“Mr. Beaver, many years ago you wrote a touching article about a young CPA who was horribly injured in a bicycle accident. Why, I cannot tell you, but for some reason I remembered that story.

“Two months ago my nephew, Brian, was struck by a pick-up truck owned by a power company. The driver was on his cell phone, distracted and did not see Brian or any of the other cyclists with him. The parallels of Brian’s injuries to your article are stunning, as are the potential family issues.

“If you can find that story, and your editors will run it again, a great public service will be accomplished, in addition, I hope, a message sent to my nephew’s family.”

We found the article.

There can be times when a parent must take charge, no matter how old their child has become. This is the story of one parent who did not.

In 1989 Rudy was a successful 28 year-old CPA. Handsome, a great sense of humor, a lovely girlfriend, Becky, nice car, in short, he earned many of the rewards that come with hard work.

Saturday afternoons were a special time for Rudy and Becky, as both enjoyed cycling. She was little more than 20 feet from him when he was struck by a bus that made an illegal left hand turn. She remained with him as he was air evacuated to a neurological intensive care unit in Sacramento.

Becky held his hand and talked to Rudy softly – through tears – for the weeks that he remained in a coma.

Upon awakening, it was to a world in which he would learn to walk with a cane, gaze at a paralyzed right arm, and to a voice which made him sound intoxicated. Brain damage can erase that which gives us our humanity, taking away logic, reasoning and self-control. These things were taken from Rudy. But through it all, his charm and strong personality remained. It would prove to be his undoing.

The lawsuit against the bus company was settled for several million dollars, enough to easily provide a comfortable life. But in the space of five years, Rudy’s net worth fell to $150,000. But how could this happen?

“My son’s first lawyer in Los Angeles urged him to put the money into insurance annuities which would pay out so much a month for life, with money left for his heirs,” Rudy’s mother explained. “But he insisted on managing his own finances, finding an investment adviser who helped him sink $500,000 into a failing bowling alley, then $250,000 in a mini-mall that was never built, and finally, almost $500,000 into various high risk investments, all of which failed.”

Rudy also was receiving $10,000 each month in “spending money,” as his parents explained. Craving attention and friends, spend, he did. To his impaired-mind, it was a way to retrieve lost self-confidence. “While the money lasted, our son had so many friends,” his mother related, adding, “He just would not listen to me.”

This bailiff had no sense of humor

Rudy was referred to our office following his court appearance for a reckless driving ticket which turned into ‘assault on a peace officer.’ With his one good arm, suddenly he began swinging the cane above his head, shouting, ‘I’m just raising a little Cain!’

“I didn’t know that bailiffs have such a poor sense of humor,” Rudy told me, oblivious to how close he came to being shot.

The nightmare was avoidable with a conservatorship.

When the extent of their son’s brain damage was known, this nightmare could have been avoided with a court-ordered conservatorship being established, as our legal system seeks to protect people from the effects of their own disabilities.

Had a conservator (or guardians as it is known in some states) been appointed, only safe investments would have been permitted. Rudy would have most likely been declared incompetent to manage his own affairs, safeguarding him from entering into most contracts. His conservator would have been required to see to it that some sense of order was maintained in his life. The power of our legal system would have been used to protect Rudy from others and from himself had his mother or other family members acted, then.

It is in the nature of things for parents to gradually let go, to replace “Mommy” with “Mom,” “Daddy” with “Dad,” a handshake or hug instead of a kiss.

Yet, in the hearts of good parents, our children are still young and small. And in need of our protection.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Earlier this year, while out running errands for my 83-year-old parents, “Sandy and Robert,” with whom I live, a solar salesman from Utah-based Mint Solar suddenly showed up at their home, and in no time, they signed a contract for a $20,000 lease financed with a 20-year loan. I only learned of this days later — after the three-day cooling period for in home sales had elapsed and then the system was installed but never hooked up to the Pacific Gas and Electric’s grid. Not only that, but we received a notice of Preliminary Lien from the installer who had not been paid. We’ve tried calling Mint, but get voice mail and no one returns a call. Can you help? Thanks, Terry.”

No research on Mint ever done 

Had the elderly couple taken just 60 seconds and Googled Mint Solar, they would have seen these comments: “Misappropriation of funds. Misleading and unqualified company. Lie after lie after lie. They don’t pay their employees! Lack of basic human decency.”

We learned that Mint is a real class act, ripping off the couple’s own salesman $30,000 in unpaid commissions. “I finally had to admit to myself having been duped by management, and there are salespeople and customers across the country in the same situation,” he told us. We confirmed his statement independently.

