Posts Tagged Steve Oshins

Oshins: Nevada Rated Top Asset Protection State for 2012

Nationally known estate planning and asset protection attorney Steve Oshins  published his updated chart on best asset protection states.

He recently did a mid-year update to reflect some significant changes made by some of the ranked states.

The Nevada Trust Reporter reported his findings.

 

, , , ,

No Comments

Trust Experts Say Judge Made “Bad Law” in Landmark Asset Protection Case

Last week, trust gurus from every corner sounded loud sirens to register both discontent and caution over a recent federal bankruptcy decision that could shape the future use of domestic asset protection trusts.

Lawyers around the country have been heating up the Internet fretting over whether a seemingly routine bankruptcy hearing invalidates an entire class of trusts and could leave thousands of their wealthiest clients exposed to nuisance lawsuits.

After Alaska geologist Tom Mortensen filed for bankruptcy protection on about $250,000 in debt, the credit card companies came after his 1.25-acre vacation property in the vicinity of Anchorage.

In theory, that property was held in an Alaska trust, but the bankruptcy judge overruled state statute to let Mortensen’s creditors recover anyway. Read the rest of this entry »

, , , , , , , , ,

No Comments

Obama Offered Plan to Name and Shame Rich Who Avoid Taxes

As the 2012 election season heats up, longtime Democratic advisor suggests using IRS records to publicly expose wealthy Americans who would rather keep their wealth and tax liabilities confidential. Class warfare or empty rhetoric?

A strategic advisor to former U.S. President Jimmy Carter, Zbigniew Brzezinski, has offered current President Obama a politically expedient way to advance his “the rich don’t pay their fair share” policy.

As the Obama administration remains hungry for revenue and votes, the chance that he may use the idea to embarrass the zero-tax-paying millionaires seems both useful and likely. Read the rest of this entry »

, , , , , , , , , , ,

7 Comments

Hawaii Amends New Asset Protection Law in Bid to Grab Trusts from Other States

Overhaul includes axing tax on inbound transfers and loosening other restrictions.  Bank of Hawaii and First Hawaiian Bank urge change as old law received few trusts.  Mainland experts are skeptical, saying “new rules don’t go far enough.”

The latest upgrade for the Aloha State’s trust code may be exactly what wealthy vacationers needed in order to eye the beauty and beaches of the islands and create a little asset protection fortress in the process.

But last year’s effort to woo trust accounts theoretically gave Hawaiian providers added tools — including the ability to shield trust assets from creditors — to compete with mainland jurisdictions.

As it turns out, once grantors learned Hawaii had wrapped these vehicles in unique restrictions and fees, the anticipated flood of out-of-state money never materialized.

“We saw very restricted movement of out-of-state trusts coming in” over the past year, says Jean Creadick, a vice president at the Bank of Hawaii.

Read the rest of this entry »

, , , ,

6 Comments

New Nevada Legislation Strengthens its Asset Protection Laws

The competition among states is heating up as the different jurisdictions continue to modify their laws to make them more competitive. 

 Asset protection is a growing area of concern for many people, especially in a sour economic environment where lawsuits multiply.

Alaska and Delaware became the first states to allow specialized asset protection trusts — designed to protect the underlying property from creditor claims — in 1997. Nevada and Rhode Island soon followed, and now there are now 13 states that allow people to set up asset protection trusts.

But while the field has expanded, Nevada has remained at the forefront in making sure to continue to improve its laws.

On June 4, the governor of Nevada signed into law Senate Bill 221which significantly enhances the state’s already cutting-edge asset protection trust statutes.

Read the rest of this entry »

, , , , , , ,

1 Comment

Alaska, Delaware, Nevada, South Dakota Remain Top Trust States

Tennessee and Rhode Island make our favorites list, but Hawaii just doesn’t get the recipe right. New rules predicted for new South Dakota trust firms.

The battle to woo trust business heated up last year as trust advisors and estate planners rushed to take advantage of the 2010 tax environment — and lawmakers scrambled to make their states look as attractive as possible.

Our 2011 ranking of the top trust states corrects a few oversights from last year, updates for new developments and addresses a few controversies.

