Check out our June edition!
405-843-6100 | 918-615-2700 | ParmanLaw.com June 2023
Can an LLC Secure Your Estate? Discover the Financial Benefits of LLCs
Clients and friends …
Estate planning is about asset protection. The only question is how much you want to protect your assets. From probate? To ensure someone is authorized to provide care if you are incapacitated? From estate tax? From nursing home costs? From creditors and expensive, time-consuming lawsuits? What is asset protection? It is the science of avoiding costly court interference, minimizing or eliminating taxes, and making your assets less attractive and less available to creditors and creditor attorneys. What are the goals of asset protection? • Transfer our assets to loved ones with the least possible court interference. • Avoid paying taxes we are not obligated to pay. • Protect assets from being taken by the nursing home. • Settle a claim or lawsuit for as little as possible, and … • Protect our assets if an aggressive creditor sues us. We want to both avoid the lawsuit and, if not, then settle the claim as quickly as possible. We typically focus on avoiding probate, eliminating estate tax exposure, and minimizing the “spend-down” of our assets when we enter a nursing home. Today, I want to discuss the use of a limited liability company (LLC) as a high-level asset protection strategy. LLCs were first used in Europe (as were trusts) — in fact, as early as 1897 in Germany. The LLC concept arrived on U.S. shores in 1977 when Wyoming passed the first LLC statute. Now, every state has an LLC statute. What’s so special about an LLC, specifically a Single-Member LLC (“SMLLC”)? It is a unique form of a corporation. However, it differs significantly from a regular C or S corporation. How? With a regular corporation, there is no protection of that entity, or its assets, from an outside judgment creditor. For the owner of a regular corporation to receive “limited liability” protection, they must follow statutory corporate formalities or be subject to a creditor “piercing the corporate veil.” SMLLCs do not have to follow statutory “formalities” to provide limited liability. Creditors of a regular corporation can seize the owner’s entire corporate ownership interest (the stock). SMLLCs can limit a creditor’s reach to just SMLLC’s distributions — and not to SMLLC management. This is a powerful distinction, one that offers leverage for settlement with the creditor.
When SMLLCs own valuable assets, it puts a layer of protection between the assets and personal claims against the owner. If the SMLLC owns a small business, it puts a layer of protection between the owner and their business debts and liabilities. SMLLCs can be used to break businesses into sections and gain layers of protection between the sections — business vehicles, business office buildings, business equipment, business debts, and so forth. SMLLCs can also be used to own shares in a partnership or a multi-member LLC, adding a layer of protection between you personally and the entity’s debts, liabilities, and obligations. Also, a number of you own life insurance policies. Many of those policies have been in place for several years. Insurance policies are like any other investment vehicle. They should be reviewed regularly. Why? Because changes in product offerings and mortality tables may offer unknown and undiscovered opportunities. For example, a number of our clients have secured more coverage for the same amount of premium. Others have been able to restructure the cash value in the policy so they have a paid-up policy. The point is: Companies are often willing to restructure the policy to more closely meet your current needs. As part of our holistic approach to your estate and financial planning, we are happy to
review your policies and help identify possible opportunities to improve your coverage. If this is something you would like to discuss, please call the office to set your complimentary appointment.
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Break the Ice on Estate Planning How to Start a Family Conversation About the Future
So, how do you start that potentially uncomfortable conversation? Begin by choosing the right moment. Ideally, you should talk in person, but don’t disrupt a holiday or special occasion with the topic. A phone call can work for faraway relatives who rarely meet in person, but chatting via text is unlikely to go well. You might begin the conversation by bringing up a recent news item, but it’s also okay to say, “I’ve been working on my estate plan, and I’d like to share some of the details with you.” Remember that your loved ones will likely be surprised and uncomfortable when you raise the topic. They might try to change the subject or deflect by stating you have a long life ahead. It’s a defense mechanism to avoid thinking about losing a loved one. Talk initially in broad strokes; the details of your trust and how you’ll minimize tax consequences are too much to start. Explain why you have created an estate plan, what you aim to accomplish, and why you think it’s important to discuss. Then, ask for their input or if they have any concerns they’d like to raise. If things get too emotional, take a break and return to the topic later. No estate planning conversation should be one-and-done. Your assets, wishes, and the makeup of your family may change over the years. Try normalizing talking about estate planning periodically; it will feel less daunting. These conversations usually feel uncomfortable initially, but they’ll eventually strengthen your relationships and help you and the people you love better understand each other. You owe it to your family to share your wishes, clarify your intentions, and prevent future heartache. Talking about your estate plan is an unconventional but necessary act of love.
Estate planning is a delicate subject. It stirs up feelings about our mortality, raises questions of fairness, and can open old family wounds. In large part, to avoid this discomfort, countless people choose not to make an estate plan. Even fewer decide to discuss the matter with their loved ones. Keeping quiet on the subject usually feels easier, but it’s a mistake with lasting consequences. While few people look forward to these conversations, having them before anything happens to you is best. When emotions run high, people can make poor decisions and say things they regret. In an outcome no one wants, families can fracture due to fights over estates after a loved one’s death. Further, you probably want to use your assets to benefit family members fairly after your death. But what you and your family members consider fair may be very different. For example, you may learn that one family member doesn’t want a particular asset or that a property means more to one child than another. Dividing your assets is ultimately up to you — but if your goal is to leave your loved ones better off, it’s worth listening to what they say.
