FRAUD - 10 WARNING SIGNS ABOUT YOUR 401K

The U.S. Labor Department publishes

10 signs that your 401(k) retirement account may be subject to fraud:

1) Your quarterly 401(k) statement is consistently late or comes at irregular intervals.

2) Your account balance appears to be inaccurate.

3) Your employer failed to transmit your contribution to the plan on a timely basis.

4) A significant drop in account balance appears that cannot be explained by normal market ups and downs.

5) Your 401(k) statement shows that your contribution from your paycheck was not made.

6) Investments listed on your statement are not what you authorized.

7) Former employees are having trouble getting their benefits paid on time or in the correct amounts.

8) Unusual transactions show up.

9) Frequent and unexplained changes take place in investment managers or consultants.

10) Your employer has recently experienced severe financial difficulty.

This was excerpted from a a larger article by Jim Gallagher in St. Louis today - recommended reading if you or your clients have a closely managed retirement account of any kind.

http://www.stltoday.com/business/columns/jim-gallagher/article_f1ae39ae-58ef-5729-ab06-9d41edf6a850.html

Life Settlements: A Risky And Wild Investment

As investors seek options that are resistant to the instability of the Real Estate and Securities markets many new options (and old ones) are being touted by promoters. Some are safe, others entail serious risks. This article is a great summary of issues to think about in Life Settlements.

Ike

(Dow Jones) Life settlements are not wildly popular investments. But they are wild investments. And to that end, federal regulators and lawmakers are fast at work trying to tame these slippery products, which promise a much higher return over more traditional conservative offerings.

A life settlement is a transaction in which an individual with a life insurance policy sells that policy to another person, who then assumes responsibility for paying the premiums.

For a great overview of the RISKS involved in these policies see the entire article:
http://www.fa-mag.com/fa-news/5882-life-settlements-a-risky-and-wild-investment.html

Arizona Real Estate Looks Grim for 2-5 Years - Which Means So Do A Lot of Things

I attended the SYEP (Scottsdale Young Estate Planners) Meeting this afternoon. A local realtor shared some info that is supported by what I've seen from many other sources including my clients in the Real Estate business and in related businesses from fine dining to dry-cleaning:

-The next 2-5 years in local RE market will be ruled by short sales;
-FEDs are pushing banks to allow and work with more short sales;
-Lending is happening but mostly under the $400K (jumbo loan) limit;
-50% of AZ homes are underwater;
-Less than 5% of loan mods are working;
-The Tax Credit only worked primarily on homes under $400K;
-Inventory is slowly being absorbed and fewer homes are hitting the sale market (rentals?);
-All income levels are in trouble, but big homes in Paradise Valley are suffering the most - some are at 50% discount;
-Don’t plan on making money on "flipping". The local properties are all being bought up by syndicates that are making close deals and keeping individual players out of the market - they will outbid you on the courthouse steps.

Personally, I'm concerned about what's coming next year, when all the 5 year A.R.M.s written in the 2006 buying frenzy all mature and can't be re-financed, and will trigger a second massive wave of foreclosures and walk-always in the Phoenix metro area.

Those affected include builders, developers, and all others who make their living off the sales, maintenance and furnishing of new homes, from AC service to the pool guy.

I'd guess the consignment furniture business will be big along with mini storage and residential rentals for those out of their homes. It will be great time to be in debtor-creditor law, bankruptcy, debt settlement and credit repair.

Those in businesses that are logically related need to take a good long look at their assets, expenses, liabilities and legal and financial planning ASAP while they still have legal, cost effective options available. It will be too late when you really feel the pinch.

Those that are prepared will be in a great spot to take advantage of a buyers market and emerging opportunities and cash, AS ALWAYS, will be king. For more thoughts on getting ready for the flood - see what I sent my clients in Dec 07, and every year since, here: 2010 Business Survival Plan - http://arfinance.blogspot.com/2009/10/2010-business-survival-plan.html

Ike

ASSET PROTECTION F.A.Q.s - WHAT YOU SHOULD KNOW

What is Asset Protection?
Assert Protection is a proactive, holistic system of legal and financial tools and strategies that preserve wealth and assets in all forms from loss, waste or spoilage. It also accurately analogized as NET WORTH INSURANCE.

Is it Legal?
Absolutely, if done at the right time by a professional and in a tax neutral way. Asset Protection planning in and of itself, if done at the right time, is a valid legal purpose on its own. Many of the tools and strategies used in Asset Protection also have legitimate business purposes for other reasons like tax efficiency, investment management consolidation, wealth transfer, and estate tax avoidance to name just a few.

Am I wealthy enough to do Asset Protection?
Probably, there are good strategies available at nearly every income and net worth level. The number one mistake made by lawyers, CPAs and Financial Advisors when advising clients if they need Asset Protection is telling them they are “not rich enough” to worry about it. That is terrible advice. While most of our clients are seven to nine figures in net worth, we also have a large group that is on their way to accumulating significant wealth. What all these clients have in common is that they have worked hard to accumulate what they have, regardless of the total dollar value. If the loss of all or most of your current assets would pose a significant threat to your family, business and way of life, you should probably examine the options available to you.

