Webinar Transcript: “Asset Protection in 2026: SLATs, DAPTs, SPATs and more Acronym"

Webinar Transcript (1/8/2026): Asset Protection in 2026: SLATs, DAPTs, SPATs and more Acronyms

Host: Jonathan I. Shenkman, President & Chief Investment Officer of ParkBridge Wealth Management (Contact: jonathan@parkbridgewealth.com)

Presenter: Martin M. Shenkman CPA, MBA, PFS, AEP, JD, Founder, Shenkman Teitz (Contaact:shenkman@shenkmanlaw.com)

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Jonathan Shenkman: Good morning, and welcome to the Park Bridge Wealth Management Winter Webinar Series. This program is entitled Asset Protection in 2026, SLATs, DAPs, SPATs, and more acronyms. As always, my name is Jonathan Shankman, I'm the President and Chief Investment Officer of ParkBridge Wealth Management. In that role, I serve in a fiduciary capacity to help my clients achieve their financial objectives.

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Jonathan Shenkman: The goal of my programs is to bring professionals together to help them better serve their clients.

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Jonathan Shenkman: And this is done by educating attendees on the latest topics in wealth planning, and by encouraging collaboration between a client's attorney, CPA, and financial advisor where appropriate.

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Jonathan Shenkman: My practice focuses on working with high net worth families, businesses, and not-for-profits. I manage individual investment portfolios, trust accounts, corporate retirement plans, and endowments to help my clients achieve their financial goals.

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Jonathan Shenkman: In addition to the 20 or so events I run every year, I also do a fair amount of writing on the topics of investing and financial planning, and you can read my work in a variety of periodicals, including Barron, CNBC, Forbes, Kiplinger, The Wall Street Journal, and Trust and Estates Magazine, to name just a few.

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Jonathan Shenkman: You can see all my work on my website at parkbridgewealth.com forward slash articles, or by following me on social media at Jonathan on Money.

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Jonathan Shenkman: Additionally, you can check out my weekly podcast, which is also called Jonathan on Money, and you can listen to that on Apple, Spotify, or wherever you get your podcasts. Additionally, I published my first book, Deeds for Diversification, ABCs to Personal Finance, which can now be purchased on Amazon or JonathanOnMoney.com.

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Jonathan Shenkman: Before I introduce our speaker, please pay close attention if you are an attorney or a CPA in Connecticut, New Jersey, or New York, and are taking this program for credit. I'll be giving a code during the program that you'll need to write down. There will be only one code. It will be given at some point in the middle of the program, so have a pen and paper ready.

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Jonathan Shenkman: After the program, you'll receive an evaluation form, where you'll need to insert the code in order to receive credit. Please stick around until the end of the program for further instructions on receiving credit.

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Jonathan Shenkman: Today, we're privileged to hear from Martin Schenkman, founder of the law firm Schenckman Teets, based in New York. Marty concentrates on estate and tax planning. He's widely quoted expert on tax matters, and is a regular source of numerous financial and business publications, and is the author of approximately 50 books and 1,500 articles. He's active in many charitable causes, and today, Marty's going to be speaking on asset protection in 2026, SLATs, DAPs, SPATs, and more acronyms.

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Jonathan Shenkman: And with that introduction, I'll now turn the program over to Marty.

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Martin Shenkman: Welcome, welcome to the program, everyone. The premise of today's presentation is that far more people should be doing asset protection planning than do.

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Martin Shenkman: Far more people should be doing it.

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Martin Shenkman: And advisors should be recommending and encouraging clients of all types

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Martin Shenkman: even more moderate wealth clients to do asset protection planning. And everyone does do it. I mean, I assume all of you have a personal excess umbrella liability policy. That's asset protection. If you have a rental property, it's owned by an LLC, that's asset protection.

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Martin Shenkman: Too often, and this is another sort of fundamental point of the program, asset protection is looked at as something

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Martin Shenkman: in terms of a complex trust, perhaps a foreign asset protection trust, or a domestic asset protection trust, and nothing more. And that's really a very limited and mistaken view of what asset protection planning is.

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Martin Shenkman: Any irrevocable trust, any entity, and even more so the combination of various irrevocable trusts and entities, can provide a much sounder

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Martin Shenkman: asset protection plan, then can, just doing a single…

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Martin Shenkman: foreign or domestic asset protection trust. So, I'm gonna try to talk about how we can use the planning tools that you as advisors know

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Martin Shenkman: With a greater focus on asset protection.

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Martin Shenkman: There's another two, sort of, fundamental concepts that we're going to talk about.

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Martin Shenkman: The recent tax legislation, OBA,

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Martin Shenkman: OBBBA, the one big, beautiful look how to concentrate to get the B's right, Bill Act.

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Martin Shenkman: has changed the dynamic of how some asset protection planning should be done, and we're gonna talk about that.

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Martin Shenkman: And… another point… is that…

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Martin Shenkman: AI is transforming how we as practitioners can deliver this help to clients. So, that's a quick sort of thumbnail of some of the things we're going to talk about.

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Martin Shenkman: And let's start with what I feel is a pretty important development. It happened, I believe, last year, and if you're not aware of it, it's important. If you are aware of it, I'll hopefully review it fairly quickly. And that is Delaware.

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Martin Shenkman: in a case, it's an odd name, something like CES2007 Trust.

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Martin Shenkman: Delaware upheld a domestic asset protection trust, which I will explain, and I will talk about the case.

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Martin Shenkman: The fact that we have a court case upholding

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Martin Shenkman: this type of asset protection planning is valuable, and we'll go through the limitations of what that

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Martin Shenkman: Court case really means it didn't go nearly as far as anyone doing this type of planning would like, but it's very helpful.

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Martin Shenkman: So, what's different? What's different post-OBA?

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Martin Shenkman: about… Asset protection planning.

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Martin Shenkman: First,

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Martin Shenkman: When we had a much lower estate tax exemption, a far larger number of people, families, were subject, or potentially subject, to estate tax.

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Martin Shenkman: I'm gonna leave aside state estate tax for this discussion.

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Martin Shenkman: Under the current regime, the federal estate tax exemption is $15 million, inflation adjusted.

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Martin Shenkman: And for a couple, that's $30 million inflation adjusted. I've seen different estimates, but

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Martin Shenkman: one of the more common ones that seems to pop up is that less than a quarter of 1% of American households may face any estate tax, and that assumes no planning to get out of it. So the estate tax is simply irrelevant for the lion's share of even what

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Martin Shenkman: anybody would call wealthy people. The exemptions are simply so high. Now.

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Martin Shenkman: even though this exemption is $15 million permanent, in air quotes, no one knows what permanent means in Washington. It really means, well, it's $15 million permanently until it's changed again. So, that may all change, but estate tax is not the driver that it had been.

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Martin Shenkman: What does that mean for planning? If a client is doing, or needs or should have, and many should.

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Martin Shenkman: Asset Protection Planning Steps the estate tax may not be relevant. In the past.

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Martin Shenkman: We would make gifts to these types of trusts, and still often do.

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Martin Shenkman: Completed gifts so that the growth in those assets is outside the client's estate.

