00:00:04:08 – 00:00:52:21
Welcome to Shorr Solutions: The Podcast. I’m your host, Jay Shorr. I’m the CEO and founder of Shorr Solutions, a national and award winning consulting firm, assisting aesthetic and surgical practices with their operational, administrative and financial success. I have an amazing team of practice management experts and clients across the U.S. and as an industry expert with firsthand experience owning a multi-million cosmetic dermatology and plastic surgery practice.
Listen in as I lend you my expertise and best tips to successfully manage and grow your aesthetic practice. I will also be bringing in guests along the way, so get ready to be equipped to operate your aesthetic practice strategically and profitably. Welcome to Shorr Solutions: The Podcast.
00:00:55:05 – 00:01:07:14
This podcast episode was originally recorded as a webinar with Michael Wild. However, we thought the content was so important, we wanted you, our loyal podcast listeners, to hear it as well. We hope you enjoy.
00:01:10:05 – 00:02:00:12
Jay Shorr
Welcome everybody, and welcome to another episode of Shorr Solutions: The Podcast. And I’m your host, Jay Shorr. I’m a practice management consultant specializing in the operational, administrative, financial, health and guidance of your aesthetic, cosmetic and surgical practice. And today, I have the pleasure of welcoming a colleague of mine, Michael Wild who is the managing partner of WFP law firm and specializing in wills, trusts and estates.
So Jay, Why did you ask Michael to be your guest today? Quite simple. Michael and his firm are my personal attorneys, and there are attorneys for our wills, trust and estate planning. And I felt who better than to ask from somebody who I trust that handles all of my financial portions of my life in my wills trusts and estates.
So. Michael, welcome aboard.
00:02:01:07- 00:02:02:13
Michael Wild
Great to be here. Thanks for having me.
00:02:02:22 – 00:04:53:16
Jay Shorr
All right. So what we’re going to talk about today are key elements for estate planning in your aesthetic medical practice. And, you know, I want to share something as we get started and why this particular process is very, very important to me. For those of you who know me, no explanation is necessary. For those of you who don’t.
Please allow me to share that I was a partner in a very, very large medical practice early in the 2000s. I came in in the 2000s, and I want to make a disclaimer. I am not a physician. In the state of Florida. You can be a partner or an associate in a medical practice with the corporate practice of medicine.
And we had several different offices. And in late 2011, actually November of 2011, the medical director was diagnosed with stage four cancer. And in June of 2012, the medical director passed away from stage four cancer. And the reason that this is so near and dear and important to me as a medical director was my late wife and I was ill prepared to face what I was about to face.
Why? Quite frankly, I didn’t know what I didn’t know. And for those of you who know me, know what I was about to face because I’ve shared it many, many times. And directly after that, I went through a lot of stages of shock and anger and denial because a loved one who was my business partner and like that was going through a catastrophic event.
I did everything I could to try to save her life, all to no avail, other than maybe sustain it a little bit longer. But the inevitable was inevitable. Shortly thereafter, I came upon a patient who happened to have been a patient in the practice because I had a locum tenens in they were handling things till we were able to shut it down, eventually sell it.
And she knew the story and he said, You know, I think you should talk to a friend of mine. And I said, Who is that? And he mentioned Michael Wild And I had known actually, very interesting, I had known Michael’s family from many years before, but I had only come across Michael once or twice, never professionally, only on a personal level.
And at which point I said, let me make a consult. And I scheduled a consult because I needed to know what do I do from here? What has happened has already happened. But now how do I prevent another unearthing situation from happening to me? And that’s exactly what I did. So I called Michael, set up the consult, and we talked about estate planning and asset protection, 4 words, estate planning and asset protection.
You’ve heard it, but do you really know what it is? So, Michael, let’s talk. What’s the difference between estate planning and asset protection?
00:04:54:11 – 00:05:09:24
Michael Wild
Well, estate planning is what happens to your stuff when you die. An asset protection is what happens to your stuff while you’re alive. And in both situations, there’s other entities that want to take your stuff from you or your beneficiaries.
00:05:09:24 – 00:05:12:23
Jay Shorr
I love that word stuff. Stuff. We all have stuff.
00:05:13:02 – 00:06:23:07
Michael Wild
it’s a legal term. Yeah. What I always like to tell my clients the death rate in Florida is 100%, so everyone’s going to eventually die and that’s the death rate for anywhere. You’re watching this at home from whatever state or country you’re in right now. But the other part is if you’re lucky enough to accumulate assets and live long enough, you’re also probably going to get sued at some point.
There’s probably going to be someone coming after your stuff. And so what we talk about with all of our clients is those threats that occur during life and those threats that occur at death. And there’s different levels of obviously, you know, people that while they’re alive, that own their own businesses like I do and like you do. People, especially in the medical profession. You know, it’s a highly litigious profession, people that own real estate or I have a lot clients that deal with electrical engineering or generators.
High litigious businesses. Those need to worry about what’s going to happen to their assets now, making sure that they separate assets from liabilities. But then every one, no matter what they do for a living, no matter what assets they’ve accumulated, needs to worry about, well, what’s going to happen to my family after something happens to me?
00:06:23:13 – 00:06:53:16
Jay Shorr
All right, So let’s talk about asset protection before we speak about anything else, because what’s very important in the medicine and I’m always and we’re always afraid of being sued for we have professional liability insurance for that ugly word called malpractice. Now, malpractice is in your business. Errors and omissions in the law, malpractices in building and construction. It’s in medicine. So what is asset protection? What does it really mean?
