Law Offices of Givner & Kaye Newsletter | January Issue 


     January is the time to begin planning for the income tax return that will be due on April 15,

2015.  Some planning structures require a great deal of time to analyze before you can be certain if they are right for you and, if they are, how best to put them in place for your particular situation.  Obvious examples include: 
  1. Captive insurance companies for your closely held business or income-producing real estate; 
  2. Tax-qualified employee retirement plans, e.g., defined benefit pension plans for your business; and 
  3. Charitable structures such as a charitable lead annuity trust, especially when combined with your own private foundation.

     This is also a good time to start thinking about establishing structures to put a hurdle between your valuable assets and some future frivolous plaintiff.  California's new LLC law, effective January 1, 2014, has made California LLC's less attractive than before so we are now forced to rely more heavily on California irrevocable trusts and Nevada structures. 


     Start your year off right by taking the steps to implement good quality income tax, capital gains tax, estate tax and asset protection planning. The professionals at Givner & Kaye are just a phone call (310-207-8008) or email ( away!


           Best Regards,

           The Law Offices of Givner & Kaye

Featured Article: Private Retirement Plans - Large, Flexible Asset Protection Planning

     California is almost unique in allowing an exemption from creditors for a retirement plan that is not "qualified" for tax benefits.  That allows your operating business to adopt a completely discriminatory retirement plan, meaning a plan that only covers you, the owner-employee.  Since it is completely discriminatory the contributions will not qualify as tax deductible, and the trust's earnings will be currently taxable.  However, the advantage - from a creditor protection perspective - is significant.  The operating business may end up with a large liability to the trustee of the pension trust for the amount needed at your retirement. 


     Assume you are 65 years of age and make $400,000 per year.  The plan might assume that you will retire at 75 years of age and, at that point, you will have a 12 year life expectancy.  How much will you be making at age 75?  If inflation is 4% that makes $400,000 almost $600,000.  How much money must be in the trust at your age 75 to pay your $600,000 per year for 12 years and end up with zero?  $5,650,000.  How much must be in the pension trust today to grow to $5,650,000 in 10 years?  $3,820,000.  That means that the trustee of your private retirement trust can file a lien on the operating business for $3,820,000 today.


     What if the operating business does not have that much in assets?  You might make a voluntary employee contribution of other assets, e.g., the equity in your residence.  The plan trustee can record a deed of trust on your residence.  What happens when you want to refinance?  The trustee can release the deed of trust to allow the new financing, and put the deed of trust on after the new mortgage is in place.


     Private retirement trusts are very flexible ways to create large liens on valuable assets.  They are also complex legal structures that require a great deal of discussion.  Let us know if you would like to explore this.


For more information on how Givner & Kaye can help you with your retirement planning, please visit our website here.


Looking for information on investing retirement plan assets? We've got a SlideShare document for you to take a look at!

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Tax Tip of the Month
If you have an irrevocable trust, you can elect - question 6 of IRS Form 1041 - to make distributions in the first 65 days of 2014 and count them as having been made as of the last day of 2013.  IRC Section 663(b). 

This can be helpful in managing the income tax brackets between a complex trust (in the highest bracket at about $12,000) and beneficiaries. 
Upcoming Thursday Insights Series Seminar: Captives & Cash

Jan. 16th

Stuart Katz and Stacie Jacobsen from Bernstein Global Wealth Management will discuss how captive insurance companies and cash balance plans can be used as powerful tools to build wealth and provide other advantages for business owners.

Call (310) 207-8008 or sign up online to join the seminar in-person or via webinar!

Coming Soon

Feb 6th: Family Limited Partnerships with Bruce Givner

Feb 20th: Fisher Investments' 2014 Capital Market Outlook

"831(b) Captives: Often Overlooked Tax Issues" by Bruce Givner in Self-Insurer Magazine
Attorney Spotlight: Bruce Gets A Shoutout From the US Tax Court

         Bruce Givner graduated from the Columbia University School of Law in June, 1976.  However, he stayed in New York for another year to get a master's degree in tax law from NYU.  Upon graduation he was hired as the 7th lawyer by the Encino law firm of Flame, Sanger, Grayson & Ginsburg, which was quite convenient since his parents were living in Encino and had been living there since the family moved from Ohio in 1969.


          During the first four years of practice Bruce was heavily involved in pension plans because ERISA - the Employee Retirement Income Security Act of 1974 - required every tax-qualified employee retirement plan in the country to be amended.  The original deadline was December, 1976, but that deadline kept getting extended due to the overwhelming workload it imposed on the IRS, taxpayers and tax professionals. 


          One of the firm's biggest clients at the time was a 20 lawyer law firm in Torrance, California.  Bruce came up with a way to cover the 5 partners in the firm and exclude the most costly employees: the associate lawyers.  One Sunday he went into the office and, in an hour, typed an article entitled "Using The Nondiscriminatory Classification Test In Designing Qualified Plans."  Five months later that article was published by a prestigious national journal TAXES-The Tax Magazine.  Four months later Judge Nims of the United States Tax Court disqualified the pension plan of a subsidiary of Fuji Film in Fujinon Optical, Inc. v. Commissioner, 76 T.C. 499 (March 31, 1981).  In his opinion Judge Nims told the disappointed taxpayer that they could have done it differently: "At least one commentator has demonstrated this possibility.  See Givner, "Using the Nondiscriminatory Classification Test in Designing Qualified Plans," TAXES-The Tax Magazine 784 (November 1980)."

For over three decades, our experienced Los Angeles estate planning, asset protection and expert tax attorneys have met each client's unique planning needs by collaborating with our longtime partners - attorneys, accountants, business managers, financial planners, stockbrokers and insurance professionals. Contact Givner & Kaye today!

Givner & Kaye, A Professional Corporation |
12100 Wilshire Blvd.
Suite 445
Los Angeles, CA 90025

January, 2014

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