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Martin Shenkman: But if a client has, for example, a $5, $10, $15 million net worth as a married couple, making a complete gift transfer to remove assets from their state is not helpful from an estate tax perspective. They don't face an estate tax. But it's actually detrimental from an income tax perspective.

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Martin Shenkman: Why? Because then, when they pass away, those assets are excluded from their estate, there's no basis step up, so all the capital gains

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Martin Shenkman: On the assets in that irrevocable trust.

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Martin Shenkman: do not get a basis step up, the capital gains tax will have to be paid when the heirs in the future sell those assets. Now, there's some very aggressive positions that, and I actually understand that John Porter has a case that he's litigating now.

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Martin Shenkman: I haven't heard a recent update on it, where a taxpayer claimed that they can get a basis step-up

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Martin Shenkman: on assets in a grantor trust that was not included in their estate for estate tax purposes. So, it remains to be seen what happens with that, but let's leave that aside.

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Martin Shenkman: So what is the broader lesson? Where a client has no likelihood of being subjected to an estate tax, but wants asset protection planning, you may transfer assets to any of the different types of trusts that we're talking about, we'll talk about.

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Martin Shenkman: But you may make that transfer an incomplete gift.

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Martin Shenkman: What an incomplete gift results in

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Martin Shenkman: Is that the assets remain taxed in the client's estate, but if you cut the line carefully enough, they can be outside of the estate that creditors can reach.

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Martin Shenkman: What will cause a trust to be an incomplete gift trust to get this potentially magical result of having assets in the estate for basis step-up, so you eliminate capital gains on death.

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Martin Shenkman: They're protected outside of their estate if a creditor or claimant tries to sue them.

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Martin Shenkman: If the settler, the transfer, the donor, the person setting up the trust.

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Martin Shenkman: Retains a limited power to appoint those assets in the trust, say, as between their children.

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Martin Shenkman: That limited power will cause a state inclusion, because it's an incomplete gift, it's as if they never gave it away.

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Martin Shenkman: That is a fundamental change in how asset protection planning Can or should be done.

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Martin Shenkman: Or… A large swath of people.

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Martin Shenkman: No longer estate tax motivated with completed gift trusts, now maybe incomplete gift trusts, so you get asset protection, basis, step up on death.

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Martin Shenkman: So, that's a fundamental change. In the past.

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Martin Shenkman: very, very wealthy clients who wanted asset protection may have used incomplete gift trusts, but it was a much more limited, segment of that type of planning. Now it may be much more, significant.

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Martin Shenkman: And obviously, if you do this type of planning with clients, you want to be attuned to it.

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Martin Shenkman: Because we don't know what may change in the future. And if in the future there's a change, potentially, maybe you have the person disclaim that power, you decant into a trust without that, and make it a completed gift. So, that's significant.

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Martin Shenkman: Now… This particular slide, is really important.

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Martin Shenkman: We, as all the different allied professions, whether you're a wealth advisor, accountant, attorney, insurance consultant, We have

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Martin Shenkman: spent so much time talking about e-state tax planning, GST planning, etc, etc, etc. Look at the number.

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Martin Shenkman: $529 billion of…

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Martin Shenkman: Claims. Tort cases. That's not all claims. It's not what's lost to divorce, it's not what's lost to other types of claims.

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Martin Shenkman: the amount of claims made against people in America is astronomical, and dramatically dwarfs the estate tax. So asset protection, and I kind of assume you already…

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Martin Shenkman: know this is really important. It deserves more attention. It should not be the Rodney Dangerfield of planning. It should be front and center.

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Martin Shenkman: And let me make just another comment.

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Martin Shenkman: It seems that so many, not just…

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Martin Shenkman: clients, but advisors are obsessed with avoiding probate. I have a revocable trust.

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Martin Shenkman: other than my car, because I don't want to deal with the DMV, I don't think I have any probate assets.

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Martin Shenkman: But… So, so there's nothing wrong with guiding clients to minimize probate.

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Martin Shenkman: probate with now the, you know, with internet and AI and everything else, anybody's documents that are filed are public record and probably easily identifiable. It's a reason enough to avoid probate. The delays in many court systems to get a will probated are really…

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Martin Shenkman: just beyond unreasonable. So…

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Martin Shenkman: Avoiding probate is good, but probate is only going to cost a limited amount of money and create some hassles and some time. Getting sued

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Martin Shenkman: And losing everything the client has.

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Martin Shenkman: destroys… can destroy them. And over the many decades of practice, we have seen, way too many tragic cases where people had lawsuits, IRS liens, gotten car accidents, and didn't have proper insurance coverage.

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Martin Shenkman: it really can destroy somebody. So, let's… let's try to give more emphasis in our planning discussions to asset protection. Now.

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Martin Shenkman: the role that the non-attorney plays in this type of planning has also become, in my view, far more important. With the high exemption amounts, an awful lot of families, even those with more than $30 million.

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Martin Shenkman: feel that estate tax is just off radar. They're just not worried about it.

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Martin Shenkman: And if that's the case, they're not coming back

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Martin Shenkman: to their estate planning attorney. So it's going to be up to the accountant, the insurance consultant, the wealth advisor to try to educate clients on the importance of asset protection planning. Really important, because too many people that need it aren't speaking to their attorneys to get this kind of guidance.

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Martin Shenkman: So, it's clearly a more important tool in light of this recent Delaware case, which I mentioned a moment ago, now we'll talk a little more about it. The name of the case is kind of odd. The CES 2007 Trust, so that's what the trust was called.

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Martin Shenkman: I guess somebody felt that by having initials.

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Martin Shenkman: the family name or something wouldn't be public record, but it's all public record because of the lawsuit. So, I don't think you accomplish much using cryptic trust names. I'd rather have trust names that make it clear what the trust is.

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Martin Shenkman: Too often we see clients have trust names that are cryptic, or even if the trust name is clear, like the John Smith, irrevocable 2020 Trust, when they open accounts.

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Martin Shenkman: the account names get truncated because there's only so many fields that the trust company or the advisor, financial advisor can have, and we end up with… and I… we keep seeing this over and over.

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Martin Shenkman: The Smith Family Trust. What is that? Is that their revocable trust, their insurance trust, a dynastic… they may have 5 or 6 trusts in the family, and you can't differentiate them. The danger in that

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Martin Shenkman: Is that if you don't even know the name… if you can't tell by the name of the trust what the particular trust is, somebody's gonna engage in transactions that are improper for that trust just simply because of the confusion of names.

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Martin Shenkman: So I encourage every banker and trust officer and wealth advisor, when you're naming accounts, speak to the attorney and make sure the name, however truncated it has to be.

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Martin Shenkman: clearly signifies what the account is for. And one of the lessons in this CES Delaware case was the client really didn't do a great job administering the trust. There were just…

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Martin Shenkman: I'll call them footfalls, but some of them were worse, and…

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Martin Shenkman: My view, the, the client, the defendant, who created the trust.

