Asset Protection Planning Should Have a Multi-Generational Focus

Posted on January 26, 2012 by Ken Laino

It is generally estimated that more than half of all Americans have absolutely no estate planning documents.  This can potentially create a lot of hassles for your loved ones.

But even those Americans with very good estate planning documents often fail to focus on asset protection for their children and other beneficiaries.  If you simply leave assets to your beneficiaries without any kind of ongoing trust arrangement, those assets can generally be reached by their creditors with little effort.

We now recommend dynasty trusts for many of our clients.  These trusts are not as exotic as the name might imply.  They simply allow your children and other beneficiaries to hold assets in a continuing trust arrangement.  This can provide better protection in the event of a divorce; and it can also provide better protection from future creditors of the beneficiaries.

Providing some added protection for the assets that you leave to your loved ones can be an important gift to them.

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IRS Form 8938 -- Another Reporting Requirement for Offshore Assets

Posted on January 24, 2012 by Ken Laino

The IRS is continuing its efforts to identify sources of offshore taxable income of U.S. taxpayers.  This has lead to a new reporting requirement.  Many U.S. taxpayers with foreign assets must now file IRS Form 8938 - Statement of Specified Foreign Financial Assets.  This new requirement is applicable to the 2011 tax year, and must be filed with an individual's annual federal tax return.  The IRS has issued instructions for the new form.

This new requirement does not replace the annual FBAR report, which is due by June 30 of the applicable filing year.

Some, but not all, U.S. taxpayers are subject to the new requirement.  For instance, it applies to married taxpayers filing a joint income tax return if the total value of your specified foreign financial assets is more than $100,000 on the last day of the year or more than $150,000 at any time during the tax year. 

There are failure-to-file and accuracy-related penalities relating to Form 8938, and these penalties can be severe.  It is therefore very important for anyone with funds in offshore accounts to have a tax preparer who is familiar with all of the applicable reporting requirements.

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