“It’s Tough to Be Better.” Here is a Great Podcast.

I am a big fan of podcasts. They offer the best of new, cutting edge ideas that I might otherwise not stumble across. Among my favorites: The TED Radio Hour.  Click here. The Tim Ferris Show. Click here. RadioLab. Click here.

This past weekend I listened to a Tim Ferris Show podcast with 62-year old trainer / weightlifter Jerzy Gregorek.  Without boring you in this blog post with details of my own observations, I will say Jerzy’s commentary was compelling. I plan to listen again to the entire podcast.  I am also motivated (somewhat officiously?) to suggest that every person I know listen to this podcast.

Jerzy’s comments go well beyond weightlifting. He more broadly touches on the universal notion of what it takes to get better at something, whether weightlifting, exercise, diet, work, or music, and so forth. Jerzy uses the phrase:  Easy Choices-Hard Life;  and Hard Choices-Easy Life.  He also uses the phrase I added to the title of this blog: “It’s tough to be better.”

Here is the link to this podcast:  Click here. It is:  “The Lion of Olympic Weightlifting, 62-Year-Old Jerzy Gregorek (Also Featuring: Naval Ravikant)”.

We all have a tendency in areas of life to get no further than imagining our goals or improvement. In essence, we simply daydream away our present opportunity and never face taking actual steps forward toward goals we truly desire.

Spend some time with this podcast.  I hope you find it also compelling.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You are Not Your Brother’s Keeper. Tax Liens and Joint Ownership of Real Property.

I cringe (figuratively speaking) when I hear of individuals who include friends and ancillary family members as joint owners of real property. Such as joint tenants in common for owning grandmother’s old house, etc.

This is joint ownership of real property with the co-owners each named on the real estate deed.  Such as “John Smith and Jane Doe, as tenants in common.” Or, “John Smith and Jane Doe, jointly with right of survivorship.”

[There are exceptions to my concern in certain cases (i) for married couples as joint owners and (ii) in states with joint “tenancy by the entirety” ownership (Georgia does not recognize tenancy by the entirety).]

Because real estate ownership is governed by publicly-recorded deed and lien records, jointly-owned property is a lightning rod for the other co-owners’ debts, judgments, unpaid income taxes, estate tax liens, etc.

Let’s assume Bill owns Atlanta undeveloped land with his distant nephew Pete. Pete owns 10% with Bill as the other 90% joint owner (joint tenants in common, to be exact). This is undeveloped land that belonged to Bill’s grandparents (Pete’s great-grandparents). Bill and Pete rarely visit the property.  It is merely a long-term, passive asset.

Bill typically remains unfamiliar with nephew Pete’s ongoing financial and tax affairs and has no idea Pete has not been paying his (Pete’s) income tax. Unknown to Bill is that the Georgia Department of Revenue has been racking up recorded unpaid tax liens against Pete (called a recorded Fi-Fa), with Pete’s unpaid tax debt continuing to increase with interest and penalties.

Bill’s 90% share is now on the hook. Although technically Bill is not liable for Pete’s tax liens. Nor is the value of Bill’s 90% portion of the land technically available to satisfy Pete’s liens. The reality for Bill is that the entire land is burdened by Pete’s tax liens.

On the other hand, Pete essentially has no concerns about his unpaid taxes or these liens. Pete, 27 years old, works part-time, has no money, etc.

Bill’s unfortunate reality is that no buyer will touch this land until Bill clears these tax liens. The Georgia Department of Revenue also has been  consistent with extending the duration of its recorded tax liens (called an “entry of nulla bona”).

Bill’s land over the years has increased in value. This results in Pete’s 10% share also increasing in value to the extent Georgia will likely demand its full claim for the unpaid taxes, penalties and interest in order to release the liens. These surmounting Georgia penalties and interest have transformed what started as nominal unpaid tax amounts into substantial issues. Bill has a costly problem.

The moral of this blog post.

Don’t — without thoughtful deliberation — become your brother’s keeper. Talk to your lawyer first about co-ownership of property. Possibly use an LLC. Or, a recorded written joint property agreement that allows a co-owner to charge the other owner’s portion of the property for these kinds of liens. Good legal advice is also an investment in tranquility.

Preventive Planning and Jazz Guitar

Bear with me. There is a connection in this blog post between my reference to preventive planning and jazz guitar. I use the term “preventive planning” in reference generally to estate and asset-protection planning.

The top 1-percent. A roster of high net-worth clients is a badge of honor among estate and asset-protection planning lawyers. A plume signifying success, financial reward, larger law firm profits, etc. The work is high-end, interesting, technically challenging, and typically underpins the ever-increasing hourly lawyer rates for this market segment. I am fortunate to have a small share of these top 1-percent clients. But, I also have many clients in my own group.  That is, the other 99-percent of us.

A focus narrowly only on the top 1-percent fails to address how important it is for our remaining 99% group to address preventive planning. Most current marketing efforts (and the bulk of related articles, commentaries) for estate planning and asset-protection continue to address options for the top 1-percent group. I find few discussions of what we (and our families) — in the bottom 99-percent — ideally need for excellent, cost-effective preventive planning.

The probable absence of estate tax liability for most of us in this 99-percent group also helps push this preventive planning to an even lower place on our “to-do” list. No pressure. No rush. Do it later.

This next point is for our 99-percent group.