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Martin Shenkman: kind of got lucky that the court didn't abosh the whole plan because of some of their administrative footfalls. So, careful administration is really critical. And by the way, that's why the wealth advisor and the accountant

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Martin Shenkman: play a critical role in the success of estate planning. It's not merely, let's say that the client hired an attorney and they did a great trust, perfect trust. If it's not administered, it's not going to work. And if you actually read this particular case, or some of the articles on it, you'll see a litany of

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Martin Shenkman: bad administration, and they were just lucky. And in fact, the client was subject to a later lawsuit in Connecticut, because they had made a fraudulent conveyance to the trust, and that was unwound.

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Martin Shenkman: What did the Delaware courts say?

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Martin Shenkman: And why is this an issue? And what didn't they say?

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Martin Shenkman: So…

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Martin Shenkman: An asset protection… a domestic asset protection trust, and it's often called by the acronym DAPT, Domestic Asset Protection Trust.

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Martin Shenkman: Is a trust that's irrevocable.

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Martin Shenkman: We call that can't be changed, but we all know with decanting and non-judicial modification, where the parties agree, you can modify a lot of irrevocable trust. Not everything, necessarily, but a lot, potentially.

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Martin Shenkman: But… It's an irrevocable trust where the person who set it up is also a beneficiary.

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Martin Shenkman: So, a client that's a surgeon, they know that 20%, I think that that's still a current statistic, approximately 20% of surgeons are sued every year, meaning over 5 years, the odds are you have a lawsuit. Once every 5 years is a surgeon.

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Martin Shenkman: So, if somebody who's a surgeon wants to protect their assets, but says, gee golly.

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Martin Shenkman: I'm gonna need that money in retirement, a domestic asset protection trust may be a perfect vehicle.

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Martin Shenkman: What the Delaware court said is this particular trust, because it met the criteria of the Delaware statute.

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Martin Shenkman: was valid.

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Martin Shenkman: It named a qualified trustee.

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Martin Shenkman: It, had a spendthrift clause that assets couldn't be assigned to a creditor, and whatever the other statutory requirements. So it met the technical requirements, the trust was upheld.

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Martin Shenkman: So, that's a great thing, because there's over 20 states, not New York, not New Jersey, that have legislation permitting these trusts. The leading, and I'm gonna say that in quotes, because everyone will define that differently, but

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Martin Shenkman: The states that have been doing this and known for this for many years are Delaware, South Dakota, Nevada, and Alaska. But there's now over 20 states that have this legislation. Tennessee has jumped into it, New Hampshire.

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Martin Shenkman: Michigan, Connecticut have legislation. So, there's many states that have it. It's not…

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Martin Shenkman: when Alaska passed the first statute in 1997 or 98, it was the first domestic state that had any legislation, and most advisors went, oh, you know, this is… this is like one-off, it's too aggressive, it'll never be upheld. In all the decades.

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Martin Shenkman: since the Alaska statute was enacted, the only cases that I'm aware of that have held against these types of trusts

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Martin Shenkman: Or where the facts have been awful.

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Martin Shenkman: In the Huber case, Washington, I think, applied its law instead of the Alaska law,

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Martin Shenkman: Because the individual involved was in default on mortgages and in a lawsuit with his real estate partner when he purported to transfer assets to an Alaska self-settled trust to protect them. So that's not gonna work.

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Martin Shenkman: The piece that has always been a question for advisors is.

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Martin Shenkman: Will, if you have, for example, a client in New York or California, That is,

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Martin Shenkman: creating this type of trust, will New York courts respect an Alaska trust?

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Martin Shenkman: Or will they instead apply New York law and say that New York law governs because the individual is in New York? Will, New York have to give full faith and credit to a, will Alaska have to give full faith and credit to a New York court that tries to pierce the trust?

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Martin Shenkman: That key question about the full faith and credit laws of the Constitution and how it would apply to potentially unravel this type of trust has never really been addressed in any of the cases since the first Alaska statute in the late 1990s, 97 or 98. So.

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Martin Shenkman: Court in Connecticut didn't address that issue. It simply said, this trust complied with the statute, and it upheld it.

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Martin Shenkman: So now we do have the favorable

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Martin Shenkman: ruling from a major, well-respected state, Delaware. Many states tend to follow Delaware, courts, in holdings.

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Martin Shenkman: that uphelds this type of trust. So if you were concerned about using a self-settled trust in the context that we talked about, like the example of the surgeon that's worried about liability, but also concerned that they may need access, using a self-settled trust

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Martin Shenkman: is certainly a viable approach to consider. It can't be stated that it has no risk, because the full faith and credit issue has never been addressed.

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Martin Shenkman: And you can't say it's gonna assuredly work even apart from the full faith and credit, because a lot's gonna depend on how it's administered. And the proper administration of a trust is something that the advisory team can and should do.

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Martin Shenkman: It's really critical.

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Martin Shenkman: So, let's… let's go on.

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Martin Shenkman: Now, here's… here's something, and I just had this happen this week, and I added this to the slide deck.

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Martin Shenkman: Ai is transforming everything we do.

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Martin Shenkman: We use a software called EstateView.

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Martin Shenkman: And EstateView has a very robust

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Martin Shenkman: background check function. Now, why do I use that? I have subscriptions to other AI,

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Martin Shenkman: I use it because they train the AI. What does that mean?

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Martin Shenkman: The, software company that, puts out a state view has spent a lot of time

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Martin Shenkman: creating prompts, and I'm using the wrong words because I'm not… I'm not the, the tech specialist, but they create prompts and parameters that they input so that it tells AI where to search.

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Martin Shenkman: How to format, the results so that they're useful.

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Martin Shenkman: If you're gonna engage in a new client, before you accept the new client.

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Martin Shenkman: you should have an AI background check done on the client to see if anything comes up.

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Martin Shenkman: So, if a client calls you.

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Martin Shenkman: and says, I want estate planning, there's nothing alarming about that. The client call… you still should do a background check. If a client calls you and said, I want asset protection planning.

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Martin Shenkman: Why are they all of a sudden calling, asking about asset protection planning?

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Martin Shenkman: Where was the case that worries them? What occurred?

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Martin Shenkman: So I had a call, Monday from a prospective client.

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Martin Shenkman: $40 million net worth, sounded like a nice client, needed planning, wanted asset protection planning.

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Martin Shenkman: So, I went to StateView, and I inputted whatever information I had, and did a background check.

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Martin Shenkman: This prospect had told me that there were no cases.

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Martin Shenkman: There were no, lawsuits, nothing had occurred. He's worried about possible future issues.

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Martin Shenkman: Well, lo and behold, from the background check.

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Martin Shenkman: there were a whole string of cases. So, first of all, I wouldn't accept him as a client, because he lied to me, but secondly, I would be very uncomfortable pursuing asset protection planning for somebody that has a whole string of cases that are still pending.

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Martin Shenkman: So, protect yourself by doing an AI search before accepting any type of asset protection planning client.

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Martin Shenkman: I would do this before any large type of transfer any client does. And by large, I don't mean $15 million of exemption. If a client is transferring even a couple of million dollars, that's not chump change. Do a due diligence

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Martin Shenkman: On the… on the client.

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Martin Shenkman: This is also very important.