Tennessee and Rhode Island make the list this year, at Tier 2 and Tier 3, respectively. Idaho and Wisconsin, which offer out-of-state trusts little real benefit beyond dynastic trust arrangements, drop off.

Checking all the boxes…or else

To make a serious bid for a share of the $1 trillion personal trust market, you really need to provide dynastic trusts, directed trusts and asset protection trusts, plus favorable tax treatment for non-residents.

“Fail to check a box as you go through the list, and that state might automatically get crossed off,” says South Dakota trust attorney Daniel Donohue, a partner in Davenport Evans Hurtwitz & Smith.

“You might not need to use a type of trust now, but family members are always active and doing things, so you might want to make use of those statutes down the road,” he added.

This is especially important in dynastic scenarios where advisors have to reckon with family members who haven’t even been born yet, but may eventually need a way to shield a trust’s assets from creditors decades from now.

In fact, despite Florida’s efforts to allow asset protection trusts this year, its failure to do so was one reason that kept it from joining the Big Four — Alaska, Delaware, Nevada and South Dakota — which offer just about everything on the menu.

As it is, Florida does allow directed trusts, which let outside advisors manage the underlying assets, as well as a substantial 360-year dynastic trust period.

“Florida is a good example of a state that doesn’t belong near the top but doesn’t belong at the bottom either,” explains Steve Oshins, Las Vegas estate attorney and author of Nevada’s 365-year dynastic trust statutes. “Their dynasty trust provisions are okay.”

Delaware has taken care to keep its trust code current while building on its own reputation as a high-net-worth mecca where assets can remain in trust not just for centuries, but forever.

The Best States for Trusts

Tier

State

State Income Tax

Directed Trust Statute

Asset Protection Trust

Dynasty Trust Ability

Number of Trust Cos.

Time Zone (from NY)

1

Alaska

No

Yes

Yes

1000 yrs.

5

(-) 4

1

Delaware

Residents

Yes

Yes

Perpetual

53*

(-) 0

1

Nevada

No

Yes

Yes

365 yrs.

18

(-) 3

1

South
Dakota

No

Yes

Yes

Perpetual

58

(-) 1 / 2

2

Florida

No

Yes

No

360 yrs.

29

(-) 0

2

New
Hampshire

Residents

Yes

Yes

Perpetual

25

(-) 0

2

Tennessee

Residents

Yes

Yes

360 yrs.

22

(-) 1

2

Wyoming

No

Yes

Yes

1000 yrs.

11

(-) 2

3

Colorado

Yes

Yes

Uncertain

1000 yrs.

11

(-) 2

3

Ohio

Residents

No

No

Perpetual

20

(-) 0

3

Rhode Island

Yes

No

Yes

Perpetual

6

(-) 0

3

Utah

Yes

No

Yes

1000 yrs.

7

(-) 2

All tiers listed in alphabetical order. States links to state trust statutes.
Trust companies include state-chartered trust companies and OTS/OCC chartered institutions with trust powers.
* DE includes 19 state-chartered limited purpose trust companies.

Data: February 2011. © 2011 TheTrustAdvisor.com

South Dakota is too good to be true

And South Dakota has definitely established its credentials for no-nonsense service on directed trusts in particular.

However, South Dakota’s long ride with a $200,000 capital requirement may come to rest this year as more state trust regulators continue to complain that their entry rules are too easy.

States like Nevada, New Hampshire, Pennsylvania, Delaware, Florida and others all require $1 million or more to qualify for a trust license.

Recently, a South Dakota trust firm was prevented from doing business in Pennsylvania unless it posted $2 million in capital.

For several years, banking authorities in Florida have been annoyed with South Dakota trust firms operating there without meeting their $2 million capital requirements to do business.

Last year, the Florida banking department denied a new South Dakota trust company local operating privileges because its capital was too low.  Experts say more of that is to come.

With 58 trust firms now based in South Dakota and operating in all 50 states and abroad, the South Dakota regulator will likely feel the heat and tighten up to prevent more regulator complaints and bad publicity.

Is it a matter of asset protection or nothing?

However, the ability to provide a high level of asset protection may emerge as the most important factor in how the various more-or-less trust-friendly states differentiate themselves in 2011.

“I believe more and more emphasis is being put on asset protection,” Oshins says.