00:06:53:18 – 00:10:40:23
Michael Wild
So there are different threats that can come at you from different angles. You know, litigation is the one that’s most prevalent, the most, the thing we focus most on. But it can be anything can be creditors, it can be bankruptcy, it could be divorce. Any number of things can happen to us during our lifetimes. Now, when we’re talking about protecting the business, especially a medical practice, there are unique hurdles, especially here in the state of Florida.
There. A few years ago, they passed a law that said it’s a three strikes and you’re out law. If you get sued for malpractice three times, even if you found not guilty on all three times, still you can lose your medical license. And what we ended up having is a bunch of doctors who wouldn’t carry medical malpractice insurance, rightfully so, because pragmatically, the more insurance you have, the more chance there is you’re going to get sued because some attorney says, okay, I’ll make a phone call, I’ll get a payout from the insurance company, I’ll keep one third of it for myself for making that phone call.
And then that’s the end of it. Well, that became a problem. So now we have a bunch of doctors that are not covered because they’re not working for big hospitals where they have deep pockets, they have their own practices. A lot of my clients in this industry handle things like cosmetic surgery where they have their own practices. Varicose vains, Botox, things like that, where you’re touching people or you have employees that are touching people, which is even more dangerous and they’re not carrying malpractice insurance.
So they come to me and they say, Well, how do we protect ourselves? We don’t have the insurance. And the way you do that is by setting up what I call a series LLC, which has a parent company and then subsidiary companies and each of the subsidiary companies holds a different liability. So we have staffing in one, we have vehicles in one, we have equipment in one, we have services in one, whatever it might be.
And we address it in a way where if something does happen, it is contained in that one subsidiary entity and it doesn’t spread or infect, the rest of the assets. We want to make sure the assets are shielded from the liability. Now some things are assets and liabilities, like, for instance, a building. If you own the building that your practice is in, very important to segregate the building from the practice.
You don’t want it under the same entity. You want a lease agreement between the two. I have actually one client. He owns a medical practice in Dallas. It’s very dangerous, really, as far as litigation goes, because all of his clients are children with diseases or ailments that require 24-hour attention. And these children are transported back and forth from the facilities that he owns throughout Texas to their homes.
And they have busses that go and do this. And when I first was doing his protection plan, he had the busses owned by the same company that was actually serving the children. It was all owned by one entity. And I asked him to separate that. It was actually costly for him because he did have to transfer the busses, had to change the insurance, had to now have the drivers change their employment to be through the bus company instead of through his company and had to create lease agreements between.
But then what happened a couple of years later is one of those busses hit a driver that was in front of them and that driver was a pregnant woman who was sent into labor, early labor with two premature twins. And luckily those twins were born with no ailments and they’re healthy and they’re fine. But it could have been bad now because he had changed everything.
When he called me up frantically, I said to him, Did you do what I asked you to do in moving those busses? He said, Yes, they’re not owned by my company. I said, Then you’re fine. Then you’re fine. In the worst case scenario, if they go on the insurance, they can take the bus. Who cares? But they’re not going after the business.
And having that kind of preparation is so important. When you have a business that that is in that highly litigious area.
00:10:41:00 – 00:11:53:20
Jay Shorr
Yeah, it’s very important to know that what Michael is speaking about with not carrying professional liability in the state of Florida, there are three options in the state of Florida. You do not have to carry professional liability in the state of Florida. There are limits of 100, 300 and 250, 750. But the three options in the state of Florida, which have to be submitted to the Board of Medicine on record are you can go bare, which what we call bare and you don’t have to have professional liability, but you have to be personally responsible if a judgment is awarded against you.
And if you can’t pay it, you will lose your license. The other option is posting an irrevocable letter of credit through a financial institution, and the other is having professional liability in those limits of 100 300 or 250, 750. Today, many states do not have that option of going bare. So when Michael talked about not having professional liability insurance, he really was mentioning to those states similar to that of Florida that have that type of a standard.
So what amount of money do you have to have in an estate?
00:11:53:20 – 00:14:03:11
Michael Wild
Well, a lot of people have the idea that having an estate means you’re rich is the idea of having an estate you think of like a real estate, like a mansion. But in reality, an estate starts depending what state you’re in at, whatever that level that probate kicks in in Florida, that level, $75,000. So if you have more than $75,000, you have a probatable estate.
Now, everyone has an estate, even if you have $0 technically, but when do you need estate planning? It’s really kicks in at $75,000. I do not have any clients that have a net worth of less than $75,000. Not that I’m not happy to help everybody. It’s just that it probably isn’t economically in their best interest to hire an attorney to protect an estate of less than $75,000.
But I do have clients. They don’t have to be estate taxable to be estate probatable, which means that a lot of times people think, well, the estate tax exemption is so high right now, the estate tax this year it’s $13 million, almost 13 million per spouse. That changes year to year. It’s been as low as $400,000 per spouse.