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Martin Shenkman: the due diligence records, a balance sheet, a financial forecast from the client's wealth advisor showing that even after the transfers to the trust, they can support their lifestyle expenses. All these things help protect the client as well, because it helps to negate or deflect

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Martin Shenkman: a future claim that the transfers to this trust, whether it's ADAPT or any of the other things we're going to talk about, was a fraudulent conveyance.

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Martin Shenkman: I don't see enough of that done. Example… another example. In addition to a background check and a balance sheet, and I try to insist, encourage that they always have their wealth advisor do forecasting, have an insurance analysis done.

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Martin Shenkman: Every type of irrevocable trust or asset protection plan has financial gaps. So if I create a trust for my spouse, a spousal lifetime access trust, if my spouse dies prematurely, I may lose access to the assets in that trust.

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Martin Shenkman: Well, that's a financial gap or risk. How can you fill that gap? One simple way, and there's other ways legally in how you draft and how you structure the trust, but a simple thing to do is have my spouse buy life insurance so that if she dies prematurely, the life insurance substitutes for the,

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Martin Shenkman: distributions I may have anticipated from her trust.

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Martin Shenkman: So, get an insurance projection done.

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Martin Shenkman: of the different types of policies, whether it's long-term care, disability, life, or all of the above, to see how to fill those gaps. And I think that's also helpful to deflect a future challenge if something was done wrong. All that background is due diligence that supports the file. You need to give a code.

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Jonathan Shenkman: Yep. Before continuing, I just want to interject here very briefly with the code for accounts and attorneys who are taking this program for credit. Please write this down. The code is A10, again, A as in apple, the number 1, and the number 0. One final time, A10. Back to the program.

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Martin Shenkman: So, this next section, because you're all professional advisors, I'm gonna go through very quickly.

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Martin Shenkman: But the point I want to make here, and the point of the next… this section of slides, we've already kind of said, and that is asset protection is more than just setting up a trust. It's really a holistic review. When I have a client, and I try to do this for every client from an asset protection perspective, I want to see a balance sheet.

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Martin Shenkman: And I want to go through the balance sheet, assets and liabilities, and look at each different category of entry.

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Martin Shenkman: And then for each entry, I ask two questions. First, does that asset create liability?

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Martin Shenkman: For the client's overall balance sheet.

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Martin Shenkman: Example, you have a rental property. Rental property is an asset, but that asset creates liability. How do you address that? You all know, you put the rental property into a limited liability company. You make sure the client has proper casualty property and liability insurance. Now you've protected, reasonably so.

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Martin Shenkman: the other assets from the liability the rental property creates. The second question is, how can I protect

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Martin Shenkman: the asset. And too often, that's the only focus in asset protection. It needs to be both. What liabilities does each category of asset or liability on the balance sheet create? And how can you insulate other assets from it? And secondly, how can you protect that asset? So if I put this rental property in an LLC,

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Martin Shenkman: And I make sure the client is advised to get proper coverage, which I can't address, it's not my expertise, but you certainly want them to make sure they get coverage.

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Martin Shenkman: By the way, a lot of people on a rental property don't. If it's a home, they misrepresent to the insurance company that it's a residence, when in fact it's a rental, and that coverage may be void. What do you do now to protect that rental property

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Martin Shenkman: from claims that originate outside the rental property. The owner gets in a lawsuit, the owner gets in a car accident that exceeds the coverage they have. Well, you could fractionalize the ownership.

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Martin Shenkman: Between spouses. Even better, you could fractionalize the ownership between two irrevocable trusts. So if husband creates a trust for wife.

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Martin Shenkman: And wife is a beneficiary. And separately, wife creates a non-reciprocal or different trust for husband, that husband is a beneficiary with different rights for each of them, so it's not reciprocal.

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Martin Shenkman: and the rental property LLC is owned 50% by each.

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Martin Shenkman: now I've really gotten even better asset protection for the rental property. So the LLC protects other assets from the rental property risk. The fractionalization of the LLC protects the value of that entity from claims elsewhere, because if somebody sues

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Martin Shenkman: one spouse, the most they can do is they can then have to pierce a trust, and even if they pierce the trust, they only get half of an LLC, so not only is there charging order protection in most states, but that's a long, tough battle. So, go through the balance sheet, take a holistic approach.

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Martin Shenkman: Another point, it's not just about… A self-settled trust.

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Martin Shenkman: And I just gave a perfect illustration. Creating non-reciprocal is a lifetime access trust, which is a very common planning tool that's done all the time in 2020, 2021, you know, when we thought the exemption was going to go down in 2026, having couples, married couples.

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Martin Shenkman: create… Spousal Lifetime Access Trust was… was…

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Martin Shenkman: almost ubiquitous in planning. Everybody was doing it, and it still makes sense. Still a great tool, even without an estate tax, to address asset protection planning.

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Martin Shenkman: And by the way, and this is really important, and I see a lot of people misunderstand this.

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Martin Shenkman: Everyone talks about, everyone in the estate planning world, the reciprocal trust doctrine from, oh my, if husband creates a trust for wife, and wife creates a trust for husband, they have to be different enough so that the IRS cannot uncross them.

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Martin Shenkman: Two, two quick points. Point one.

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Martin Shenkman: That is not merely a tax construct.

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Martin Shenkman: Creditors can use the same theory to undo the trust planning and reach the assets. So it's very important if you're doing

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Martin Shenkman: SLATS, Spousal Lifetime Access Trust for asset protection, great tool that you make them sufficiently different so they can't get uncrossed. Second point on slats, that is…

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Martin Shenkman: Almost never seems to be addressed.

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Martin Shenkman: When I create non-reciprocal slats, my preference, unless the client's wealth level is too small to afford it, and it's not that expensive, is I will put each spouse's slat in a DAPT jurisdiction.

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Martin Shenkman: So… And…

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Martin Shenkman: For example, the husband's slat that he forms for the wife will be in Alaska, and the wife's slat that she forms for the husband, again, non-reciprocal, different provisions, would be in Nevada.

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Martin Shenkman: I do that with institutional trustees. That doesn't affect the wealth advisor, because they're all directed trusts, but by doing that, several things. First.

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Martin Shenkman: if somebody's living in New York or California, now they have to go to Nevada to try to attack the trust, let's say, that the wife set up.

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Martin Shenkman: But worse, take the example of the LLC.

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Martin Shenkman: For better, take the example of the LLC I gave. Half of the LLC that owns a rental property asset is owned by a Nevada trust, and half is owned by

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Martin Shenkman: an Alaska Trust. So think of the impediments that's creating for a claimant to pursue that rental property to satisfy a claim against either spouse, or both spouses. They have to go to two different jurisdictions.

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Martin Shenkman: And I don't know how easy it is to get a litigator to sue one of the trust companies in Alaska or Nevada, because they're all often so involved with doing work for the trust companies that a lot of them are going to be conflicted out.

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Martin Shenkman: You now also, for purposes of the reciprocal trust doctrine, you've sort of integrated or infused two different state laws into each trust that further, in my view, differentiates them from the reciprocal trust doctrine. Again, not just for,

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Martin Shenkman: IRS purposes, but for creditors and claimants as well. Also very important.