“If so, that helps break away Nevada from the other top-tier states, given that it has the leading self-settled asset protection trust laws,” he added.

Last year, uncertainty about the future of the tax code drove a lot of middle-market families to move their money into trusts.

But since the eleventh-hour Congressional compromise raised the exemption to $5 million — well above the level where it could apply to any but the wealthiest Americans — the trust industry’s priorities are rotating.

The logic here is fairly simple. While raising the estate tax exemption from $1 million to $5 million lets all but 3,500 families a year off the estate tax hook, the number of affluent doctors, entrepreneurs and potential divorcees out there who could benefit from asset protection trusts remains fairly constant.

Asset protection may become a more important factor in next year’s rankings, but that may not help Hawaii make it onto the list.

The Aloha State tried to make a big splash in the industry by allowing asset protection trusts last summer. But the statute was so diluted by restrictions and added fees that it just didn’t impress many onshore family offices.

Shortly after we published our 2010 survey, we reported that New Mexico was moving closer to enacting more trust friendly rules to attract trust business. That may not be the case. Shortly before press time this week, we learned that one of New Mexico’s largest trust firms was jumping ship and filed for a South Dakota trust charter this week.

Scott Martin, contributing editor, The Trust Advisor Blog. Jerry Cooper and Steve Maimes contributed to the reporting and research.

Permalink: http://thetrustadvisor.com/news/states2011

, , , , , , , , , , , ,

1 Comment

How Provident Trust of Nevada Went from Zero to $750 Million in 24 Months

Founder Theresa Fette’s marketing machine seems to be generating income faster than the federal government can spend money. Her institution’s rags-to-riches story will inspire big and small trust firms alike.

Three years ago, tax lawyer and entrepreneur Theresa Fette was not expecting to become the CEO of one of the most successful trust firms in Nevada.

Today, she’s running Las Vegas-based Provident Trust Group, which has evolved into a $750 million trust company. The average trust account is in the $50 million range, the company is inking huge 1031 exchange deals and high-end lawyers from around the country keep calling in to place assets.

All of this comes from an opportunity that fell into place two years ago when Trust Company of the Pacific (TCP) lost its trust license after getting on the wrong side of the Nevada banking regulator.

When TCP’s owner P. Sterling Kerr, a prominent Las Vegas attorney, saw the writing on the wall, he contacted Fette and made a deal to sell all 7,000 of his company’s now-refugee accounts—crown jewels valued at nearly $300 million—to her group.

The problem was that Fette had no immediate home for the accounts. As a tax lawyer, she could not just pull a trust charter out of her hat, but after lining up a holding company and support from the Nevada banking regulator, within a few months Provident Trust was up and running.

With some of the best and the brightest people in the industry on her team and 7,000 accounts already in place, there was no question the day the operation opened its doors, it was pulling a handsome profit.

Today, Fette is not too shy about discussing the enormous success her trust firm has experienced after that jump start. Having more than doubled its assets under administration, Provident has also expanded its trust product offering to include retirement accounts, alternative assets and the highly sought-after Nevada asset protection trusts.

The Trust Advisor Blog asked Steve Oshins, one of Nevada’s best-known estate planning attorneys, if he had ever heard of Fette and Provident. He said no.

“In a small community of Las Vegas, you’d think we’d know each other, considering that we’re both in the same industry,” he says. “But she’s obviously smart because she contacted you to gain attention for her trust firm’s success story.”

Networking is key

Provident has kept a fairly low profile because just keeping up with word of mouth has kept the team busy.

“There really hasn’t been any advertising,” Fette says. “We network with members of the legal and financial advisory community and that’s our biggest source of referrals.”

One big plus with the advisors: As a strictly directed trust operation, Provident Trust doesn’t offer in-house wealth management services, so there’s no worry that it will try to poach client assets.

“We see all the trouble come when people try to dip their hands in too many buckets,” she says. “And how truly independent can a trustee be if you’re also managing money?”

Good point! And for many trust firms wrestling with conflicts of interest and unbundling trust fees to comply with Knight vs Commissioner, she might be right on the money.

