Monthly Archives: November 2012

If I Had a Million Dollars: More (Estate) Money Than You Knew


If I Had a Million Dollars: More (Estate) Money Than You Knew

This morning I explained to someone how a credit shelter trust works (the complicated-sounding structures I wrote about yesterday on my blog). He said, “that’s great, if only I had a million dollars in the first place.” By the time we ended up counting all of the assets in his estate plan, including life insurance, he found that he had more than he knew. Not money he could spend today, but money that (if still in his estate) will go to his heirs at some point. Or the government, if he doesn’t plan well. The only question is when, and hopefully later rather than sooner.

Whether or not you believe that you have a considerable estate, after speaking with an estate planning attorney or financial professional or simply tallying your assets on your own, you may be surprised to find that you have more than you imagined. You don’t need to feel “rich” to have a taxable estate; you only need to have enough to exceed the exemption amounts.

An “estate” for estate tax purposes comprises all of your assets, including:

- real property (such as your house, vacation home or time share – 1/2 if owned jointly and equally with spouse or another individual),

- personal property (cars, furniture, antiques and other property),

- bank and investment accounts,

- retirement accounts (401k, 403b, Roth IRA, etc.),

- stocks, bonds and other securities,

- monies owed to you (including salary and bonuses),

- your portion of any closely-held business, and

- any life insurance you own.

Taking five to ten minutes to assess your estate, five to ten hours to work with a lawyer and five to ten weeks to put something in place may save you more than five to ten thousand dollars in estate taxes. It could potentially save you five to ten hundred thousand dollars or more, especially if your estate grows over time. Money you didn’t think you even had (to pass on). It all depends on how those nickels, quarters and dollars add up.

Anne Marie Segal is admitted to practice law in New York and Connecticut. She provides legal counsel to businesses and individuals at Law Office of Anne Marie Segal. Please visit her website at www.amscounsel.com for more information. None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.

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Formula and Disclaimer Bypass Trusts Explained

As you may know, unless Congress acts, as of January 1, 2013 the federal estate tax exemption amount is scheduled to drop from $5.12 million to $1 million, and the maximum tax rate will increase from 35% to 55%. In addition, New York and Connecticut each levy state estate taxes on estates over $1 million and $2 million, respectively.

Formula and disclaimer bypass trusts are irrevocable trusts used by married couples to minimize estate taxes on their combined estates. These credit shelter trusts work by channeling the assets into a trust for beneficiaries, such as the couple’s children or other family members.

Either type of trust may be a useful component of your estate plan, depending on your needs and goals. As with any planning, there are advantages and disadvantages to consider, as discussed below.

For the full memorandum, click on the link: Disclaimer and Bypass Trusts Explained

Anne Marie Segal is admitted to practice law in New York and Connecticut. She provides legal counsel to businesses and individuals at Law Office of Anne Marie Segal. Please visit her website at www.amscounsel.com for more information. None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.

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All I Want for Christmas is an Estate Plan

It’s too early to start talking about Christmas. I know and agree. But I’m going to do it anyway.

Before you run out and spend all your Christmas cash, take a step back…. What would really make a difference for your health, wealth and well-being? If an estate plan has been on your to-do-list for far too long, how about moving it up the queue?

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Confidentiality a.k.a. Non-Disclosure Agreements: What Type of Lawyer Do You Need?

A confidentiality agreement, also known as a non-disclosure agreement or NDA, is often the first step in a business transaction or employment relationship that involves sensitive information. In its simplest form, an NDA is an agreement by one or both parties (often called the “discloser” and “recipient” as applicable) not to disclose confidential information received from the other party to the agreement. In some cases, NDAs are more broad and include, for example, language that one party will not circumvent the other party in a transaction, solicit its employees or steal its trade secrets.

NDAs often have highly-technical legal language like the following (translation into plain English below):

“In consideration of your involvement in a possible transaction (the “Transaction”) relating to [Name of Company] (collectively, with their respective subsidiaries, the “Company” or “we” or “us”), the Company is prepared to make available to you certain information concerning the business, financial condition, operations, assets and liabilities of the Company, including information which may be non‑public, confidential or proprietary in nature. As a condition to such information being furnished to you and your Representatives (as hereinafter defined), you agree to treat any information (whether prepared by the Company or its representatives or otherwise and irrespective of the form of communication (i.e., whether written or oral)) which has been or is furnished to you or to your Representatives already or in the future by or on behalf of the Company (collectively, the “Information”) in accordance with the provisions of this agreement (this “Agreement”), and to take or abstain from taking certain other actions as hereinafter set forth.” 

The above paragraph essentially means, with some nuances, that, “if we give you certain information, you will comply with this agreement.”

NDAs are generally short documents, from one to five pages or more depending on the size, industry and inclination of the parties, the jurisdiction governing the agreement and the nature of the information being disclosed. In most instances, negotiations are and should be judicious and prompt so that, once agreement is reached, the business deal, investment or relationship can go forward as intended. Sometimes, however, negotiations take weeks or months because the parties do not see eye-to-eye on the major points, one party has unreasonable demands or a well-meaning but incompetent attorney bungles the process. Unfortunately, legal ineptness in the field of NDAs is more common than one might imagine, since lawyers often fall in love with the negotiation process and a preferred “turn of phrase” rather than maintain the proper perspective that the NDA is simply an appetizer to the main course.

An experienced and skillful NDA attorney knows how to cut through the words on the page and drill down to the significant point for a particular client. An incompetent one simply works from a form or (worse) hampers the process by not understanding, knowing or caring about each party’s leverage and how to negotiate significant issues. Bad lawyering not only slows the NDA negotiation process but makes the business people (who retained the lawyer) appear inexperienced and unable to see the big picture. In the worst case scenario, it can lead to opportunities being missed or business relationships being strained or severed.

Finding the right attorney to negotiate NDAs for your firm can be a challenge. They are often short and straightforward agreements that do not require major legal “firepower”, yet they require close attention by a careful reader so that nothing is unnecessarily given away in the process. One example that is common in form NDAs is that a discloser attempts to make all information shared under the agreement confidential, whether or not such information is related to another company, covered by another agreement (such as one with a third party, which may have different or conflicting provisions) or already possessed by the recipient. Another common provision states that the recipient cannot share the information received with other parties to a transaction (including, for example, joint investors, lenders or advisers), which language may be buried in the small print on a back page but nonetheless binding unless revised.

While lawsuits involving NDAs are relatively rare, it is better to have the “insurance” of a proper drafted document than take the risk of costly disputes and/or threats down the road. In addition, in many cases NDAs with the larger companies are “take it or leave it” documents, so it pays to know in plain English what you are signing.

Law Office of Anne Marie Segal is available to direct or advise on your NDA negotiations under New York or Connecticut law on a fixed, hourly or retainer basis. Alternatively, you may wish to schedule an introductory session or “tune up” for your own legal team and/or business professionals, such as one or more sessions covering the major issues that often arise in these agreements and how to streamline your internal review process.

Ms. Segal negotiated several hundred NDAs across a variety of industries for a prominent Connecticut hedge and private equity fund and its operating companies in her role as Deputy General Counsel at the firm. In May 2012 she returned to private practice and launched a sole proprietorship devoted to business law and estate planning, with an emphasis on working with clients to achieve their goals rather than coming to the table with a “lawyer’s agenda”. 

Please visit www.amscounsel.com for more information. None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.

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