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Martin Shenkman: Think of the incremental asset protection benefit

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Martin Shenkman: If you're in New York, and your client has trust in two different… clients have trust in two different jurisdictions, for somebody from New York to have to pursue claims in two different states to try to get at their asset that's fractionalized. And even if they pierce the trust, as I said earlier, they still have to get through the LLC.

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Martin Shenkman: So, the jurisdictional aspect of it.

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Martin Shenkman: is really important. Another very important point. And I see too many clients, when they set up non-reciprocal slats, they'll name spouses. If this is for… if asset protection is even a small motive.

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Martin Shenkman: Why would you name your spouse on your trust, and your spouse name you on your trust? I just… I feel that's so much less defensible if something happens. But here's the real crux of it.

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Martin Shenkman: For a fairly modest annual flat fee.

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Martin Shenkman: that most of the administrative trust companies charge, and by administrative trust, they're not investing the assets, they only have the responsibility to administer the trust. You have a professional institutional trustee. That is a huge benefit in terms of respect for the trust and the trust transaction.

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Martin Shenkman: We all know that when clients, family members, or friends Serve as trustees

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Martin Shenkman: They rarely adhere to the formalities.

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Martin Shenkman: Rarely.

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Martin Shenkman: An institution has formalities and processes and procedures in place to make sure formalities are respected. So it's a much safer and better result

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Martin Shenkman: From a NASA protection perspective.

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Martin Shenkman: Some people still view asset protection as, like, it's a bad thing you're trying to

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Martin Shenkman: Keep your assets from your creditors. No, it's a prudent thing, it's not a bad thing. Everybody buys property casually in liability insurance. Lots of people do prenuptial and post-nuptial agreements. Many people will get assets that are exempt under state law, like a homestead exemption in Florida.

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Martin Shenkman: Many people, maybe even most clients, own homes in states like New York and New Jersey as tenants by the entirety, which provides a measure of asset protection. Lots of people use qualified plans and maximize their assets in qualified plans, because those can be protected. Qualified plans under ERISA, IRAs, under state law.

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Martin Shenkman: A Roth conversion. Lots of people talk about it from an income tax perspective, but think about the math from an asset protection perspective. If you have a million dollars in a regular IRA, it may be worth $600,000 net a tax.

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Martin Shenkman: Guessing… assuming a 40% tax. If you convert that million-dollar IRA to a Roth, and you pay the income tax on the conversion from non-protected assets, now you have a million-dollar protected asset.

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Martin Shenkman: So don't view asset protection planning as something only bad people do, or that it's a negative. No, it's very positive. And if you listen to the… and heed the comments I made about due diligence and protecting yourself, it shouldn't expose

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Martin Shenkman: the practitioner who's prudent and careful and does due diligence to risk, and I think if the client's doing the same due diligence, it gets much harder for someone to argue a fraudulent conveyance when everything… there were no storm clouds on the horizon when they did the planning.

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Martin Shenkman: We talked about the beginning of self-settled trust, we've talked about the CES case. Let me just make a few more comments on it.

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Martin Shenkman: In the case… The taxpayer… the taxpayer, the… the defendant

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Martin Shenkman: Did a number of bad things.

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Martin Shenkman: That, fortunately, the court didn't undermine the trust form.

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Martin Shenkman: they… transferred assets into LLCs owned by the trust. They took assets out of the trust.

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Martin Shenkman: out of the LLCs, into the LLCs. They financed properties and had use of the money.

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Martin Shenkman: You gotta be very clean and careful in how you administer it.

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Martin Shenkman: And that's why a team approach is so important. If a client needed access to money, they should talk to their wealth advisor, who should understand that you're not going to tap trust assets, and we can arrange a line of credit or a loan from some other way, so we're not undermining the plan. Really important to avoid the shenanigans or footfalls that this client did.

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Martin Shenkman: There are two important points.

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Martin Shenkman: in the structure of this recent, I think, very important Delaware case that are worthy of note.

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Martin Shenkman: The most common trust structure that I see is the following.

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Martin Shenkman: Client sets up a directed trust.

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Martin Shenkman: So that an investment advisor or investment trustee is named in the trust, an institutional trustee in Nevada, Alaska, Delaware, South Dakota.

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Martin Shenkman: and South Dakota, you know, there's… or New Hampshire, wherever you pick.

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Martin Shenkman: They're in charge of administering the trust, but the investment trustee is in charge of asset decision making. That way, the client continues to control the decisions for investments. Investment is not deemed a tax-sensitive power.

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Martin Shenkman: What this case had in it were two factors that are common, ubiquitous in the asset protection and estate tax planning that I see. Number one.

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Martin Shenkman: John Smith, whatever the client's name, Schubener, I think it was, he was the investment trustee of the trust.

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Martin Shenkman: Second, the trust-owned interest in LLCs

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Martin Shenkman: that owned real estate. It was the manager of the LLCs. Despite the transfer or the settler setting up the trust, the person who became the defendant because of the claims.

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Martin Shenkman: Came, when he was sued.

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Martin Shenkman: despite his being in charge of investments for the trust and the manager of the LLC owning underlying assets, the court said that doesn't negate the validity of the trust. He was not acting as the general trustee, he did not control distributions, the trust remains valid.

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Martin Shenkman: That's a powerful and important point to this case that I didn't say in my earlier comments.

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Martin Shenkman: And that's something that helps support the structure that is so commonly used. So if you have a client that's, has a family business, and they put the family business into a trust, they can remain

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Martin Shenkman: an officer or a manager of the LLC that runs a family business, they can be the investment trustee of the trust, so they can make the decision to hold or not hold that family business. That's very important and very powerful.

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Martin Shenkman: Next slide, there's a point

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Martin Shenkman: that I see usually done… I can't say it's wrong, but I think it's fair to say less than optimally.

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Martin Shenkman: So let's say your client owns real estate in New York, and that real estate is being put into,

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Martin Shenkman: a Tennessee Asset Protection Trust.

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Martin Shenkman: What I would do, what I would recommend, form the LLC that owns the real estate in Tennessee, where the trust is, and then authorize it to do business in New York, where the actual real property is.

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Martin Shenkman: And even if you have an LLC that already owns the property and you transfer it to the trust, you can reorganize it

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Martin Shenkman: under Tennessee law, and have it authorized to do business in New York. Why? I think having the entity, LLC in our examples, formed in the jurisdiction, the state where the trust has CITUS, helps further support the nexus to that state.

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Martin Shenkman: No law on it, never seen anything written on it, it just seems to make sense to me. If someone's gonna try to attack and pierce the trust, every additional contact you have with the jurisdiction, to me, makes sense. I also think it's important to have some… some reasonable bank account for the trust

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Martin Shenkman: And maybe even for the LLC in the same jurisdiction.

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Martin Shenkman: So if you have a trust formed in Nevada.

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Martin Shenkman: Trust itself should have at least a money market account with 20 grand, maybe more, in Nevada.

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Martin Shenkman: If there's an LLC formed in Nevada and authorized to do business in New York to hold a rental property, see if you can have the bank account in Nevada.