Our readers are visibly impaired, admitting to having significant memory and reasoning problems which should have been obvious, “But we believed the salesman,” Robert stated. Solar salespeople are famous for having their sense of honesty, ethics and morality surgically removed before being unleashed on America’s elderly.

It’s 3 p.m. What are your parents or grandparents up to?

If you do not protect them from themselves, who will before it’s too late? And, just what can you do? Stay with us, as Southfield Michigan-based Certified Financial Planner Sandra D. Adams – who also holds a Masters in gerontology – sets out a strategy for children and grandchildren to help steer their aging family members out of harm’s way.

Isolation leads to being scammed

“When adult children or grandchildren, like your reader, discover what happened, they will often yell, “Why did you do this? Why did you let the person in?” The answer is often found in one word: Isolation. Even when family are all in the same city, our nation’s aging population is more isolated than at any other time in our history,” Adams observes, adding:

“The need to talk with someone, to have human contact with a person who appears to care about their welfare, all of this leads to being scammed. But research shows when family maintain frequent and close contact, they will be phoned before that contract is signed.”

Make mom and dad aware of what’s out there

Will readers who like to be accused of being gullible or stupid, please raise your hands. Hmm, no one?

“The same applies in helping your aging relatives to see what dangers are out there. One way to do this by referring to a newspaper article, or what you ‘heard’ happened to a friend’s father, in an informative tone of voice. Remember, you want them to buy into the idea of running these kinds of decisions by family first. Without saying it directly, you are encouraging them to make sure their antennas are up, aware of potential traps.”

“In fact, you can encourage asking for your recommendations by asking their advice, such as, ‘Gramps,’ I am considering about doing this. What do you think?”

“By expressing respect for his opinion, showing that you are vulnerable and open to asking for his advice, he will be more comfortable in bouncing decisions off of you when it is his turn.”

Current scams target new Medicare cards 

New Medicare cards are being issued without using Social Security numbers, reducing the chance of identity theft.

“Con artists are contacting the elderly and falsely insist on obtaining proper identification before the new card is sent out. The fear of not getting the new card leads to revealing all sorts of personal information. As this is pure gold, the crook opens a bank account in the elderly person’s name, establishes direct deposit with Social Security and steals their money.”

There is a time for ‘The Conversation’

Working with the elderly as a financial planner, Adams sees the results of parents and grandparents who seek to maintain control by refusing to keep their responsible children aware of what they own and where it is.

“The key is to ask for their help so that you will be there to help them, and keep in close contact. Prevention is the operative word,” she concludes.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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If you have any type of insurance policy from MetLife – in fact from any insurance or annuity company – our story should cause you to take certain steps to protect future payments, and we begin with this question:

“Does the insurance company know where you live? Can they contact you or your family members?”

MetLife is one of the world’s largest insurance companies. Stand on any street corner from Hong Kong to cities in South America and in no time a bus will come by with an ad for MetLife.

While “big” may have advantages, it can also have considerable drawbacks, such as “too big” to know who they insure, and who is supposed to receive monthly annuity payments.

Last December, this mammoth insurance company announced that it had a little problem. MetLife admitted “Internal failures resulting in not making payments to tens of thousands of pensioners stretched back a quarter of a century.”

Downplaying the significance of this event, the company “Believed the group missing out on the payments represented less than 5 percent of about 600,000 people who receive a type of annuity payment with average benefits of less than $150 a month.”

“But that’s 30,000 workers harmed by this failure!” outraged New York attorney Edward Stone tells You and the Law. “Metlife does not even know how many years back these unpaid pension obligations go, but retirees were owed a defined amount of monthly income when MetLife took on responsibility for the pensions from their employers, which is known as pension risk-transfer or pension de-risking.”

While Stone is one of a handful of attorneys in the nation who deal with the consequence of life insurance companies getting in financial hot water, he was quick to point out that “No one is concerned about MetLife’s immediate financial viability, and policyholders shouldn’t panic and jump to another insurance company without careful thought, but these events are highly disturbing.”

Stone points out retiring workers with pensions were promised a defined amount of money from their employer, designed to last a lifetime. “Pensions are a very different animal today than in the past, and it is something that people working or retired need to be aware of.”

That’s because, in large part, over the past few years “It became apparent to companies that retirees were living much longer and costs were ballooning from having to write years of additional pension checks,” he notes, adding, “And the major life and annuity companies saw this fear as a huge source of new money, billions of dollars in new money and so they did something about it.”