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SPECIAL NEEDS TRUST CREATES OPTIONS Safeguard Assets for Family Members With Disabilities We create estate plans to protect our loved ones, and family members with disabilities are often most susceptible to financial difficulty. But safeguarding their futures is not always as simple as leaving a lump sum behind. An improperly structured estate can ultimately harm your loved one more than it helps, but a special needs trust will support and improve their lives. Many people with disabilities in the U.S. receive government assistance. But programs like Supplemental Security Income (SSI) or Medicaid have strict eligibility requirements. For example, an SSI recipient cannot own more than $2,000 in assets. Therefore, even relatively small gifts can affect their qualification for benefits.
by Darlene Parman MARGIE’S KITCHEN: GARLIC GRITS
As you may know, my parents (Margie and Harold) loved nothing more than to indulge in a bit of cooking (okay, okay, let’s be honest, mom indulged in the cooking, and dad indulged in the eating!) for family and loved ones. And since Easter was not too long ago, as of writing this, I was reminiscing on how Margie’s go-to brunch for any holiday was egg casserole, garlic grits, and fruit. She believed garlic grits were the perfect complement to any breakfast (it’s a Southern thing!). So, I hope you enjoy adding this Southern classic side dish to many brunches to come with your family and friends!
Ingredients
A special needs trust holds funds for your loved one without impacting their eligibility for government programs. A person can fund the trust with as many or as few cash or property assets as they’d like. A special needs trust will grant your family member additional resources without restricting their access to otherwise costly support services, medical care, or housing. Under a special needs trust, your loved one with a disability is a beneficiary, and they will not have direct access to the trust. You must also designate a trustee, a third party who controls and distributes the funds. Depending on your situation and preferences, the trustee can be a trusted family member or a third-party paid administrator. The trustee cannot give cash directly to the beneficiary but can use the assets to purchase items and services to improve their quality of life. Many people use special needs trusts for out-of-pocket medical expenses, a home, bills, or recreation. A special needs trust can even fund a vacation for your loved one! Ultimately, the trustee has fiduciary responsibility and is legally obligated to act in the beneficiary’s best interests. Special needs trusts can be complicated, and people making their estate plans have options between multiple types of trusts. A mistake can cost a loved one dearly, so it’s always wise to speak to an experienced estate planning attorney to understand your options. They can confirm a special needs trust fits your goals and will draft all necessary documents correctly to ensure your wishes are fulfilled.
• 2 cups of shredded sharp cheddar cheese or 1 roll of garlic cheese (Garlic Roll is very difficult to find anymore)
• 1 cup grits
• 4 cups water
• 1/4 tsp salt
• 1 stick butter
• 2 cloves of garlic, finely minced
• 2 eggs, slightly beaten
• Dash of Tabasco sauce
Directions 1. Preheat oven to 350 F. Cook grits according to directions. Stir butter and cheese into hot grits. Add garlic, salt, tempered eggs, and a dash of Tabasco. Place in a greased 2-quart casserole dish. Bake uncovered for 45–60 minutes or until lightly browned and set. 2. For a spicy change, use pepper jack cheese and add one 4-oz can of drained green chilies to the mixture.
3. For a breakfast change, add eight strips of crisp, crumbled bacon.
If you have a recipe you’d like us to share in Margie’s Kitchen, please mail it to us or email it to info@parmanlaw.com. We’ll feature it in our newsletter or on our website!
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Oklahoma City: 405-843-6100 Tulsa: 918-615-2700 Parmanlaw.com
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INSIDE THIS ISSUE
How Can You Protect Your Assets?
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Discussing Your Estate Plan With Family 101
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Margie’s Kitchen: Garlic Grits
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Special Needs Trust Creates Options
The History of the Statue of Liberty’s Arrival
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Behind the Landmark’s Journey to US Shores Lady Liberty Lands in America
for the statue because he imagined the figure welcoming people to America. Intended as a gift for the United States’ 100 years of independence in 1876, construction did not begin until that year due to funding issues. Even with the help of engineer Gustave Eiffel of Eiffel Tower fame, the project was a massive undertaking that took years for workers to complete. Titling it the Statue of Liberty Enlightening the World, its creators presented the finished monument to the U.S. Minister to France on Independence Day 1884, then disassembled it for shipping. On June 17, 1885, France’s gift arrived in more than 200 cases. But unfortunately, the United States wasn’t ready. Again facing a budget shortfall, the U.S. had not yet completed the pedestal to support the statue. When workers finally finished that last piece in 1886, a construction crew of mostly new immigrants reassembled the monument. Lady Liberty debuted to the public on Oct. 28, 1886, and she was an instant hit. Originally shiny like a new penny, the copper statue took less than 20 years to oxidize from the elements and gain the distinctive green hue it has today. Despite her French origins, the Statue of Liberty is now as American as apple pie, and her unmistakable image continues to represent the country’s values of freedom for all.
It’s hard to imagine the United States without its most iconic landmark, but the Statue of Liberty didn’t arrive on our shores until more than 100 years after the American Revolution ended. The torch-bearing monument so closely associated with our nation finally reached its home in the U.S. in May 1885 — but it arrived unceremoniously in 350 pieces.
Contrary to widespread assumption, the Statue of Liberty did not celebrate America’s founding. Edouard de Laboulaye was a French anti-slavery advocate who wanted to give the country a statue representing freedom as the Civil War ended. He conceived of the sculpture in 1865 to mark the recent abolition of slavery. Laboulaye and sculptor Auguste Bartholdi decided on Lady Liberty because she was a familiar icon in U.S. culture, and a similar image appeared on American currency. Though invisible from most viewing angles, the statue has a broken shackle by her feet, representing a move toward freedom.
Bartholdi chose Bedloe’s Island, now known as Liberty Island, as the ideal site
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