There is a concept called retirement planning which by its very nature takes place and is activated prior to the onset of the results of a properly maintained estate plan. Retirement planning is somewhat different than estate planning because the focus is on maintaining some type of income flow to the individual prior to death whereas estate planning usually is an attempt to direct transfer and to avoid taxation on assets prior to their transfer to beneficiaries. Retirement planning for the most part involves investment strategies for the placement and maintenance of one's assets. There are tax considerations that should be taken into account when establishing a retirement plan so here again not only should you take advantage of the acumen of your attorney but again you should also seek the advice of your friendly accountant and investment advisor. Retirement planning we feel should go hand in hand with estate planning if estate planning is necessary. Otherwise retirement planning is something everyone should consider. Let's face it, we may all say we love our jobs but we all at some point get older, slowdown and look to convening a more relaxed lifestyle. I know that I do, although I do not see myself fully terminating my practice of law because of the enjoyment I obtain from the practice. It will take planning now while you are able to work to be able to afford the cost both in time and money in being able to turn the key in the Winnebago. Part of retirement planning entails attempting to incur less debt and satisfy or put a major dent in the continued pressure of payment requirements of present debt. We do not hold ourselves to be experts in tax planning or investment strategies or debt reduction but we again have many contacts in these areas for referrals to interested clients. Much of retirement planning involves some type of retirement fund establishment and administration. Such carries many different names and different structures, whether it be a pension plan, your KEOGH (in whatever present form), your IRA or in my case my SEP. One thing that I find appealing regarding these types of retirement planning is that you are allowed to within limits place certain or your assets in investment portfolios not subject to tax on the gain and the ability to exclude the principal invested from income tax. I believe it is a good concept to be able to pay monies into your own investment plan rather than hand them over to the IRS as income taxes and I hope its not extinguished as rumor has it. I have actually found great benefit in being able to deposit into my retirement fund monies that otherwise might be taxed by and go to the IRS. On an annual basis because of the looming IRS cloud you have opportunity for in effect a "forced" retirement funding under circumstanceswhen you otherwise might not have considered such investment. Thank you Uncle Sam. Mind you, the drawback of course is that those funds must remain in an effective escrow until retirement and such only become available beforehand with significant penalties but there is comfort in knowing at least to some extent you are assisting yourself to ready your situation somewhat for retirement. I had contemplated discussing the status of Social Security in this newsletter and what the probabilities are that you would see any significant income from your efforts into paying for social security all these years. I for one have learned over the past several years that social security is not to be considered our protector with which to confront the pressures of getting older and knowing that we must retire, I suggest that Social Security be used as only as an adjunct to retirement planning. They blame the Social Security problem on us Baby Boomers, but why? They should be thankful to us because we funded for the others and it is doubtful we will see adequate returns for our efforts. I would like to better control my destiny and this type thinking is the basis for discussions over the last year or so on allowing the individual to invest his own portion of Social Security funds. I abstain from opining on whether such is or is not a good idea but one thing in my mind is certain and that is I would like to continue, as espoused at the outset, to be able to rely on myself to see me through the hard times and I am reluctant to place any type of controlling interest in my maintenance in the hands of my Uncle Sam.
Lastly, there is an estate planning/retirement planning strategy which is a personal favorite of mine, use of the entity format whereby assets are placed in a corporate or limited partnership format and stock ownership in the corporation is slowly transferred inter vivos to intended beneficiaries without transferring control until you are ready, or you maintain only the general partner interest to maintain control, all the while dictating the income you shall recover from the entities activities. You can then place the entity ownership in an Alaska trust (a far-reaching concept but an example of how for we attorneys can stretch out thinking) and likely protect the asset from creditor reach while still controlling and benefiting directly from its income strategies. You can also then transfer all of such assets offshore. We do not however favor subjecting assets to non-US rule. Offshore depositing is more of a creditor avoidance tool in our opinion than an estate planning tool. Different from common thought, assets in foreign trusts are likely to be at some point subject to taxation and creditor attachment in most instances where the settlor remains a US resident. Call for further details - its an interesting discussion.