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Martin Shenkman: I can't tell you how to weigh the benefit of what I've just said, but it just seems logical to me that the more connections I create to the state.

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Martin Shenkman: the stronger my argument is that that trust has sufficient nexus to apply Nevada law and not New York law.

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Martin Shenkman: In the Delaware case, they tried to invalidate the trust. Court said no.

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Martin Shenkman: They tried to void the spendthrift provision, which is required to have a Delaware asset protection trust, and it's required in all the states. The court said there's no basis to invalidate it.

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Martin Shenkman: client was a little… the taxpayer, the settler, the defendant was a little lucky, because, as I said earlier, they were kind of doing transactions that were really not optically…

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Martin Shenkman: Great.

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Martin Shenkman: They tried to argue the trust was a sham. They said no.

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Martin Shenkman: It met the statutory requirements, the trustees were qualified trustees, and the mere fact that the,

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Martin Shenkman: Defendant served as the investment trustee, did not

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Martin Shenkman: Any… to not negate the fact, and we talked about the full faith and credit.

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Martin Shenkman: Now, here's something else, and I want to change gears and piece together a few of the comments I made. I've talked about domestic asset protection trusts, self-settled trusts, where the client themselves is a beneficiary of trusts, of the trust. I've talked about non-reciprocal spousal lifetime access trusts.

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Martin Shenkman: I talked about putting the trust with an institutional trustee in Nevada and Alaska, and so on and so forth. There's really a whole continuum

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Martin Shenkman: on which you can help a client plan. So maybe on the low end of the continuum, everybody should have an excess personal liability or umbrella policy, right? And too many clients don't have enough. And,

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Martin Shenkman: One of the mistakes that I hear people make is, oh, I got a million dollar umbrella, there won't be a claim more than that. Yeah, but you're worth $5 million, or $10 million, or whatever.

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Martin Shenkman: if the claim exceeds a million dollars, they're coming after your assets. So.

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Martin Shenkman: Maybe you want a bigger excess liability policy.

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Martin Shenkman: You take a little teeny step up, you have a rental property, we all know to tell a client, if it's a rental property, or even a home-based business, put it into an entity, an LLC.

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Martin Shenkman: Maybe a little further up, let's meet with your lawyer every year. Yeah, I know the lawyer's gonna charge you, but meet every year.

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Martin Shenkman: Keep adequate records, have the operations reviewed, talk to your accountant, have a collaborative meeting, make sure that the LLC is operated properly. Not a big deal to do. So you're starting to move from maybe almost no asset protection, to insurance coverages, to entities, and then now into the trust realm.

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Martin Shenkman: You can start with a simple, non-reciprocal spousal lifetime access trust formed in the client's home state, let's say they're in New York.

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Martin Shenkman: and not spend the extra money, which I don't think is material for a lot of people, but again, you can do the planning at a lower level, for less cost, with less complexity, and it's still… you're moving the client down the continuum towards stronger and better planning.

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Martin Shenkman: I still wouldn't put spouses as trustees, I just…

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Martin Shenkman: I think it's just too hard to risk a problem if there is a real suit or claim. So, name independent people if you're not naming an institution. You can always give a trust protector in the document, and it's very simple to add.

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Martin Shenkman: the right to remove and replace trustees and change governing law on site us. So maybe the young surgeon, who doesn't have a lot of money right now, but still wants to start putting money into the trust.

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Martin Shenkman: can have it as a local New York trust with Uncle Joe as trustee of one trust, Aunt Jane as the trustee of the other trust.

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Martin Shenkman: So they keep their costs to a minimum, but they're getting it started. Now, years later, as they start to accumulate some wealth in the trust, their longtime family accountant pulls the trigger, moves the trust to Alaska and Nevada, and names institutional trustees.

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Martin Shenkman: The beauty of the plan that I just said, and you haven't gone initially far down the continuum, but when the trust protector pulls the trigger, you move further down the continuum, is that you can do it simply and more cost-effectively for a client with more moderate wealth, and as they grow into it, move. The CES

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Martin Shenkman: 2007 Trust Delaware case that I talked about, one of the very important points

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Martin Shenkman: Which is going to reinforce the planning I just said, with a cheap local trust that you then move.

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Martin Shenkman: The court noted

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Martin Shenkman: in a very positive way, that the trust involved was set up before the activities that gave rise to the claim involved in the suit against the defendant even arose. The trust, and I don't have the dates in front of me, but the trust was set up, let's say, in 2007,

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Martin Shenkman: But the claim, or the real estate activity, the loan, the guarantee, whatever gave rise to the claim, occurred 7 years later.

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Martin Shenkman: Having a trust in place long before an issue occurs

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Martin Shenkman: Really gives great credibility and security to the plan.

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Martin Shenkman: So that's why I think it's so vital, as I said earlier, that all advisors, especially the non-attorney advisors, the accountant, the wealth advisor, the insurance consultant, need to encourage and educate clients about the importance of planning. This Delaware case really drives home the message. Get the planning done early.

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Martin Shenkman: some of the things that I'm talking about, like getting the planning done early, even if you do it cost-effectively and later improve it, some of the things that I've been talking about.

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Martin Shenkman: They're not highly complex or sophisticated, but can have a really outweighted positive impact on the success of the plan.

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Martin Shenkman: The most important opportune time to do asset protection planning

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Martin Shenkman: Is before the client thinks they even need it.

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Martin Shenkman: And based on the case that I just talked about, getting planning done then, before it's needed.

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Martin Shenkman: Makes the planning so much more solid when it's later needed.

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Martin Shenkman: So, how far a client will move down that asset protection continuum depends on their perception of risk, the cost and complexity of planning.

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Martin Shenkman: What they view as the trade-off, the pros, the cons, and benefits.

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Martin Shenkman: But here's where you can also, as an advisor, introduce some planning that, again, is not done enough.

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Martin Shenkman: I can use a spousal Lifetime Access Trust

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Martin Shenkman: to plan for a moderate wealth client, and later move it to a better jurisdiction. But we can go further.

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Martin Shenkman: If the client's hesitancy is, gee, you know, in 20 years when I retire, I may need access to that money.

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Martin Shenkman: take the SLAT, the Traditional Spousal Lifetime Access Trust, And give a special person

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Martin Shenkman: In a non-fiduciary capacity, not a related or subordinate party.

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Martin Shenkman: The power to do one of two things.

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Martin Shenkman: A hybrid dApp or a SPAT? Hybrid dApp. I give my longtime accountant, Bob.

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Martin Shenkman: the power to add me back as a beneficiary to the slat that I created for my wife. So, God forbid there's a premature death, he can add me back to the trust so I can now benefit from it. For most clients of even fairly wealthy means.

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Martin Shenkman: Giving away $15 million, or whatever they can afford to give into a trust, is scary, because they may want the money later. Knowing a long-time trusted accountant can add them back as a beneficiary may give them the comfort level to proceed with that kind of planning. That's called a hybrid DAPT.