And what they did was highly attractive to huge corporations with substantial pension obligations. “Some of the world’s largest life insurance and annuity companies approached industry and said, ‘We will take over paying benefits to your retired employees. Just give us the billions of dollars you are now managing, and we will assume responsibility for their monthly payments. We know what we’re doing, as we’ve been at it for years. We’ll invest the money and keep your retirees happy – and in the dark!”

The term “pension-risk transfer” means that, “The risk to the employers’ bottom line in being able to earn enough money to pay retirees gets transferred to an insurance company. This phenomenon has grown at a worrisome rate over the past few years. When this happens, pension benefits are no longer governed under ERISA and retirees become subject to non-uniform state law.”

An annuity is a promise by a life insurance company to pay out a certain amount of money to a policyholder for their lifetime or a set number of years. If you spoke with insurance company executives before the Great Recession they would have told you that funding an annuity is pretty simple.

As Stone explains: “Traditionally insurance companies would simply match fund liabilities with government or high-grade corporate bonds that paid out enough interest to satisfy what its payment obligations were to annuitants or certificate holders But with rates at virtually nothing these past few years companies are scrambling to earn more on their assets with things that are far less safe than highly rated corporate or municipal bonds.”

Edward Stone has this advice for all policyholders and their family members:

“Keep the company aware of where you are. Check in at least once a year. Prevent them from losing you by being pro-active.”

Edwardstonelaw.com is a website we recommend for anyone who can see themselves or their family affected by these issues.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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It is a conclusion parents never want to reach. “Our son is a failure and will never accomplish a thing. Can I protect him from his laziness and financial incompetence so that he doesn’t wind up homeless?”

Earlier this year one of our stories described a family that was “Eerily similar to ours,” an email from “Oscar” began. “A father told you about their two adult sons who will likely remain life-long failures.

“That’s what we are facing with our son, Eddie. After reading your column for years, I feel that I know you, Dennis. Can we please talk, we are worried sick and would appreciate your advice.”

We were on the phone a minute later.

Both in denial of son’s obvious mental illness

“Ever since he was a child, his behavior has been abnormal. We hoped it was something he would out-grow, instead it slowly worsened. We failed to get him psychiatric care, and have been enablers, pure and simple,” Dr. Oscar explained.
Yes, both he and his wife are health care professionals now facing the consequences of denial and worries that Eddie could wind up homeless or in prison.

“He graduated college with a business major and has spent the past three years living at home, using medically prescribed marijuana he claims helps his migraines. Our generous allowance led to hitting the bars, picking up a DUI with a .25 blood alcohol level, but, at his lawyer’s suggestion, getting into law school  – for which we paid, of course.

“He dropped out the first semester, telling us, “I am conservative politically, and all the students and teachers stare at me. They hate me for my views. Also, I couldn’t study or sleep as my apartment is near a radio station, and the radio waves keep me up at night.”

“This is, of course, paranoia, and on some level we were aware of it, but who wants to think your son is mentally ill?” his mom stated. “We prevented him from ever facing the consequences of his flawed thinking, and to Eddie, nothing is ever his fault. He is stubborn, so if he ever gets psychiatric care, taking meds will not happen.

“Can we provide him a lifetime income that will keep a roof over his head yet which he can’t blow?”

Inheritance often spent on flashy cars and trips to Vegas

“There is an “Eddie” in most families and the story doesn’t always have to be tragic. A son or daughter might be a poor musician, but loves music, enjoys performance and won’t ever earn much money at it. Or perhaps it’s a ‘starving artist’ child that mom and dad want to protect years down the road,” Stan The Annuity Man, a.k.a. Stan Haithcock, commented when I ran Eddie’s case by him.

Based in Ponte Vedra Beach, Florida, he is nationally recognized expert on annuities, and as we discovered, has a valuable tool for Baby Boomers who want to help financially protect their children or other family members.

As Baby Boomers age, the greatest transfer of wealth in our nation’s history is taking place, usually by inheritance, “There is a substantial risk of immature or irresponsible beneficiaries blowing the money on flashy cars and trips to Las Vegas,” Stan points out, adding, “Yet this does not have to occur, as there is a way to put in place what amounts to a pension – a lifetime income – which will pay as long as the person lives.”

Creating a lifetime income stream

He was quick to caution, “This is not a do-it-yourself project that you can download from the internet, as a family trust needs to be established by an attorney. You are putting in place a monthly income stream based on the child’s life expectancy, and you want to prevent the child from cashing it in.”

Stan explained how the trust functions:

“A living trust is the owner of an annuity and the child is referred to as the annuitant. What makes these annuities so valuable to parents is that the annuitant cannot cash it in. So, Eddie has no rights to a thing – that’s the ‘Handcuffing.’