Speaking of networking, Fette is one of the younger members of the trust community. A few months ago, the M&A Advisor Network flew her to Los Angeles for a black tie gala to honor her and other under-40 movers and shakers in the advisory world.

Flat fee for small accounts

We found one aspect of Provident’s business model especially intriguing. Under their self-directed IRA banner, they take relatively small-sized accounts ranging from $50,000 to $100,000.

This is not the norm for most trust firms, which tend to prospect for accounts north of $5 million. Provident’s key to success is charging these relatively low-maintenance IRA customers a flat $395 a year for providing custody service no matter how much—or how little—money is in the account.

Naturally, for a $50 million dynasty trust, $395 per year wouldn’t work, but Provident’s normal basis point billing structure ensures that taking care of those larger accounts remains a profitable enterprise.

When you work the math out, 8,000 accounts times $395 means you’re billing over $3 million a year. And in a world where retirement accounts are relatively dormant most of the time, both risk and turnover are comparatively low.

With ideas like that, coupled with the team’s stellar reputation, it’s clear that Provident will be well over $1 billion in assets shortly.

Scott Martin, contributing editor, The Trust Advisor Blog. Jerry Cooper and Steven Maimes contributed to the research and reporting.

Rate this story? Click here.

, , , , ,

1 Comment

Don’t Count on Hawaii’s New Trust Law to Attract the Super-Rich

Experts say Hawaii’s new asset protection law is “dead on arrival.” With a 1% user fee and onerous investment restrictions, few billionaires will find Hawaii a proper bastion for their family fortunes.

The economic pinch has even affected paradise. Hawaii is suffering from a decline in tourists and as a result is scrambling for new ways to bring more money to the state. Ambitious plans are underway that include the revival of the 1970s hit CBS TV show “Hawaii Five-O.”

As part of the revival initiatives, Hawaii’s trust firms and the estate planners have embarked on a bold campaign to attract the world’s super rich by making it the premier trust haven of the Pacific.

On June 28, 2010, Hawaii Governor Linda Lingle signed into law a new trust law designed to compete with Nevada, Delaware, Alaska, South Dakota and other domestic asset protection trust states by allowing local trusts to shield assets from creditors or, theoretically, the courts.

With the new law, Act 182, as ammunition, local legislators hope their state will become a powerful “sun, swim and protect” combo that entices mega-rich families who may be vacationing in paradise to leave more of their cash behind.

“We believe that trust business is very compatible with our visitor industry,” explains state senator Rosalyn “Roz” Baker, who sponsored the bill back in January.

“Yes, the rationale was to woo offshore assets to a repository in Hawaii,” she adds.

DEAD ON ARRIVAL

Even though Honolulu is optimistic that asset protection trusts will bring in revenue, estate planners do not see a credible threat to established trust centers on the mainland.

Although Act 182 puts Hawaii ahead of the 37 states that do not support asset protection trusts at all, unique twists ensure that the Aloha State will remain a poor second choice compared to other asset protection states

Under the new law, wealthy families must pay an unprecedented 1% excise tax on all money and assets they move into an asset protection trust.

Given the potential size of these accounts, this can add up to real cash for the state government—but why would anyone pay it if a few phone calls to Nevada, Delaware or South Dakota will provide the same benefits without the added charge?

“The law won’t work as intended,” says Dan Rubin, a prominent estate planning attorney with the New York firm of Moses and Singer.

“Without very bad legal advice, no smart billionaire is going to set up a trust in Hawaii even if they have a $10 million house on the beach if it requires participants to pay a 1% user fee to gain trust benefits.”

If the extra expense weren’t enough, Hawaii also restricts asset protection trusts to 25% of the grantor’s net worth—and prohibits transfers of real property into trust.

And unlike states like South Dakota or Nevada, trusts administered in Hawaii pay state income tax whether their trustees are locals or tourists.

Someone in Hawaii must have done some quick math to work out a formula for political success. According the state’s 2010 budget, Hawaii only had a $22.3 million shortfall. Therefore, if say only a few billionaires set up a handful of trusts, with a 1% excise tax, $3 billion would do the trick and generate $30 million in tax collections.

Finally, while Honolulu may hope Tiger Woods or other celebrities with contentious marriages will start flying in for sun, golf and protection, Act 182 does not shield assets from divorce—or even secured creditors.