But people think, well, I’m not going to have to pay estate tax. Why do I need a trust? I don’t have an estate. But in reality, having that trust in place is much more important than just the estate tax, because probate is the main threat that we want to avoid. Probate is when all the assets in your name go through the court system at the time of your death and they have to be cleaned and then they’re cleaned by the court by making sure that the estate gets paid, the court gets paid, the taxes get paid, the creditors get paid, the funeral home gets paid, the attorneys get paid, and then whatever’s left over,
they give to beneficiaries of which this Florida statutes or the state statutes that you’re in will decide. So every state’s different and they’re called the intestate statutes, but every state has them. And if you don’t have a will or a trust, then what happens is the state says, well, here’s what’s going to happen to your assets when you die, and nobody has any choice, even if your intent was something other. Now the will having a will is not enough, though, because a will pushes things into probate. A will does allow you to appoint your own guardian for any minor child, and it does allow you to appoint your own beneficiaries that get it after the probate process is done, but it does not allow you trust.
00:14:03:13 – 00:14:05:23
Jay Shorr
So what’s the difference between a will and a trust?
00:14:06:00 – 00:16:30:02
Michael Wild
So the trust itself is an entity and now there are different types of trusts. There’s irrevocable, there’s revocable, and there’s different levels of revocable and irrevocable under those. But when we talk about revocable trust, it’s a disregarded entity. But they exist now. The reason why we call it a disregarded entity is you don’t pay taxes any differently. You have your own Social Security number as its tax ID number.
The you’re still the grantor, you’re the trustee, you are the beneficiary. You can change it as many times as you want. Add to it, subtract from it, transfer it, get rid of it completely. You’re not limited in any way, but as soon as you die, you have set it’s a contract between you, yourself and your beneficiaries saying that, okay, what’s going to happen?Who’s going to take over when I die? So when it comes to simple assets like a brokerage account or a bank account or a piece of real estate, it’s simple. It goes into the trust. It’s owned by the trust. You control it while you’re alive. After you die, the beneficiaries will receive it in the way that you ask them or that you describe them to.
So, for instance, for me, I have a 14 year old and a nine year old. Number one, they’re not allowed to make any financial decisions until they turn 30, so the trustee manages it for them. Until that time, it also stipulates I want all education paid for and health care and maintenance, things like that. Even when they turn 30, it has protections in place, protecting them from divorce, creditors, litigation, bankruptcy, all the things they might face in the future.
And then it stipulates that my grandchildren, not any daughter in law, son in law that I might have, are going to receive the eventual distribution afterwards. So those are the stipulations I put in place. A lot of people have certain restrictions or distributions that they want in their trust, but you can do that through your trust because the trust is a contract that you’re creating with yourselves.
Whereas a will, a will is not anything more than a piece of paper that’s given to the court determining who’s in charge of your estate and who eventually will get that benefit after you die. The problem with a will is that a will doesn’t provide you any protection or privacy. A trust is completely private. A trust is creditor-proofed.
A trust cannot be challenged, a will. None of those things. The will has none of those protections. So a lot of people think they have protection because they have a will in place. And literally tell people, if you don’t have a minor child, your will does nothing. There’s no guardian appointed. So the only thing the will is doing is pointing to probate. That’s it.
00:16:30:03 – 00:16:38:02
Jay Shorr
So in essence, what you’re doing for your children is protecting them from them in spite of them, right?
00:16:38:04 – 00:16:39:07
Michael Wild
Yeah, 100%.
00:16:39:09 – 00:17:00:13
Jay Shorr
Yeah. And you don’t want any piercing of in-laws or their spouses that in this world we never know how long those relationships last, you know, And then you don’t want things co-mingled. Once again, that seven letter, ugly word called probate. Can you give that quick definition? How to avoid that? I hate that word.
00:17:00:17 – 00:18:50:12
Michael Wild
I know it is an awful word. Now, I will tell you a little asterisk next to what I’m about to say. I make a lot more money probating the States than I do protecting people from probate. I don’t want any of my clients to go through probate. But you know, there’s a difference. And you were talking about how do we avoid probate?
There’s a difference between pre-need and at-need, you know? So if someone comes to me at need, oh, my mom died. She didn’t have any estate planning. It has to go through probate. But when someone comes in and we set up these trusts and we fund the trust, because a trust is like a safe, you know, it’s it’s fireproof, burglar proof, waterproof, but if you leave the assets on the dresser, it’s not going to protect anything.
So you got to put the assets in the safe. And that’s a very important part of the process with estate planning and with asset protection to make sure that once the structure set up, it’s funded with the assets. Now with the revocable trust, avoiding probate is so key because probate is usually going to cost somewhere between 7% and 10% of the value of the estate.
And on a short term probate, we’re probably looking at 6 to 9 months. Most of our probates go over a year. You know, it’s not in anyone’s best interest to go to probate. Now, what we want to do is avoid probate at almost all costs, you know, make sure that we stay away from the court system, keep the assets private, keep the assets protected, keep the assets challenged-proofed, and put those things in place, protecting kids from themselves.
Listen, my kids seem to be great young adults or young young kids that are about to be adults, adolescence, whatever. Myself, when I was in my twenties, I wasn’t a bad spender. I wasn’t, you know, crazy with my money. But if I would have inherited money at, let’s say, 22 years old, you know, I just graduated college, maybe I would not have gone to law school.
Maybe I would have said, you know, hey, I earned $100,000. I’m rich. Meanwhile, at 44, I inherit $100,000. I’m like, maybe I’ll take the weekend and go on a vacation or something, you know? I am not changing my life. I’m still showing up on Monday.
00:18:50:14 – 00:19:09:10
Jay Shorr
yeah, you know, we didn’t talk about we were talking about asset protection and all these things in Florida and some other states. For protecting your primary residence. We have Homestead. It’s kind of one of the reasons that O.J. Simpson kind of moved to Florida, right?
