Yesterday TheHill.com published an article titled “Debate Over Estate Tax Likely to Wait till 2010,” which suggests that the most likely scenario for estate tax reform is a “one-year extension and then tackling the issue as part of broader tax reform next year.”

The full article is available online at http://thehill.com/homenews/senate/58665-debate-over-estate-tax-likely-to-wait-until-2010. (For those of you unfamiliar with TheHill.com, it is self-described as the publication “for and about Congress, breaking stories from Capitol Hill, K Street and the White House. The Hill stands alone in delivering solid, nonpartisan reporting on the inner workings of Congress and the nexus of politics and business.”)

Asset protection is on a lot of people’s minds.  For some it may be on their minds unnecessarily.  Others do not have asset protection on their minds, but should.

Who should be thinking about asset protection?

The obvious answer is anybody that has some likelihood of being sued.  Thus medical doctors are an obvious group of people who need to be aware that at any time a patient could bring suit.  However, it does not have to be a patient; it could also be a partner or an employee.

Another high risk field is that of builders and developers.  Obviously, a project could go south because of a change in the market.  Eventual owners could sue and once again partners could also sue.

People in all types of businesses and professions need to be on guard.  That includes owners of apartment buildings, duplexes, or simply those who rent out a house.  I know of a situation where an owner of an apartment building was sued for a lot of money because there was a shooting on the property.

We are the most litigious society in the world. As most reading this know, even businesses who serve hot coffee have to be on their toes!

Another reason to do asset protection is to protect yourself when an investment goes bad.  Recently I read that the coach of the University of Michigan football team, Rich Rodriguez, was sued for $3.9 million due to a loan default in a condominium project.  What makes it interesting was that the money was borrowed by a limited liability company of which Rodriguez was a partner.  Ironically, one of the reasons that someone forms a LLC is for asset protection as I will discuss in a future blog.  However, Coach Rodriguez, it is alleged, gave a personal guarantee, and therefore may be liable for whatever the difference is between $3.9 million and the assets in the LLC.  It is true that the creditor can and probably is seeking repayment from all of the partners and not just Coach Rodriguez.  On the other hand, creditors often attempt to get repaid from the easiest source(s).

In future blogs, I will discuss other reasons to do asset protection and what are some asset protection mechanisms including trusts.

For those above a certain age and/or for those from New York City, the Astor family name is synonymous with wealth and charity.

Brooke Astor lived a long and storied life.  She died in 2007 at age 105.  Her son, and an attorney, Anthony Morrissey, who did estate planning for her are on trial in a Manhattan courtroom for among other things, larceny, scheming to defraud and forgery.

The basic prosecution case is that while Mrs. Astor was suffering from Alzheimer’s disease for the last seven years of her life, her son caused her to change her will, forged her name on a codicil, and sold a painting that she was attached to while pocketing a 20% commission.

The prosecution called 72 witnesses over the almost 17 weeks it took to put on its case.  Many of its witnesses had no direct connection to the case, but testified because the prosecution wanted to demonstrate that Mrs. Astor was not competent during the time period that the “acts” were committed. 

Every day in southern California, estate planning attorneys are asked by someone’s child to prepare a trust, or a will, an amendment to a trust, or a codicil to a will, when it is evident to the estate planning attorney, that the parent is not leading the child, but rather the child is leading the parent.  Frequently the motive of the child is harmless – in fact it will be of benefit to the parent.  However, sometimes the motive is not harmless and the primary motive is to alter the wishes of the parent.  It is in those situations that the attorney can become either the defendant in a civil lawsuit or the defendant in a criminal prosecution.

Probate litigation frequently involves claims of undue influence.  Whether or not Mrs. Astor actually signed one of the codicils to her will is important, but almost beside the point.  The key questions are whether it was something that she wanted to do, that she knew what she was doing, that she was not unduly influenced, and that she was competent to do so.