One of my high-priority, personal goals is to prevent me and my family from wasting valuable time due to problems caused by lack of planning, outdated, flawed or missing documents, failure of estate planning, absence of asset-protection, etc. Coupled with this threat of lost time, I prefer my family not expend their financial resources on lawyer fees to clean up an oversight or mess I might leave for my wife and kids.

Now, why jazz guitar? I have played guitar since college and presently take improvisational jazz guitar lessons. I am committed to squeezing in 45 minutes of evening practice each day, as though it also is a job. I guard this 45-minute time-slot zealously.

I would be extremely perturbed if issues were to arise from a lack of planning, etc., that steal away my (and my family’s) valuable time. But, I have my preventive planning in place. And it gives me great comfort knowing my family and I will not lose time in dealing with problems, etc. We also will likely not incur substantial lawyer fees to fend off and resolve future problems.

But, bottom line for this post, I am far more concerned about wasted time than money (for fees, etc.). One can always make more money. But, can never get back lost time.

 

This Just Hit Me. Re Estate Planning

I grapple with how much information a client needs to read and consider when putting into place core estate planning.  The complex tax and non-tax laws — and how these laws affect a family and estate planning — have made this entire area almost unbearable for busy clients.  Most simply cannot easily take the time to deal with this right now.

I don’t want to overwhelm a client, but do strive constantly to have my clients end up with a good grasp of the fundamental design of their planning, and their key options.

This points to there being  no simple, easy approach to good estate planning. Choices and options are a necessary evil.  And, require time and thought.

Here is what hit me.  For clients who never take the time to deal with their estate planning, the choices and options do not simply disappear.  Instead, often the continuing need to address these items becomes centered under court-oversight, including potentially contentious litigation.

With the clients failing to deal with these choices and options, you now have opposing family members (fueled by in-laws) fighting to elbow in their own personal choice and options.  The court becomes essentially the forum.   A costly forum.

The potentially expensive court-option is why, as I stated in my last post, lawyers will still benefit financially at the expense of the client’s family in the absence of planning.

Do your family a favor, seriously.   Don’t make your family help line lawyers’ pockets.

Estate Planning. Give this PDF Memo to Your Clients

For many people the topic of estate planning is very low on the list of priorities. This is understandable. Estate planning is, by analogy, like flossing. We hear the admonitions to floss (or to get our estate planning in order), but who really buys into these pleas?

I also find surprising the number of families who end up later with no choice but to pay large legal (and litigation) fees to deal with an abundance of problems. Problems — both tax and non-tax — arising from aging, incapacity, and death.  Problems in many cases avoidable.

Lawyers reap the financial benefit of this family expense. Virtually a captive market.   The hourly fee clock ticks on, almost perpetually.

So, in line with my persistent efforts to highlight the need for estate planning (and asset protection planning), primarily for preventive purposes, here is a memo that might help you, your friends, and clients get moving on this task. Click here for my memo.

 

I Need to Practice What I Preach

IRA Beneficiary Designations —

Backdrop for this post is that we lawyers typically take great care of our clients, but due to time-limits, fatigue, family, etc., tend to disregard our own personal affairs.   I candidly state that most evenings I look at my personal in-box as I am about to leave my office and sigh with a routine “I will take care of that later .   .   .”.    The problem is my client work constantly displaces this personal “later”.

The point of this post is that I recently rolled over my 401(k) plan into an IRA.  As part of the roll-over process the new IRA custodian sent me various papers, emails, and contacted me with a few phone calls as part of the process.

A month later (yesterday) I finally looked at my to-do list about the IRA account beneficiary designation and realized I had no designation in place.   I quickly prepared a new IRA beneficiary designation with my wife as primary beneficiary, kids as secondary beneficiaries.

Without going into the income tax horror that would have resulted if I had died without this designation in place, let’s just say it would have been stupidly very costly to my family.

The point of this post:

Stop what you are doing now and verify (with a call or email to your retirement account custodian) and make sure your beneficiary designation is up to date. Yes, right at this moment. No delay.

 

 

 

 

 

 

 

 

 

Recent Georgia Trust Law Proposals

Georgia has some excellent, pending trust law proposals on the table. The essence of these proposals is an expansion of flexibility for modifying and changing trust documents.  Also included are new trust decanting provisions and an extension of the Georgia rule of perpetuities period to 360 years (currently 90 years).

Click here for a pdf copy of the proposals (dated December 13, 2016).

This blog post is not for the purpose of merely summarizing the proposals.  Rather, below are a few of my initial observations (point Four is the take-away point):

One.  I have for many years been a fan of designing as much flexibility within a trust document as possible, making sure the flexibility is consistent the client’s preferences.

Two.  Flexibility can affect significantly the down-the-road tax savings options and asset protection features of the trust document.

Three.  In the past, generally, the only way a client could obtain this flexibility was with inclusion of built-in, adaptive written provisions within the trust document, prior to most states changing their trust law to allow more flexibility.

Four.  My key point is that clients must keep a very close eye on who — under these new Georgia proposals — ends up holding this flexibility and how does the flexibility positively or negatively affect the client’s wishes for the design and structure of the trust document (assuming these Georgia proposal are inacted).

In other words, clients (and their advisors) will need to think about whether they wish to limit or restrict any of these state-law provisions.

Overall, however, I believe these pending proposals are an improvement of the Georgia trust law and can be applauded.