00:19:09:12 – 00:19:10:00
Michael Wild
Totally true.
00:19:10:05 – 00:19:18:08
Jay Shorr
Yep. Let’s talk a little bit about homesteading and how to protect that asset. Are there legal ways to eliminate those estate taxes?
00:19:18:10 – 00:22:20:14
Michael Wild
Oh, absolutely. And so when we talk about from a protection standpoint, both taxes and litigation, so from a litigation standpoint, there are certain assets in each state that are protected. And depending on what state you’re in, I mean, for instance, in California, nothing’s protected. Like the state wants everything to go away. But in Florida, we do have the homestead protection.
Florida is actually one of the best states for asset protection. And as a side note, just because you live in a state and are domiciled in that state does not mean you can’t do asset protection in another state. Hence why so many people have Delaware trusts, South Dakota trusts, you know, LLCs throughout the country, in Nevada and Alaska and things like that.
So you can always do things to protect yourself in other states, even if you are domiciled in a different state, that’s first and foremost. Now, in Florida, we have a homestead that is protected. We have life insurance, annuities, retirement accounts that are qualified. They’re all creditor protected automatically, which is great because we don’t have to worry about those when it comes to someone taking them.
We also with accounts that have beneficiary designations on them such as retirement accounts and life insurance. We don’t have to worry about them going through probate. However, even if those assets are creditor protected and protected from probate, it does not necessarily mean that they’re protected from the estate tax. So the IRS, when someone dies, they add up all the assets that they owned in their own name and they figure out how much money do you owe us?
Are you above the exemption or below the exemption? And like I mentioned briefly before, this year, we have the highest estate tax exemption we’ve ever had, which is the $12.9 million. It’s going to go up again next year. But at the end of 2025, when the Trump tax laws expire, it’s going to drop down to 5 million. Now in the United States, most people are not affected with a $5 million exemption.
So it’s fine. But if it goes below that, it’s going to affect a lot more. And the funny thing is people don’t realize their net worth when it comes to estate planning, when it comes to the estate tax calculation, somebody might say, well, what do I have? I have $1,000,000 brokerage account. I have $1,000,000 retirement account, and I’ve got, you know, $200,000 in the bank, plus I’ve got my home.
So what do I have? I don’t have to worry about it so. Well, how much life insurance. Yeah, well, I’ve got four and a half million dollars in life insurance. Okay, So that’s added that’s added to the estate tax. If you own that life insurance policy, even though you can’t use that money, the IRS is nice enough to say on the day you die because that four and a half million dollars went into to your beneficiaries that you actually were worth that.
Okay, well, you can’t use you can’t spend your house, can’t spend the value of your house. Well, it doesn’t matter. The IRS is going to look at that and say, well, your house had a value. And if you had a business, that business, the valuation of that business is very interesting because if you were to argue the valuation of your business, just like I would argue the valuation of mine once I die, what’s my business worth?
Well, the argument can be made while you’re alive that your business isn’t worth as much. But as soon as you die, the IRS is going to say, No, no, Look how much money the business made over the last three years. Even though you don’t exist anymore, even though you’re not here to make that money anymore. The IRS says no.
We think the value of your business is way higher than.
00:22:20:16 – 00:23:04:11
Jay Shorr
So let’s talk about the these are irrevocable life insurance trusts, the ILIT that lives outside of your estate. Naturally, I was guided because my fear was that the amount of monies that I had or my insurance might at that time exceed that limit. And then there will be a lot of money for taxation. So I took out a policy that if I died, if I had it and it was not in an irrevocable life, insurance could possibly put you over that threshold.
But taking that policy that lives outside of your estate can actually go to pay some of the taxes. If you find, if you go over that limit, You want to explain a little bit about that and how you handle those.
00:23:04:17 – 00:25:03:11
Michael Wild
Absolutely. It’s so important, especially when the exemption was only $1,000,000, and that’s when I started my law firm. We were doing ILITs for everybody because even if you had a $1 million life insurance policy, you became taxable immediately. The IRS says if you owned the policy in your own name, it’s added to your estate. But if you don’t own the policy in your own name and it cannot be part of your estate, you’ve gifted it away.
So what we do is we create a different type of trust from the revocable trust I talked about before. This is called an irrevocable life insurance trust, where you name somebody else as the trustee and somebody else has the beneficiary. Most of the time we see a spouse or children as the beneficiaries, and if they’re adult children, sometimes trustee, if it’s a spouse, sometimes trustee, or even any U.S. citizen about 18 years old.
The trustees job, though, is to pay the premiums. The way that it works is you set up the trust and you set up an account for the trust. Then you, as the insured, donate the money, you gift the money. Let’s say it’s a $50,000 a year premium. You donate $50,000 to irrevocable life insurance trust account, the bank account, and then you give what’s called a withdrawal letter or a crummy letter to each of the beneficiaries.
What you’re saying is I’ve given $50,000, I’ve gifted $50,000. You guys have 30 days to do whatever you want with that money. After 30 days, you haven’t taken that money. The trustee is going to use it to pay the life insurance. The reason why that’s so necessary is that 30 day period, you’re actually hands off. And you have said, I’ve relinquished control that period of time allows for you to then or your beneficiaries at that point to show the IRS, look, he didn’t have control of that money.
