy living in a bubble? To think, someone who owns and manages one of the largest privately owned regional brokerage houses was asking these questions. After regaining my composure, I sent him a reply that not only confirmed our intentions but also outlined the many other advantages of Irrevocable Pure Grantor Trusts. I further indicated that I would be happy to sit down with him and go through the mechanics of how they work and how we use them to not only protect the assets of clients like the one we shared (a 62 year old with $1.5 million in assets), but also for many clients who own businesses and all clients concerned with the cost of long-term care. I also provided my law review article published in 2011, “Irrevocable Pure Grantor Trusts: The Estate Planning Landscape Has Changed.”

It is essential today that, if you are helping individuals concerned about protecting their business or personal assets from general liability or from long-term care costs, you must be intimately familiar with how the iPug™ genre of trusts meets many if not all clients’ needs. In my experience, most clients who come to me for planning have three requests: 1) I want to stay in control of my assets; 2) I want to protect my assets from the government and the cost of long-term care; and 3) I don't want to become a burden to my children. All three goals can easily be met when doing proper planning using an Irrevocable Pure Grantor Trust. Another blind spot for business owners and their financial professionals is the belief that creating an LLC or a corporation protects their assets. While the business owner's personal assets will be protected from the liabilities of the LLC or corporation, the ownership of the LLC or corporation will be at risk to the personal liabilities of the owner (including lawsuits or long-term care costs).

An Irrevocable Pure Grantor Trust is a mechanism that allows business owners to maintain control of their assets and the freedom to continue to develop their business while protecting it not only from the creditors of the business but also the personal liabilities of the business owner. Obviously the best defense is a good offense. Making sure you don’t live in a bubble and are fully aware of how Irrevocable Pure Grantor Trusts are becoming the trust of choice for the 99.8% of Americans who are no longer concerned about Estate Taxes will ensure you a prosperous practice and identify you as a counselor to guide your clients to the solutions that best fit their needs.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder of MPS, Founder and Senior Partner of Estate Planning Law Center