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Martin Shenkman: Simply, it's a domestic asset protection trust in the future, but only if and when, and that's where the hybrid word comes, that person is at a back. Now, many people will say, don't just…

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Martin Shenkman: permit the client to be added back, make it the descendants of the client's maternal grandmother, because, oh, it's a class of people, the client's only one of them.

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Martin Shenkman: I mean, I think that's pretty transparent. Do we do it? Yes, sometimes. But the concept is you can get the client an additional means of access to the trust. So instead of doing a slat that the husband creates and a slat the wife creates, one of them can create a hybrid adapt.

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Martin Shenkman: and the other can create a SLAT. Think of how that also breaks the reciprocal trust doctrine. Why do two plain vanilla slats, with whatever differentiation on powers of appointment distribution rights, if I can add a hybrid DAP provision? A SPAT is similar.

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Martin Shenkman: And a SPAT is a special power of appointment trust, so I give my longtime accountant, Bob, the right not to add me back as a beneficiary, because if I'm a beneficiary, it's a self-settled trust, and I'm in New York, where you can't use a self-settled trust, but I give Bob the right to direct the trustee to make

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Martin Shenkman: a payment to me. Bob has a limited or special power of appointment. We've used limited powers of appointments in estate planning for forever.

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Martin Shenkman: to appoint money to me. So it's not included in his estate, it's not a right his creditors can reach, and arguably, I'm never a beneficiary because the trustee can't give me a distribution, only this person, Bob, can appoint

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Martin Shenkman: assets to me. So you can take the chassis of a common non-reciprocal slap plan, enhance it by putting it in two different jurisdictions, enhance it by having different provisions and maybe adding to those, enhance it by making one a SPAT and one a hybrid DAPT,

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Martin Shenkman: And you're not just enhancing the differentiation, which can help from tax and asset protection, you're enhancing access, which is absolutely critical for a lot of clients to be comfortable with this type of planning.

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Martin Shenkman: I got ahead of my… with my discussion, I was so excited about this, that the next few slides we covered. But the point of these slides is, on the continuum, you can also do planning at a much more cost-effective and simpler level, and move it up as the client

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Martin Shenkman: becomes more concerned about asset protection as their wealth level grows. So I broke out asset protection pending steps that can be at a low end, at a mid end, and at the higher end.

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Martin Shenkman: Keep in mind, is on this slide.

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Martin Shenkman: it's not just SPATs and DAPs and hybrid DAPs, and if the acronyms are making you spin, special power of appointment trust is the SPAT, the hybrid DAPT is where I can get added back as a beneficiary to my trust, the DAPT is where I already am a beneficiary.

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Martin Shenkman: But all types of irrevocable trusts can provide some type of asset protection planning. And I think one of the mistakes is somebody comes for asset protection planning, and they do a foreign or domestic asset protection trust, and that's all the planning they do.

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Martin Shenkman: Think of it more holistically. Okay, I got young kids.

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Martin Shenkman: I don't have young kids, but if the client has young kids, do an insurance trust. Well, why should I do an insurance trust if I can have insurance owned by the slat?

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Martin Shenkman: Well, because now you have a separate pot with a different trustee in a different jurisdiction. So if I'm buying term insurance, I may just have a fairly plain vanilla insurance trust in New York that owns my insurance, and a separate slat in Nevada that's more asset protected. But think how you complicate and increase the cost and difficulty of somebody piercing this trust.

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Martin Shenkman: Because now you have… an insurance trust in New York, and a SLAT,

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Martin Shenkman: for one spouse in Nevada and a slap for another spouse in Alaska. Charitable remainder trusts, RATs, they're not great as asset protection tools.

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Martin Shenkman: Because of the leakage, right? A charitable remainder trust is going to pay a unitrust or annuity trust payment out. A grat's going to pay an annuity trust out, no one really does gruts. So, in those contexts.

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Martin Shenkman: They're not ideal because of the leakage, but again, if you're multiplying the number of different irrevocable trusts, the jurisdictions, the trustees, think of how you're building a more difficult

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Martin Shenkman: plan to pierce if there's a suit or claim. It's gonna cost a lot of money for someone just to figure out

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Martin Shenkman: By hiring a, you know, their own counsel, what the plan even is.

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Martin Shenkman: Add to that 529 plans. Well, what's good about 529 plans? As the account owner, you can pull the money out.

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Martin Shenkman: but it's out of your estate, it's not yours, I don't know unless… if it's not a fraudulent conveyance, I think piercing a 529 plan's gonna be very hard. Roth conversions. All of these things together

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Martin Shenkman: can build a more elaborate, and I think a more defensible plan. And here's another key point. If somebody moves a huge disproportionate amount of their wealth.

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Martin Shenkman: into a… Asset Protection Trust in South Dakota.

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Martin Shenkman: Kind of looks like you did this because you were worried about claims.

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Martin Shenkman: No, no, no, no. I set up a slat because I want to protect my wife, and I'm worried that, you know, the exemption may come down, I want to do it while I can. The insurance trust owns insurance because I have little kids, or I have a family business that's illiquid, I want to cover that. Roth conversion, my accountant told me it made sense from an income tax perspective.

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Martin Shenkman: Cuprit, I thought the house that we live in may continue to grow in value. I thought it was a great way to get it out.

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Martin Shenkman: and you do a cupid for 30 years, so the client has lots of time to live, and if they die prematurely and it ends up back in their estate.

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Martin Shenkman: still provided some measure, some measure of protection. So you start to cobble together a plan where each component, and this is a key point, each component has a rational, justifiable, explainable, non-asset protection motive for it.

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Martin Shenkman: So…

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Martin Shenkman: On the higher end, you can start to cobble together more and more of these different types of trusts and planning.

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Martin Shenkman: So, to summarize.

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Martin Shenkman: two of my last topical points. First, when you do asset protection planning, get a good balance sheet, have the accountant or wealth advisor both put together a good balance sheet so you have the title and ownership of each asset correct.

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Martin Shenkman: and you know what each different category of asset is. Evaluate every single line item for what risks might this pose to other assets on the client's balance sheet, and how can we protect the other assets from the risk inherent in that asset. Second, what can we do to protect

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Martin Shenkman: That asset from claims against the client that could pierce or reach that asset in a settlement.

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Martin Shenkman: Do that for everything in the balance sheet. Then take a look at the asset protection continuum.

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Martin Shenkman: where is appropriate for the client to be, not just today, but where may they want to move as time goes on? Because if you think forward a little bit, you know, you could form a simple life insurance trust in the client's home state with a spouse as a trustee.

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Martin Shenkman: Is that the best asset protection plan? No, but it's pretty good.

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Martin Shenkman: But if that same trust, you just throw in a trust protector provision.

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Martin Shenkman: If in the same trust, instead of using a simple, old-style life insurance form that you used 20 years ago, use a modern, robust, drafting software to create, you know, trust protectors and decanting provisions, it doesn't cost a lot or take a lot to throw in

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Martin Shenkman: a lot of other enhancements into the trust. So you can create a really robust trust, naming a spouse as the trustee, so there's really no cost, it's not a big deal to do, it's local, you don't need an opinion of counsel in Michigan, another DAP jurisdiction.