You didn’t have control of this insurance policy. If your kids are dumb enough to take the money and not pay the premiums, they shot themselves in the foot and they don’t get the insurance proceeds. So it’s not a smart move. But usually what ends happening is 30 days pass or you pay your life insurance. Then when you die, when the IRS says, Whoa, didn’t you have that $5 million life insurance policy, you say, no, no, no, I didn’t. My life insurance trust had it.
00:25:03:13 – 00:26:45:11
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00:26:45:13 – 00:27:02:09
Jay Shorr
Good. So people talk about offshore and you hear that word being thrown around a lot to avoid taxation and protection of assets. And let’s talk about that. You need to go offshore to protect your assets like the Cayman Islands or in the Caribbean somewhere.
00:27:02:11 – 00:29:26:23
Michael Wild
With assets protection. This is one of the biggest misconceptions, is that the only way to protect yourself is by going offshore, because there are a lot of states Florida, Delaware, Wyoming, Nevada, South Dakota, Alaska that provide high levels of asset protection without raising a red flag to the IRS that you might be doing something shady from a from an income tax standpoint.
And the other side of that coin, the reason why, you know, I mean, don’t get me wrong, we do set up offshore trusts. An LLC is maybe, you know, two or three times a year for clients when necessary. But the other part of that is people think once they go offshore, oh, I’m outside of the US jurisdiction, so now nobody can take my assets.
That’s not true. So if you set up an LLC, let’s say the Cayman Islands or Nevis or Cook Islands, wherever it might be, you set it up and you are the trustee of that trust, or you are the manager of that LLC and you are sitting here in your home state in the United States of America, and you get sued.
You have a judgment against you and you say, Well, my assets are offshore. You can’t force me to bring those assets back. They’re not under your jurisdiction. The judge will say, Well, you’re under my jurisdiction and I’m going to hold you in contempt and put you in jail until you bring those assets back and pay the creditor or the divorcée or whoever it might be that suing you.
So in the situation where you are going offshore, it is crucial that somebody else, not you, is the trustee or manager of that trust or that LLC. And then what you’re doing is you’re actually hiring a stranger to manage your money. Now it’s done and there are reputable firms that do it. But the only time we go offshore usually is, it’s like a cyanide capsule in a James Bond film.
It’s the last ditch effort to move stuff around. And we’re and we’re usually not even doing it for full protection. We’re usually doing it to get to a settlement, because if you already have a judgment against you, you’re going to be writing a check. We just want to make that check as low as we can. So by moving things offshore, sometimes it’s worth it.
We go back to the other side and say, Look, you can try to petition the judge to have me bring that money back here and domesticated again. Or listen, I’ll give you, you know, $0.25 on the dollar, and we’ll settle this thing right now. So, you know, it’s used as a strategy, but we still, you know, sometimes offshore is used, but it’s so crucial that if you go offshore that you are not in charge of the offshore money.
00:29:27:00 – 00:29:32:01
Jay Shorr
So the bottom line is you don’t have to go offshore just give them to Shorr.
00:29:32:01 – 00:29:35:06
Michael Wild
Exactly. Very good. I love it.
00:29:35:08 – 00:29:43:06
Jay Shorr
So if my assets are protected, all these things that you said, do I still need insurance?
00:29:43:08 – 00:31:01:15
Michael Wild
So we talked a little about malpractice insurance, and why sometimes there’s a strategy of not carrying it. But when it comes to all other liability insurance, I still say carry it. The fact is that just because you are creditor-proof does not mean you can’t be sued. So you could have all your assets tied up where, you know, once they get a judgment against you, if they get a judgment against you, they’re not going to be able to to to attach that judgment to any of your assets.
But that doesn’t mean you don’t have to pay your own legal fees. Now, insurance, if you don’t realize the insurance actually pays the legal fees for you, too. And you could go and get into a lawsuit. These lawsuits take forever. Even if you are completely innocent and you win the case, you might have spent $200,000 in legal fees. So I always say keep liability insurance.
You don’t have to go crazy with that. I have a lot of clients. They come to me, they get umbrella policies that’s as big as their assets instead of as big as their liability. So I have a client that came to me, a $10 million umbrella policy. They said, Are you flying kindergartners around in your private jet? Like, What are you doing?
That’s this much liability? And it turned out he really only needed 1 to $2 million worth of liability insurance. You don’t need to have enough liability to cover your assets. You only need to have to have enough to cover whatever potential liability you might have. But I still think it’s a good idea to have insurance.
00:31:01:17 – 00:31:16:12
Jay Shorr
Do you think it’s true that the more… now you’re basically on the defense side than you are on plaintiff’s side, but do you think it’s true that the more insurance that you have, the bigger the Pandora’s box you have to open from the other side.
00:31:16:14 – 00:32:56:19
Michael Wild
Definitely. There’s a magic number on how much insurance you should have, because it is totally true that if you have a $5 million, for instance, umbrella and let’s say you were in a tiny fender bender, you’re getting sued like they’re going to try and they’re going to sue for a crazy amount. It’s going to be where somebody sues for $5 million and the insurance company goes, Get out of here.
It’s like, Well, all right, give me something. I know you have 5 million. Give me something. Right. I, I found that when it’s, you know, for, for instance, even myself, I one time I got called by a an attorney who was… they were trying to shake out some estate plan where the client died and he had to give it to certain beneficiaries but not given to others.
