Law Offices of Givner & Kaye Newsletter | April Issue 


     Radio commercials and the internet are constantly pushing California residents to set up irrevocable trusts, corporations, partnerships and LLCs in Nevada and other states with strong asset protection laws.  Those structures might make sense if the assets to be owned by the Nevada structures are (i) liquid assets which are in financial institutions outside of California or (ii) businesses and real property located outside of California.


          However, if the Nevada structures own assets in California, the hoped-for asset protection benefits are unlikely to occur.  That point was brought home by the recently decided case of Dahl v. Dahl, ___ P.3d ____, 2015 UT 23, 2015 WL 404521 (Jan. 30, 2015).  We believe that when a California judge is called upon to rule, in a lawsuit between a California judgment creditor and a California judgment debtor, on whether an out-of-state trust or other structure should be given the benefits of the other state's law, that judge will determine that California has a more important interest in the case and ignore the other state's law.


          If you wish to pursue asset protection planning that is more likely to work, then let's talk about it now, many years in advance, while no one has a claim against you.  Creating structures in California for assets in California is usually a very good approach. 



          Best regards,


                    Bruce Givner

                    Owen Kaye

                    Kathleen Givner

                    Neda Barkhordar

Featured Article: Phantom Stock For Closely Held Businesses

       The owners of closely held businesses often want to reward key employees by making them shareholders.  This is an important way also to motivate those key employees to continue to do good work and add value to the business.


       However, California law - unlike the law of Delaware - provides strong protection to minority shareholders.  For that reason we strongly urge the owners to enter into individual employment agreement with each key employee and to include, as part of that agreement, a Phantom Stock Agreement.  That gives the employee virtually the same economic rights that the employee would have were that employee a shareholder.  Assume the decision is made to treat the key employee - Joe - as a 5% shareholder.  Each year Joe would receive, as a bonus, an amount equal to 5% of the profits of the business.  For that purpose the owner-employee would agree to restrict the owner's compensation to a specific number.  In the event of a sale, Joe would get 5% of the sales proceeds.  For the sale event, Joe might share in 5% - or just in 5% over the value of the business at the time that Joe becomes an owner of phantom stock.  And Joe's rights as a shareholder of phantom stock might vest of 5 or 10 years. 


       There are a variety of ways to customize phantom stock plans to make them truly attractive to key employees.  The key is that in the event of a dispute, the key employees' rights are limited to those found in the contract; the employee does not have access to the protections afforded to minority shareholder under the Corporations Code of the state of California..


       If you are interested in motivating a key employee, let's have that discussion.

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Protecting Real Property - Asset Protection Planning
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Attorney Spotlight: Upcoming Engagements

on April 25 Bruce will be speaking at Cal State University L.A. on "Income Tax, Capital Gain Tax and Asset Protection Planning: An Overview" for Dr. Richard Lau.


On May 29 we will be holding a Tequila Tasting Event.  Attendance will be limited to the first 20 people who (i) RSVP to Desiree; (ii) promise not to drink anything before they arrive; and (iii) promise not to leave until they are sober. 


On May 4 Bruce will be speaking to the Pasadena Discussion Group of the L.A. Chapter of the California CPA Society on "Tax Planning for the Sale of Real Estate or a Business: Two Plus Years In Advance Is Best."


On May 7 the firm's Thursday Insight Series - from 2:30 to 4, both in the office and televised over the internet - will be on "Everything You Always Wanted to Know About Section 482 and Transfer Pricing Problems" with Bruce.


On May 21 the firm's Thursday Insight Series - from 2:30 to 4, both in the office and televised over the internet - will be on "Everything You Always Wanted to Know About The IRS Offshore Voluntary Disclosure Program and Foreign Bank Accounts" with Neda Barkhordar, Esq. of our firm.


On May 26 Bruce will be doing a nationally televised webinar for the Clear Law Institute on Retirement Plans For Nontaxable Estates.


On September 26 Bruce will be speaking to the Santa Barbara Paralegal Association on "How Parents Keep Control Both During Their Lifetimes And After They Are Dead."

Tax Tip of the Month

The easiest and safest way to avoid the payment of a capital gain tax on the sale of real estate; stock of a "C" corporation; membership interest in an LLC; or partnership interest in a partnership; is to transfer that asset to a charitable remainder trust ("CRT") before the deal has gotten too close to being done.  Many people do not like CRTs because they feel that their children will not be getting a share of the asset.  However, it is possible to design a multi-generation CRT.  For example, we recently created a CRT that will last as long as any one of mom and dad, ages 75 and 70, and three children, ages 44, 46, and 49, is alive.  Because we included the children in the measuring lives, mom and dad felt comfortable with the structure. 


Bruce Givner & Owen Kaye
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Bruce - Updated
Upcoming Thursday Insights Series Seminar:  
Everything You Always Wanted to Know About Section 482 And Transfer Pricing Problems (And the Related International Tax Planning Opportunities) But Were Afraid to Ask with Bruce Givner, Esq. 

Details to follow!
May 7

Join us in the office or online via webinar, where you can watch the folks in the room listen to and question Bruce.  

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For almost four 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!

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Los Angeles, CA 90025