Steve Oshins, a Nevada asset protection trust lawyer who rates asset protection trust states based on their benefits, agrees with Rubin that the new law is “dead on arrival.”

“I don’t even know if it’s got a lot of sizzle, let alone the steak,” he says. “Nobody’s going to use it.”

In fact, he gives Hawaii a failing grade where asset protection is concerned, and would be surprised if the new law will help the Aloha State carve out even 1% of the business currently dominated by Nevada, Alaska, South Dakota and Delaware.

“Laws need to be competitive with those of the Tier 1 states,” he explains. “Given the ability to forum-shop, nearly everybody from out of state uses one of these four states.”

NOT FOR TIGER WOODS…BUT WHAT ABOUT THE LOCALS?

With reviews like these, the state’s three institutions with trust powers—Bank of Hawaii, Central Pacific Bank and First Hawaiian Bank—may not win many accounts from the mainland after all.

Bank of Hawaii, far and away the biggest of the trio, does substantial trust business with locals, but so far this year its trust and asset management income has been flat or even slightly lower on a year-over-year basis.

Resident estate planners doubt that the new law will even give Hawaiian professionals and other wealthy residents an incentive to keep their assets at home.

“Now that I’ve chewed through this a bit more, I’m moderately certain we won’t use many of these,” says Hawaii-born financial planner Lesley Brey.

“I suspect that it will not be very appealing to most professionals,” agrees Honolulu estate planning attorney Ethan Okura. “I see no reason to keep marketable securities with a trustee in-state.”

In fact, Okura believes that only relatively “unsophisticated” locals will take advantage of the new ability to create an in-state asset protection trust.

“Many local Hawaii residents prefer to work with other local professionals, so perhaps there will be quite a few who utilize the new law—especially if the local banks promote it with their clients,” he says.

Dan Rubin predicts the Hawaiian legislature to wake up to Act 182’s problems and start fixing them fairly soon.

But for Hawaii to become a real national competitor, just putting asset protection on the menu is not going to be enough, Steve Oshins says.

“Because they have a state income tax, they wouldn’t have a chance,” he says. “If you had the best state law, then you can say that you’re going to charge a little more because you’re the best. But this is a mediocre law anyway.”

Perhaps the revival of the TV show Hawaii-50 may have the same good luck it did 40 years ago and attract tons of tourists to the islands. But for now, as Dan Rubin says “if this were 1997 and Hawaii introduced the first domestic asset protection statute, this law might be taken seriously.” He adds, “but this is 13 years later, and wealthy families expect a lot better.”

Jerry Cooper, senior editor, The Trust Advisor Blog. Steven Maimes and Scott Martin contributed to the research and reporting.

Rate this story? Click here.

Don’t Count on Hawaii’s New Trust Law to Attract the Super-Rich on Morningstar.com

Permalink: http://thetrustadvisor.com/news/hawaii-dapt

, , , , , , , , , ,

2 Comments

Would the Actors Heirs Have Been Better Off With an Alaskan Will?

Alaska’s new will testing statute allows for “death rehearsals” to give families a chance to correct mistakes before they happen. But some estate planners think the law is just a marketing gimmick.

If Gary Coleman or Dennis Hopper had been able to take advantage of the new Alaskan probate rules, local trust industry leaders say their estates might not be in turmoil today.

Starting in September, Alaska will become one of only a few states that allows for pre-mortem probate, which theoretically lets people resolve disputes around their wills before they die. (Read the new rule here.)

As a result, the state’s estate planners have gotten a lot of calls from non-residents looking to prevent the ugliness surrounding the Coleman and Hopper inheritance battles.

“We’ve gotten a lot of interest in this,” Douglas Blattmachr, CEO of Alaska Trust, told me. “I’m not sure how much we will get on the trust company side, but I think Alaska’s lawyers will get a lot of work out of it,” he added.

But while the lawyers in Anchorage may be generating a lot of out-of-state leads, it remains to be seen whether probate judges in the state where the death actually takes place will surrender their jurisdiction to the Alaskan process.

Settling the arguments in advance

In pre-mortem probate, residents and non-residents alike have the option of distributing their will to interested parties, who then have a limited amount of time to raise any legal objections.