And one of the beneficiaries hired a lawyer to see if they could collect some money. And they couldn’t because everything was done in trust and everything was protected. But they called me and they said, Hey, well, we’re going to put a claim in against you because you didn’t. You did an estate plan and it didn’t include the client’s brother.
And I said, well, I they said, oh, they wanted to know my carrier, my malpractice carrier. And I said, Well, I don’t carry malpractice insurance and I’m an asset protection attorney, so good luck to you. And that was the end of that. So there is some benefit. There is some benefit to not having the insurance when it comes to things like that.
But it also is a benefit because if they would have sued me, then I would have had to come out of pocket defending it, even though it was a frivolous lawsuit, you know, And you could always challenge if it’s really frivolous, you can challenge and try to get your attorney’s fees back. But but it’s very difficult. So it is good to have a certain amount.
If you have too much of it, though, to your point, I do think you are opening up a target on your own back.
00:32:56:21 – 00:33:05:21
Jay Shorr
What if you’ve already been sued or you’re about to be sued, Can you protect your assets at that time or is it too late already?
00:33:06:03 – 00:36:56:16
Michael Wild
So it’s never too late. There was a judge, and he was a conservative judge. I didn’t I was shocked by his response to this. He was asked one time, can I still do something? There’s a judgment against me already. And the judge said, well, if you don’t do anything, we know what’s going to happen. If you do something, at least maybe you can save some assets.
And that’s usually what I expressed my clients is there’s it’s never too late. It’s never too late there. Obviously, the earlier you start, the more options you have. If you come to me and you’ve never been sued and you don’t have any issues, there’s no potential creditors. You’re not expecting to get divorce and we can legitimately protect you.
We can use limited liability partnerships, we can go to different states. We can even go offshore if we need to. There’s tons of stuff we can do. Once the incident occurs. No matter what that incident is. Now, the clock starts because now if you’re doing anything between the incident and the judgment, you have to legitimize it. So you have to be able to show that your purpose of doing this was not to defraud a creditor, but for some other purpose.
Maybe it’s a business purpose, maybe it’s an estate planning purpose, whatever it might be. But you have to legitimize it as you go down that road and get further and further along and get closer and closer to that judgment or even beyond that judgment. Now we’re playing the money game, the negotiation game. And now you’re not worried about the law, you’re not worried about the judge.
You know, whatever the court, you know, worried about the president, what you’re worried about is which attorney is suing you? Because and this is the first thing I do when someone comes to me and they already have a judgment. I say I need to know what law firm is on the other side. If I see that it’s a mill, you know, the personal injury law firm.
And it’s one of these, you know, Morgan and Morgan, nothing against these firms, but they know what they are, you know, So they’re looking to move fast, you know? So when I see it to them, I go, you’re fine. They’re going to take your insurance. They’re going to go away. They’re not they’re not looking to prolong this into a litigation.
If I see on the other side where it’s a first year attorney that he lists himself as a real estate attorney and he’s probably doing a favor for a friend, I say they’re not even going to get the insurance. They don’t know what they’re doing. They’re shaking the tree, hoping something falls. They’ll take $10,000 and be on their way When it’s somebody, a lawyer at a firm that instead of on a contingency, they’re getting paid hourly to sue.
And this usually only happens in business disputes. It never happens in like injuries. But in a business dispute, they’re getting paid to sue because the other side, they’ll happily, happily spend $1,000,000 just to get $100,000 from you. That’s the danger. And then what you have to do is you have to play the game. You have to say, okay, I’m going to make this so difficult for them.
As far as you know, when you have one pawn left on the chessboard and you just keep moving it around, you say, I’m going to I’m just going to keep moving and make you chase me. And eventually, hopefully you get tired and you just call it a draw. So in this case, they are looking to acquire assets as easily and quickly as they can.
If you tie up your assets in a number of different baskets. So we use a limited partnership, we use irrevocable trusts, we use, you know, LLCs, and we start moving things around. It’s harder for them to find them and it’s harder for them to acquire them. And so then you go back and you say, okay, well, what kind of deal can we make?
But any client that comes to me and says, Well, I don’t want to pay anything. I say, You’re unrealistic. But I did have my biggest win I ever had was I had a client that had a $20 million judgment against him. When he came to me. So he already had the judgment against him. He was being sued by a big law firm.
I won’t say their name, but it’s one of the firms in Fort Lauderdale is a big firm. They’ve got 100 attorneys and we up all of his assets and we ended up six months later settling that lawsuit, that judgment for $650,000 from 20 million. So he ended up saving 19 and a half million dollars. And now I eat for free at all of his restaurants.
00:36:58:19 – 00:37:17:19
Jay Shorr
That’s cute. So let’s say now that you know that you’re being sued and that you want to dump a lot of your assets elsewhere, you know, and you want to have what they call the fraudulent conveyance. One Talk a little bit about fraudulent conveyance statutes.
00:37:19:01 – 00:40:46:21
Michael Wild
That that’s the biggest question I get when someone comes to me with a judgment against him or an incident has already happened. They’re worried about the fraudulent conveyance statute. So they actually change the name of the fraudulent conveyance statute recently to the reversible Transfer Act. But I still like to even say the fraudulent conveyance statute, because that is what people are thinking of, like it’s fraud.
Well, it’s not. And this is very state specific. I want to also say, because in California, it is completely different to California. If you fraudulently move assets, if you move assets with the intent to to to deprive your creditor or judgment holder of that asset, it could be criminal. So you want to say if you’re if you’re in California, seek California advice.
