PLANNING, PROTECTION, CONTROL DURING CRISIS, AND PRIVACY

 Many people wait to plan for emergencies and their own estates.  They 
 want to avoid the thoughts of medical distress, long term care, or 
 eventual demise.

 To avoid to plan is to leave all issues in the hands of the courts, and allows 
 for family disputes, problems, personal agendas, and public disclosure.

 Most people start planning with a will, thinking that is the most important 
 solution to estate planning.  The problem is that a will does nothing while 
 you are alive, and is easily contested upon death.  It would be better if it 
 was called a "want", as it is what you "want" to happen, instead of what 
 the courts and others end up determining.

 On the other hand, a revocable trust will actually be effective upon your 
 making it irrevocable, either by statement, or by your death.

 It's important to make it irrevocable to gain asset protection status.  The 
 fear for most people is that they may possibly want to cancel the trust and 
 would be prevented from doing so.  Then again, "Why would you want to 
 cancel the asset protection?"  Since you can give the Trustee any powers to 
 do virtually anything, it's possible to include provisions to eliminate any 
 reason to cancel the trust.  The sample trusts we provide in our FORMS 
 section have good provisions that can optionally be part of your trust.  Be 
 sure to consult a professional for the latest court tested language.


 PROTECTION

 You can pre-plan your own lawsuit protection prior to any crisis, such as 
 health problems, divorce, lawsuit, bankruptcy, or other private situations.

 The key here is to pre-plan.  Nothing works very well after the crisis starts.  
 In fact, protection against medical disasters must be done at least 30 months 
 in advance to be effective in most states.

 If you protect the assets before problems in life appear, you can completely 
 avoid many legal problems, especially costs and delays in control.


 A BASIC OWNERSHIP DECISION
 
 Every person or group of persons planning to own assets must make a 
 basic decision at the outset.  This decision will determine such things 
 as the benefits to be enjoyed, the risks to be assumed and shared, the 
 problems to be avoided or created, and much more, including the treatment 
 of your assets for estate purposes.  This decision concerns your selected 
 type of ownership, and it should not be made quickly or taken lightly.
 
 There are many forms of ownership, as well as numerous variants. 

 The first, and by far the most numerous, is the individual or Sole Proprietor.  
 According to the 2005 Annual Report of the Internal Revenue Service, there 
 were some 5,704,000 individual business (or Sole Proprietor) tax returns 
 filed for 2004.  

 The next most common recognized form of business is the Corporation.  
 Many tax returns were filed for corporations in the United States.  Of those, 
 about half were for small businesses.  A LLC is very similar.  A third form 
 of business organization is the Partnership. 
 
 The above three forms of ownership, the Sole Proprietor, the Corporation, 
 and the Partnership, are widely recognized and widely used by the business 
 community, their accountants, their attorneys, and their consultants.  But 
 there is a fourth form of ownership that is also widely used, but is not 
 as well known among business professionals: the Trust.  In 2004, some 
 2,876,000 trusts were registered in the United States; not to mention it 
 is NOT required to register a trust.
 
 As a form of ownership, Trusts are not unusual.  For the average individual, 
 they used to be too expensive or complex.  Now, with proper forms and 
 support, this has all changed.

 
 WHAT IS A TRUST?
 
 To state it in the simplest terms, "A trust is a right of property, real or 
 personal, held by one party for the benefit of another."
  
 A trust, then is a Contract in which an individual (variously called the 
 Settlor, Creator, Trustor, or Grantor) transfers property, either real or 
 personal, to one or more Trusts (or Trustees), to be held or managed 
 for one or more Beneficiaries.
 
 There are many types of trusts in use today for a variety of purposes.  
 We cannot examine them all, but the primary ones to consider are the 
 "revocable" and the "irrevocable". 

 
 WHAT IS A REVOCABLE TRUST?
 
 The easiest type of trust is the Revocable Trust.  Many similar titles are 
 used to mean the same type of trust.  Some of these are:
               Revocable Trust, usually meaning exactly the same as:
               Family Trust... or 
               Living Trust... ("intervivos" in Latin) or
               Living Revocable Trust... or
               Living Revocable Family Trust
          (or a combination of the same words in different order)

 As we stated above, "A trust is a right of property, real or personal, held 
 by one party for the benefit of another." or, more exactly, a trust becomes 
 the owner of your property instead of you, but; remains under your control 
 (you are the Trustee); for the benefit of your family.  In other words, you 
 still keep control and use, but designate the eventual ownership, after you 
 can't own it anymore.


 WHAT IS A IRREVOCABLE TRUST?

 Basically there is all of the above mentioned characteristics AND there is 
 separation of ownership (alienation of ownership) into a different entity.  
 For instance, the children could be the beneficiaries and if there was true 
 separation of assets to this new entity and no "ownership rights" of the 
 parents, it would be considered different than the assets of the parents.

 LIABILITY PROTECTION.  The proper design and use of a Trust will provide 
 a high degree of professional liability protection.  It is a fact established 
 at law that "The beneficiary of an ordinary trust is not personally liable 
 to third persons for torts committed by the trustee."  Furthermore, the 
 assets of a Trust are exempt (in the absence of a fraudulent conveyance 
 within one (1) year prior to a bankruptcy) from the claims and actions of 
 personal creditors.
 
 SOLE PROPRIETORS AND PARTNERSHIPS.  These two forms of business 
 basically represent individuals in business for themselves with little 
 or no protection, organization, or benefits.  
 
 CORPORATIONS.  A popular form of business organization among 
 professionals such as physicians, dentists, chiropractors, attorneys, 
 CPAs., insurance brokers/agents, and other professionals is the 
 Professional Service Corporation.  These are usually small to medium 
 sized businesses and are usually closely held (i.e., no publicly offered 
 shares).  We could include in this group many other small-to-medium 
 size professional corporations such as Sub-Chapter S corporations, 
 that are closely held.  

 In terms of professional liability protection, estate planning, and tax 
 management, this form of business organization offers some limited 
 benefits.  


 THE IMPORTANCE OF YOUR PRIVACY
 
 How important is your privacy?  How important is it that your privacy be 
 well organized to offer the best protection (from liability, harassment, 
 judgments, etc.) and the greatest benefits?

 Your personal efforts, assets, and estate, represents the work and 
 accumulation of a lifetime.  If you are going to spend a lifetime building 
 ownership and equity (and accumulation of an estate); protecting and 
 preserving that accomplishment with proper privacy and estate 
 planning will be one of your highest financial successes.