Will it get me in trouble with the IRS?
Not if it’s done the right way. The tools and strategies we use to protect thousands of clients are tax neutral and require full compliance and tax reporting. We never want to see your planning jeopardized because it put you harm’s way with the IRS. None of plans involve “secrecy” or “hiding” assets. Those amateur plans often assume that you will commit perjury and are based on the “hope” that you can hide something and that the courts won’t find it or ask about it. Hope is not a plan.

I already have a Revocable Living Trust (RLT), isn’t that Asset Protection?
No, if that’s the case you have great estate planning, an important and necessary part of any good system. However, an RLT provides absolutely ZERO protection against judgments, lawsuits and a hostile world. The first word is “revocable” so the courts will simply order that you revoke the trust and hand over the house, investments and other assets it holds. An RLT is Death Planning, as opposed to Asset Protection which is Life Planning.

Can I wait to do it until I really need it?
No. The number one flaw in most Asset Protection plans is TIMING. Most people wait until they have an exposure to take simple steps that could have protected a lifetime of effort. Trying to gift, move or hide assets after you have an exposure is fraud. In fact there is a specific name for it, Fraudulent Conveyance. Transfers you make under this harsh light can be set aside completely and create a hostile situation with the courts. The best time to act is always now, and every day that passes makes the planning you do a little stronger. Just like with insurance, you can’t insure yourself against an event or loss that has already occurred, only against future exposures.

What can be protected?
Almost everything, a partial list of the assets that can be protected would include:
- Investments like cash stocks, bonds and etc.
- Residences
- Investment Real Estate
- Interests in Businesses
- Valuable personal property like Art, Jewelry, Collections
- Business Equipment
- Future Income
- Cash Value of Life Insurance Policies

Do I lose control of my assets?
No, most our tools allow direct control by the client or someone the client wants in control, until and unless it is more efficient or safer for the client to delegate management to a fiduciary like a trustee. You will decide when and if that happens.

Are your Asset Protection tools International (offshore) or Domestic?
We use a system that incorporates both kinds of tools, but primarily domestic ones. What specific tools we prescribe to any individual client depend on a variety of factors including the nature of the assets they have, their value and the threats the clients faces. Every plan, like every client, is unique.

Can my lawyer do this?
Probably not. The upper level tools and strategies we use to protect thousands of clients and billions of dollars in assets are unique and special tailored to this purpose. If your planner was aware of these tools and risks, and was informed about your risks and the options available to you, it would already have been done and you would not be reading this. There are many potential planning pitfalls that lawyers who work primarily in other areas are simply not aware of and now matter how smart your counsel is they can’t be an expert at everything. Asset Protection is the sole focus of our legal practice.

How Do I start?
Just call and we will set a mutually convenient time to talk on the phone or in person. We will ask you a series of questions covered by attorney-client privilege that will allow us to get a real idea of the risks you face and what needs to be done to address them. You don’t need to do any “homework” before the call and most of the people we talk to can provide us enough detail to create a good plan. We will create a specific written plan of action and also provide you a very specific fee quote that will allow you to see how a small investment can protect a lifetime of hard work.

ESTATE PLANNING 101 - Should I have a Trust or Will?

An estate plan is always necessary unless you want your estate to pass through “operation of law” which involves the long, uncertain, public and expensive process at your death with a stranger (the courts) deciding who gets everything you leave behind. This process often leads to heartache, delay and additional stress for those you leave behind, especially if they need the assets to sustain the family or if (all too commonly) family members may fight over what you leave behind.

A Simple Will comes into effect at your death, controls the distribution of your assets (who gets what and when), and names who the Executor of your estate, the person you chose to be in charge and carry out your wishes, will be. A Will is the most basic form of estate planning and still requires the estate and its assets to go through the probate process, meaning that there will be an expense and delay in transferring assets at your death. A will is also public, meaning that a record of exactly what you left and to whom is available. In our view, it’s best suited for those with limited and simple assets, few or no heirs, and those with no minor children, dependents or pets that require specific care and guardianship guidance.

A Revocable Living Trust (RLT) on the other hand includes all the elements of a will, is established and can take title to a certain assets during your lifetime when you (and your spouse) can actively manage and change it. The RLT avoids probate, passes assets privately with little or no public record and typically includes a variety of sophisticated estate tax avoidance measures. (This last issue is especially important given that many seasoned estate planners are preparing their clients for an expected estate tax regime that takes 55% of everything a married couple leaves over $2 Million as of January 1, 2011.) The RLT also names and has specific guidelines for the Trustees of your estate, appoints Guardians for your children and dependents and can retain wealth and “sprinkle” income off the principal to your heirs. It allows a countless variety of sophisticated directives including what you want done if you have some sort of incapacitation condition like an illness or mental issue, typically referred to as “living will” and “health care power of attorney” provisions.