But in Florida and in most states, there is no penalty for moving assets after the judgment, the only penalty if you get caught or if if the judge finds that you are doing it with only that intent to deprive, then they reverse that. That’s why they called it a reversible transfer act. They say, hey, nice try. We’re going to take that money that you spent on that new homestead.
We’re going to put it back in your name. And now we’re going to give your creditor another shot at getting it. Doesn’t mean the creditor gets it just means now they get another shot because now it’s back in your name. So the most important part of asset protection is actually estate planning. I love it when someone comes to me and they have a very high net worth or they own a couple of businesses or they have all these different things going on and then they’ve been sued and they say, I don’t know what to do, because now what I can say as well, Do you know what you haven’t done yet is you haven’t done
your estate planning, and especially if they haven’t if they have done it already, we don’t get to use this argument. But if they haven’t done it already, then what we say is, well, here’s what we have to do. We have to worry about the estate tax. We have to worry about probate. We have to worry about what’s going to happen with your kids, with all these assets you’re leaving behind.
And after we set up this structure that is completely protected from an estate tax standpoint, it just so happens a side benefit of that is completely protected from an asset protection standpoint. And when they go then to court and has to and it never gets to this far where they actually have to say it to court. But if they were to have to go to court and say, well, what is your reason for having moved your assets, they can legitimately say estate planning, legitimately say it and they can show the process in which we accomplished that.
Now, the fraudulent conveyance statute, there are three tiers. The opposition has to get past all three to prove something was a fraudulent conveyance. So it was a reversible transfer. Number one, did the debt already occur? So was there a judgment or an incident that already was in existence at the time you made the transfer? Number two is did the transfer of that asset make you insolvent for the purpose of paying that debt?
So if you’re moving stuff around, if you owe 50 grand to somebody and you still have 50 grand in your account, they can’t say moving the other stuff was fraudulent, you still could pay the debt. And then the third and this is where it really we get to be creative is was there another reason for moving that asset other than avoiding that creditor?
And that’s where the estate planning comes into play. And sometimes it’s not even estate planning, Sometimes it’s actually like business operations. People think that once they get sued, they have to stop living their lives the way they were living them. Know if you’re still running your business, if you’re still buying real estate, if you’re if you want to move, there’s no rule that says you can’t do those things.
It’s just where people get in trouble is they’re like, I’m just going to put everything in my brother’s name. It’s like, No, that doesn’t work.
00:40:40:09 – 00:42:03:14
Jay Shorr
All right. Now, as we’re getting ready to conclude this, you have people as young as you and then you have people as old as me. I like to kid that the picture that we took of you and I, it looks like a before and after. You look like a Rob Bilott and Ben Affleck, you know, and I’m looking like Sean Connery, you know, at this point in my life.
All right. How soon is soon to start? Because we have client base that has just come out of their residences and are just going into their business venture of opening up their practice for the first time. It’s the big step of their life. They either come out of institution, academia, working for somebody or out of a residency. We help multitudes of doctors and surgeons open their business, and one of the first things that I speak to them about is a business plan.
Don’t go into a business without a business plan. And the second thing I speak to them about is, are you married? All right. Seriously. And do you have children? Well, Jay, why do you ask? You know, well, let me share a story and I go into my own personal story, and it’s not you’re never too young to run into a tragedy.
So when is it not a good time or what’s the best time? How soon do you start your asset protection plan?
00:42:04:19 – 00:45:00:06
Michael Wild
Well, so it’s funny you say that. So I often people think that estate planning is for the old. That’s what they think. Oh, well, I’m not going to die tomorrow. I mean, first of all, I always tell everyone, if you know when you’re going to die, just come to me a month earlier and, you know, you are fine that is no problem.
Most people don’t know when they’re going to die. And like I mentioned before, the death rate is 100%. So nobody gets out alive. And the important part about estate planning is it’s funny, It’s not about the money. It’s not about the age. It’s about the beneficiaries. Because I had a client years ago, I still remember he he actually set the record for the largest real estate deal in Queens, New York.
So he got a ton of money sold, like for apartment buildings. And it was he came to me for estate planning. This is a gentleman that is on his first marriage still. So there’s no issue with that, but never had any children. And everything’s going to charity. Just decided he wanted everything to go. So there really was not much planning to do.
We wanted to plan for him as far as get his power of attorney and his health care surrogate and make sure his wife’s protected when he passes. But estate tax wasn’t going to be an issue because but when both of them died, it was going to go to charity. And during his life, it wasn’t an issue as far as, you know, asset protection because he already cashed out.
So, you know, it’s simple LLC. Well, it’s not a lot of moving parts. He was already retired. It wasn’t there weren’t a lot of worries. However, on the other side of that, then I had a client that their net worth is probably about $1,000,000, but they’re on a second marriage each having kids from previous and they have one of the kids has special needs and then they have a son in law that they don’t like.
So for them, estate planning is crucial. I think that if I die, I’m not. I am a single dad. I’m a divorced dad with two minor children. If I were to die without estate planning and that includes the planning of life insurance or retirement plans and things like that. If I were to die without planning, my kids would be crippled for a very long time.
They would be. They would be financially and emotionally crippled. And they might have to go through guardianship. It might have to be where the assets are in probate if I didn’t plan, whereas, you know, when my grandmother died recently, now I set up her estate plans so I shouldn’t have to worry about anyway. But when my grandmother died, she died at 96 years old and literally had three assets.