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Martin Shenkman: And as the client's wealth grows, you can enhance it, you can decant it, you can move it to a better jurisdiction. Where is the client today? Keep in mind the Delaware case, that it was done 7 years before the suit that that asset protection trust was set up. Get clients started today.

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Martin Shenkman: And have them move forward over time. That moving forward over time requires a collaborative team effort and periodic meetings, which too many clients don't do. We had a call yesterday from somebody that wanted to know if I could do a,

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Martin Shenkman: A certificate of trust, or a revocable trust, because they're selling their home.

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Martin Shenkman: I looked in our file, we haven't seen this person in 21 years.

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Martin Shenkman: How do I even remember who they are? Clients need to come back. A wealth advisor or accountant, you meet with your client at least annually. If they haven't talked to their estate planning attorney like this person in 21 years, they're long overdue, right? You're not going to go 21 years without changing the oil in your car.

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Martin Shenkman: Another sort of view of it, and we've talked about it, so this'll be quick.

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Martin Shenkman: is create lots of different buckets. 529 plans, Roth IRA, insurance trust. Oh, but that's more complicated. You're trying to protect assets, and I think it's more defensible if somebody has 6 different buckets that they have to attack.

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Martin Shenkman: A Roth conversion, let's say there's only a half a million in the Roth conversion, but 5 or 10 million in the trust. Maybe the claimant's gonna assess, you know what, Roths are protected under state law. Unless I have some obvious way to pierce that Roth IRA, I'm not gonna bother with it. Well, isn't that good for the client? Isn't that a successful asset protection plan?

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Martin Shenkman: Here's another point, and I…

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Martin Shenkman: Can't tell you how wrong I see this done. No matter… modern trust drafting and planning is everything should be in trust for as long as state law permits, you know, limited by only the rule against perpetuities. I constantly see people, and I keep having discussions with other advisors, oh, yeah, put it in trust to the kids age 30.

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Martin Shenkman: What are you talking about?

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Martin Shenkman: Every trust should go on for as long as state law permits. If a trust ends at age 30, the kid's gonna get in a car accident and divorced at age 31, right? Murphy's Law. So, use long-term trust for everything.

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Martin Shenkman: A lot of parents don't want to deal with this. The kid could set up, and we've done this many times, the kid can set up the John Smith Trust, if their name's John Smith.

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Martin Shenkman: And simply tell, hey, mom, dad, you know, I know I don't… you know, you should live forever, I don't want anything from you, but if you leave anything to me, could you bequeath it not to John Smith, my name, but to the John Smith Trust? Give this to your attorney, this way it's protected if there's ever a lawsuit or a claim.

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Martin Shenkman: I see way too many people making large, outright gifts. I see way…

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Martin Shenkman: Way too many people putting a lot of money into custodial accounts. Awful. At age 18, the age of majority, the kid gets the money. Why?

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Martin Shenkman: What if the kid has an addiction issue?

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Martin Shenkman: You can't tell me today when the kid's 5 that they're not gonna have a problem. Now what do you do? The kid gets the money outright.

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Martin Shenkman: So, not… not a good thing.

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Martin Shenkman: By the way, all my examples used couples.

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Martin Shenkman: That doesn't change…

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Martin Shenkman: too much about the planning. It can do almost all of what I said for single individuals. The difference is.

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Martin Shenkman: you can't really do a non-reciprocal slat plan for spouses if there is no spouse. You can do, affirmatively, can do.

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Martin Shenkman: Non-reciprocal slap plans, if there's a partner, if there's a sibling, if there's a close friend or family member.

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Martin Shenkman: You can also do the SPAT, the DAPT, and the hybrid DAPT for a single individual. So don't… don't leave single clients out of this planning. You can do almost all of it, just not the SLAP-type plan with a spouse.

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Martin Shenkman: Make sure all the trusts that you create are discretionary distributions with an independent trustee, don't have automatic income payments unless it's required by the terms

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Martin Shenkman: of the tax law and the trust, like a Q-tip for a spouse, so full discretionary. Have tax and loan reimbursement provisions, because it's another way to get money to the client, and I like that, because if there's a distribution provision to the spouse, tax reimbursement, loan provision.

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Martin Shenkman: You can mix and match what you do, so there's no pattern of accessing it. Final point to limit, because I think we're out of time, to limit jurisdiction, let's say in New York for a trust in Nevada, but you want to name your brother-in-law who lives in New York as a trust protector, consider forming an entity in Nevada

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Martin Shenkman: and let your brother-in-law work as a manager, be the manager or member of that entity. Managers better, have the entity owned by a different, trust, so that you don't have a New York person directly serving in those capacities. You can modify existing trusts to try to do that.

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Martin Shenkman: And we've talked about lots of other types of trusts. We mentioned fraudulent conveyance and wanting to protect that.

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Martin Shenkman: And we talked about some of the ways you can do due diligence to reduce the risk of all this planning.

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Martin Shenkman: And there's a number of comments about what you should do to protect yourself. We talked about that. I actually made that the first slide with the AI comments. And finally, and we've talked about this, combined entities, have an underlying LLC-owned asset, so you have a second layer of protection. It's not a big cost, and it doesn't really add a great deal of complexity.

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Martin Shenkman: So, I want to thank everyone for joining us, and I'll turn it back to Jonathan.

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Jonathan Shenkman: Great, thank you so much, Marty, for those insightful remarks, and if anyone has any specific questions, new business opportunities, or any other issues they'd like to discuss, please feel free to reach out directly to Marty or myself where appropriate, and I'll be sure to include his contact information in the follow-up email to this program. Four more quick items before I let you go. First and most important, later today, you'll receive an email from me with an evaluation form for the program.

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Jonathan Shenkman: We'll ask you to input the code that I mentioned here today in order to receive your credit.

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Jonathan Shenkman: After that's submitted, in the coming days, you'll receive an email from ACE Seminars with your certificate. Again.

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Jonathan Shenkman: Please keep an eye out for an email from ACE Seminars. If you don't see that email in the next few days, be sure to check your spam folder. Again, the email with your certificate will not be from me, it will be from ACE Seminars. Second, my next webinar is on Thursday, January 29th, on Overcoming Estate and Elder care planning hurdles, featuring Elizabeth Forsband from the firm Forsband Clear, based in Great Neck, New York.

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Jonathan Shenkman: I'll be sure to send out the invitation to this program in the coming days. In the meantime, if you have a friend or colleague who'd find these webinars of interest, they can subscribe to my webinar distribution list by emailing me with the word webinar in the subject line. My email is jonathan at parkbridgewealth.com. Third, you could follow all my work on X and Instagram at Jonathan on Money, and by connecting with me on LinkedIn. You could also listen to my weekly podcast called Jonathan on Money, which is available on Apple, Spotify.

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Jonathan Shenkman: or wherever you get your podcasts, and you can watch my practical planning videos, which I post several times a week by following me on YouTube at Jonathan Money as well. And fourth, please take 30 seconds to fill out my survey at the end of this program. It helps me improve my webinars and provide timely and interesting content to attendees. I thank you in advance for that. And with that, this concludes today's session. Please stay safe and healthy, and have a wonderful day, everybody.