As published in MACPA Statement
I’ve always envied CPAs as they’re guaranteed to meet with their clients once a year (at tax time); and they, therefore, have the opportunity to make sure that their clients’ planning is up to date. Most CPAs remind their clients, at tax time, to review their financial plans and make sure that their investments are well diversified; and they routinely advise their clients to bring their estate plans up to date. But, to my surprise, they rarely inform their clients to enter into an asset protection plan, a plan that will be protect their hard earned savings from claims of future creditors.
Frankly, I don’t know why more CPAs don’t discuss asset protection planning with their clients as we live in a world that has too many lawyers and too many law suits. CPAs, therefore, have to realize that their clients need to be informed about asset protection planning. My advice to all CPAs is to have them discuss asset protection planning with their clients next tax season, especially the following clients who, in my opinion, have a critical need for asset protection planning:
- Clients whose first marriage ended in divorce and are planning on getting married again. They hope that their second marriage will bring them happiness and they are, therefore, afraid of asking their fiancé to sign a prenuptial agreement. Nonetheless, they want protection as they’re fearful that their second marriage (like their first marriage) could end in divorce.
- Clients who are planning to sell their business and will be signing a contract of sale that contains pages and pages of warranties and representations. Clients like this can’t wait for the day that the closing on the sale of the business will occur, as they will then be flush with cash and able to retire. Unfortunately, for some of these clients, their dream will turn into a nightmare as they’ll be sued by the buyer of their business for breach of warranty and representation (because the business wasn’t as profitable as the buyer expected).
- Clients who are doctors and specialize in an area of practice (i.e. obstetrics, surgery, and anesthesiology) where medical malpractice suits are routinely filed.
- Clients who businesses are cyclical (and go from periods of boom to periods of bust); clients like this should protect the profits that they earn in the periods of boom from the liabilities that they’ll have difficulty paying during the periods of bust.
- Clients who lease real estate that was built before 1978 and may, therefore, be subject to suits filed by tenants who have sustained injuries resulting from lead paint poisoning.
In my opinion, there’s no downside to discussing asset protection planning with your clients. While many of your clients won’t take your advice and establish an asset protection plan, I’ve found that they are appreciative of the fact that you care about their well-being and are trying to protect them from claimants they could encounter in the future. Furthermore, you’ll find that some of your clients will take your advice and establish an asset protection plan. Then, if they’re sued, they’ll be forever indebted to you.
About Maurice Offit
firstname.lastname@example.org | 301.575.0308 Maurice Offit is an estate planning attorney, co-founder of Offit Kurman Attorneys at Law and a member of the firm’s Management Committee. Mr. Offit counsels a large number of clients who share an interest in minimizing estate taxes and asset protection from the claims of creditors. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.
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