She had a retirement plan, a bank account and a brokerage account. All three accounts had my parent, my father, my aunt and my uncle, who are all in their seventies or sixties and seventies. My aunt would kill me if I said seventies, but they’re all grown and it’s not a ton of money. And even if my grandmother did not have a trust, it would have been fine.
Yeah, that would be fine. So I think that the key is who are your beneficiaries? Who are your loved ones? Who are you trying to protect? Because if you have that, then you need to do it. Now, if you have a baby, do you have a grown child? Whatever it might be, you have to protect the loved ones, not the money as much.
00:45:01:00 – 00:46:32:09
Jay Shorr
Very important to know that just because you do it, I always say that the part of a business plan is to create it, review it, review it again, and review it again and modify and or change. And let me give the perfect example. 11 years ago, after my late wife passed away, then I created my estate plan, you know, from my wills, my trust, my estate.
And Michael took care of health care, surrogate and power of attorney. We did that. And then, you know, much to my blessing. I got married again. And I then came back to Michael and I said, Look, my circumstances have now changed and we need to now redo my assets protection. And then my wife now was also a widow, and she then had to create her asset protection plan and her living trust so that it had to be done again.
And I don’t think that I’m an anomaly in this world. I mean, with first marriages and second marriages and now third marriages, you have divorces and then you have, you know, your spouse has passed away. And sometimes people forget to change these. And if you’re divorced, you certainly may not want your former spouse to be the beneficiary. Your children are a different story, but you may need to remove of those people that you no longer want and modify. So how often should you do this, Michael, if you know, once you start this plan.
00:46:39:12 – 00:48:19:21
Michael Wild
It’s a very good point. In fact, I always usually say, depending on the age of the person that’s setting it up, it’s going to be somewhere between three and seven years every three and seven years. So, for instance, if you just had if you’re on your first marriage and just had your first baby, you might not even be changing it until you have your second baby or if you’re done having babies.
But they’re but they’re young still, it might be ten years before anything happens because the rest of your family’s young too. But when you’re older, then it changes a lot because then there’s birth, death, marriage, divorce. And it doesn’t only have to be yourself and your immediate family. You could have your brother listed as the trustee for your kids, but then he gets divorced, moves to Vegas and starts partying every weekend, and you’re like, Well, maybe you shouldn’t be the trustee anymore, you know?
So those things happen too. And then I’ve had so many times where someone will come to me with a trust that’s 20 years old. I’ve got, actually, a friend of mine sent me his yesterday, he sent me his will and he goes like, Michael, I’m embarrassed. I haven’t updated this will this gentleman I know he’s an older guy.
And I looked at it and it said, my wife is pregnant with our fourth child and it was 20 years ago. But I’m like, okay, you need to update you. It doesn’t even have the fourth kid in there. And some of the people on there are no longer with us. So yeah, it’s important to make sure that any time there’s a change in the family or in the assets, sometimes I have serial entrepreneurs, which I imagine a lot of people on this call might be because they’re business owners.
And once you own one, you like to be involved with multiple. So if you then add more businesses, but you forget to change your trust or add them to your trust, well now you set up the first structure, but you didn’t add to it later. And then we’re going to have to probate those other assets, which we’re trying to avoid.
So I really think that, you know, at least every 5 to 7 years you want to sit down with your estate planning and asset protection attorney and review what you have and how it’s changed since the last time you got together.
00:48:20:04 – 00:49:28:14
Jay Shorr
Yeah, exactly. Because after I got remarried, now, you know, I have the introduction of different new grandchildren and now I’m about to become a great grandfather next month. And in my estate planning, I want to make sure that we provide for education for these children and a new education and the trust fund for the great grandchild that is about to come.
You know, And as I went and did my revisions of my wills and trust in the States, and I’m trying to explain all of this to Michael and my wife is explaining all of this to Michael, We have to change documents and then re change documents. I mean, it’s a good feeling walking out that it’s done, but it’s an arduous process that you have to make sure that you keep everybody in mind with that, you know, as we conclude, I’d like to be able to give contact information.
So if you would like to be able to get in touch with us, Michael, please share with the audience how they can get in touch with you for your consult or guidance in their wills, trusts and estate planning.
00:49:29:12 – 00:50:09:16
Michael Wild
Absolutely. And as you can see, my email address is right there on the screen, mwild@wfplaw.com and anyone who wants to call the office can also call at 954-944-2855. As you mentioned, you know, I’m 44, so I’m fairly young for an estate planning attorney, but I’m the oldest person at my firm. So even as I have deceased, I have three other attorneys that are backing me up here because I’m not free of the risks either.
But we’ve got a great team here, and everyone here handles estate planning, asset protection and probate only. So we are we are not dabblers. We are specialists in this area.
00:50:09:17 – 00:50:48:09
Jay Shorr
Perfect. And feel free. You can contact me at jayshorr@shorrsolutions.com. Our website is www.shorrsolutions, plural because we have more than one solution .com and our handles on social media are @shorr solutions. So ladies and gentlemen, on behalf of Mike Wild, my colleague and my personal wills trust estate Attorney, please allow me to thank you for spending an hour of your day with us.
And I hope that we were able to give you some good information. And please feel free to visit our websites or call if we can assist you.
00:50:49:06 – 00:52:21:18
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