If you don’t have an estate plan, or have had substantial changes to your family structure, wealth, children’s guardians, asset structure or gifting plans it’s time to get experienced help.

The basic estate planning tools noted above are only the tip of the iceberg. These are “death planning” tools, and do not protect assets during your life. A wide variety of Asset Protection, estate planning and family wealth management tools are available more easily and cost effectively than you know, call us to discuss your wishes and concerns!

AUTO INSURANCE AND ASSET PROTECTION - HOW MUCH DO YOU NEED?

The results of an auto accident can be financially, physically and emotionally devastating. To help address this issue proactively, (the way any good Asset Protection strategy works) I asked my friend and Arizona attorney Michael Troncellito to give us some pointers. PART ONE of Michael's guidance deals with specific dollar amounts and types of automobile coverage insurance that are necessary to keep you safe in a sea of drivers of various skill, sobriety and legal capacity.

Yours, Ike

GUEST AUTHOR ATTORNEY MICHAEL TRONCELLITO

We all buy insurance because we are required to. Arizona and many other states have financial responsibility laws. Did you buy coverage to protect yourself from others with no or insufficient insurance? Probably not; not many people do. Most roll the dice hoping that the other drivers on the road will be at least as financially responsible as we are. However, the situation is often different than we hoped. We need to protect ourselves from these drivers with different types of insurance coverage.

The three most important types of coverage that I do not see enough accident clients have are:

-Medical Payments Coverage (“Med Pay”);

-Uninsured Motorist Coverage, (“UM”); and

-Under Insured Motorist Coverage (“UIM”).

Med Pay is a type of coverage purchased through your auto policy that will cover medical bills regardless of who is at fault for the accident. You can purchase varying amounts of Med Pay coverage. I recommend at least $5,000.00 worth of coverage to my clients. The premium is reasonable; usually between $85 and $120 per year. If you are not at fault for causing the accident, your premiums for Med Pay coverage will not increase. Use $5,000.00 worth of Med Pay coverage once and it will take the insurance company between 40 and 55 years to recoup that $5,000.00 in payments to you. If you don't have health insurance or have physical/medical conditions that could cause you to sustain greater than average injury you should have even more.

Uninsured Motorist Coverage is, in my professional opinion, an absolute necessity here in Arizona. If someone does not have insurance and causes an accident, you are likely out of luck when it comes to collecting your damages. But, if you have Uninsured Motorist coverage, your medical bills, pain and suffering, and lost income damages suffered as a result of an uninsured driver will be paid. Annual premiums on $100,000.00 per person coverage range from $85 - $185. If you did not cause an accident, your Uninsured Motorist premiums cannot rise simply by virtue of you using this optional and additional coverage.

Under Insured Motorist coverage is just as important as Uninsured Motorist coverage. They both work the same way. The difference is that Under Insured Motorist coverage will kick in and pick up the tab after the other driver’s insurance coverage is exhausted. The premiums are similar to Uninsured Motorist premiums, and the insurance company is prohibited from raising your rates for simply using the additional and optional coverage.

While I am not a fan of insurance companies, I am even less a fan of you not knowing how to protect yourself. If your insurance has not been reviewed lately, you should contact your agent. If your agent hasn’t called you in the last nine (9) months, you should get a new agent. Speak to a professional about these coverage types. If you have no one to speak to, feel free to call me. I can get you in touch with people who may be able to help you.

Our guest author, Michael Troncellito, http://phxinjurylawyer.com/ is an attorney who practices in litigation and personal injury law. He can be reached at mtroncel@cox.net or by calling his firm at 602-548-8595. Coverage limit requirements may be even more onerous for many of our high net worth readers and clients - always use information of this type as a general guide of issues to examine, not legal advice specific to you and your family.

Why Does a creditor protected CASH ALTERNATIVE make sense? Because 60% of AZ banks are vulnerable to FAILURE!

We have been warning advisor partners and clients for some time about the vulnerability of banks across the country and how we feel a little risk spreading is a good idea from both a bank solvency and Asset Protection standpoint.

The first link below is to an article that shows how vulnerable some banks in Arizona are, as just one local example of a national crisis. There have been over 80 bank closings across the country since January 1 of this year and a highly placed banking executive has informed us that the FDIC has basically run out of money twice in the last nine months. The second Link describes one of the solutions we are implementing.


THE PROBLEM:
Report: 60 Percent of Arizona Banks Vulnerable to Failure:http://tinyurl.com/2dcgnp9

And one of the SOLUTIONS: Creditor Protected Alternatives To Cash:http://tinyurl.com/lkwqtv

Please take a look at this and share with anyone you feel it would help. As always, call us for help or with questions.

Yours, Ike