If they fail to contest the will at this point, they forfeit the chance to do so later. Meanwhile, the person who wrote the will is still alive and available to clarify his or her wishes and mental competence in probate court.

Had Dennis Hopper gone this route, for example, he might have been able to argue personally that his estranged wife was not actually living with him, which would have technically broken her pre-nuptial agreement. His art collection would have gone to his children, and not to her.

And if Gary Coleman’s ex-wife or girlfriend wanted to contest his will with spurious or outdated paperwork of her own, the judge could have simply asked Coleman to point to which of the competing documents really represented his plans for his estate after his death.

The sticky point is that while out-of-state trusts have become a familiar part of the estate planning landscape, out-of-state wills are in more nebulous territory.

“I don’t think this would help Dennis Hopper or Gary Coleman,” Delaware probate attorney Peter Gordon of Gordon Fournaris & Mammarella told me. “Coleman is a classic example of a will that is going to be a nightmare because, among other things, a Utah judge sitting in a Utah court with a Utah resident is not going to send the case to Alaska.”

California resident Hopper would be similarly hard-pressed to get a California judge to hear his case early whether his will was drafted in Alaska or not. Unlike trusts, which are separate legal entities resident in the state where they are chartered, a will is simply a document that expresses the deceased person’s instructions about his or her estate, Gordon says.

In other words, in most cases, the will still needs to be probated where the person lived. While the Alaska rules are great for residents, estate planner Steve Oshins has deep reservations about how useful for accounts coming from out of state.

“I don’t see how an Alaska will would work for a non-resident given the jurisdictional issues involved,” he says. “An Alaska trust would have a better chance of success.”

Better for trusts

The Alaska rules extend to both wills and trusts. Someone can set up a trust in Alaska—a popular destination for wealthy individuals looking to take advantage of favorable laws—and distribute an estate plan for pre-mortem testing.

While states like Delaware do not allow pre-mortem probate for wills, this kind of testing has a longer track record where trusts are concerned. Peter Gordon says he’s personally made use of the trust testing rules several times since Delaware authorized them in 2003.

Wilmington Trust managing director Richard Nenno, known universally as “the font” of information on this topic, notes that if the assets are in trust, arguing about the terms of the will is a lot less likely to derail someone’s final wishes.

“The trust is where most people are putting their funds,” he told me. “Adding it for wills might help one or two situations in exceptionally dysfunctional families, but I don’t think it will be all that relevant in many high-end estate planning situations.”

As such, the new rules do two things for Alaska. First, they bring the trust code in line with other states by allowing pre-mortem testing—and this helps keep the state competitive on the national playing field.

Second, the will testing mechanism is great for state residents, but may not end up as much more than a marketing proposition for Alaska lawyers courting non-resident clients. Although North Dakota, Arkansas and Ohio also allow will testing, none are known as estate planning paradises.

The combination of will and trust may create some residual benefits for people coming to Alaska to get a trust anyway. Steve Oshins says an Alaska co-trustee may be able to work the local system successfully, although he is not convinced that this would do non-residents much good.

As it happens, Alaska Trust could get some add-on business from this, Douglas Blattmachr told me. “We might get appointed as trustees a bit more often,” he says. “A lot of clients are interested in trusts and worried about will contests. This gets those worries out of the way.”

Scott Martin, contributing editor, The Trust Advisor Blog, Jerry Cooper contributed to the reporting, Steven Maimes contributed to the research and editing.

Permalink: http://thetrustadvisor.com/news/premortem

, , , , , , , , , , ,

No Comments

Nevada Lawyer Offers Teleconference to Promote Asset Protection Trusts

Advisors who want to learn more about the differences between asset protection trust states should get a good running start from an upcoming teleconference.

Estate planner Steve Oshins of Las Vegas firm Oshins & Associates will be on hand on Thursday, June 10, to explain the inner workings of asset protection trusts and the differences between how different states handle these vehicles, which are designed to shield wealth from litigation.

The event is $99 and according to the promotional material there will be a Q&A at the end of the hour-long seminar.

For more details and registration information, take a look at http://www.ultimateestateplanner.com/DAPT.html.

,

No Comments