“It is a way of being sure the child has an income. This truly is controlling from the grave, when it will start to pay, how much will be paid, building in a cost of living increase if you like, while preventing it from being paid as a lump sum,” he points out.

“It is the ultimate legacy. Your kids will hate and love you at the same time. Every time a check hits their bank account they will think, “Thanks, mom and dad.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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In 2008-2009, when the stock market crashed, so many people who were either close to or in retirement not only lost their shirt, but also their self-confidence, trust in their own decisions, respect from family members and a complete loss of faith in their financial advisor. Heart attacks increased significantly, especially among the elderly, as a Duke University study reported in late 2011.

“But just wait. If they jump back into the stock market, life for many of them — who lost over half of what they had accumulated over many years — could get much worse if we see even a mini-crash,” warns a Southern California stockbroker who we will simply call Mr. X, a veteran of 25 successful years with one of the nation’s largest investment houses.

He has a warning: “Many of these same people are now being frightened into getting back in, told that if they do not, they will not have enough money to live on.”

Mr. X isn’t selling a book which promises to save us all from disaster and does not claim to be prophet. Rather, he finds “mounting evidence of highly dangerous financial propaganda, aimed at those very people — crushed financially and emotionally by their earlier losses — the last ones who should ever dream of putting what they still have at risk back into the stock market.”

Not everyone needs to be in

“There are many people who should not be in the stock market — either by temperament and their inability to emotionally cope with loss — or who have no need to own stocks, which are never a sure thing, and always far from it,” X points out. “When you have sufficient income sources without stock dividends or stock appreciation, then you probably do not need equities.

This includes people who:

Live within their means and save;

Remain clear of unnecessary debt, especially from credit cards;

Do not treat their home like an ATM:

Own some type of income property, royalty, annuity or a small pension; and,

Will receive Social Security.

“You avoid the craziness — the fear — of making a mistake in not buying stocks again, by asking: Are my needs met, or will they be with what I already have in place? What can I lose by being at risk again in the market? What would that do to me emotionally, and in the eyes of my family?”

No duty to watch out for your money

X cautions us to be wary of ads which create an image of stockbrokers who place their customer’s financial interests first. That’s what a fiduciary does — places the client’s interest first. But, stockbrokers are not fiduciaries.

“Regardless of these comforting ads, a stockbroker has no legal duty to watch out for your money or act in your best financial interest, and certainly not to put you first. We sell investment products, and just like anyone in sales, it is because we want a commission,” he notes.

“We must not knowingly put you into something completely inappropriate, but until the law changes, a stockbroker has no fiduciary obligation to customers. So, unless it is very clear that you are suffering from some mental impairment and your decisions cannot be trusted, we will do what our customer instructs. That’s why adult children need to be aware of what mom and dad just might be getting into, if there are questions about judgment or self-control,” X suggests.

“Also, realize there is no requirement for us to call you and say, ‘Sell this stock!’ Some brokers will, but most are only too happy to sell you something and then almost vanish,” he stressed.

“Just talk with the people who rode the 2008 crash all the way down — losing in many cases well over half of their money — and worse yet, could have gotten out early, had their brokers just said, ‘Look, it’s bad, sell now, keep your profits in cash and wait to get in later.’ But that rarely happened.”

It’s more than just losing money

“Losing money in the stock market is often much more than just losing money. It can ruin your marriage. It can get you sued by your employees if you manage and lose their retirement money,” broker X underscores.

“Finally,” he points out, “Often investors have no idea of what the term ‘risk tolerance’ means to them. The answer is only revealed in a down market. If you have proven to yourself that you cannot accept risk then, you have already answered the question, ‘Should I again be in the market?’”

So, what are we to do? Annuities claim to protect our nest egg, provide money in the future and not be subject to loss in a stock market crash? But do they, and are they as safe as all the fancy ads claim? We’ll have the answers next week.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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What would you think upon answering a phone call and hearing, “How would you like to make 21% on your money, guaranteed?”

“Hmmm, sounds interesting, so what’s the catch? Is this a Ponzi scheme?” you would probably wonder. Or, you might think, “Wow! Sure! How do I get in?”

That’s what Ponzi scheme operators are banking on — a way to get a return on your money that no one else can offer.

As a legal affairs columnist, I had to listen to the pitch because no doubt lots of people were hearing the same song, and so I replied, “This sounds like a Ponzi scheme, but can you explain why what you are offering isn’t one?”

Recall Bernard Madoff’s Ponzi scheme?

The largest Ponzi scheme in U.S. history was run by Bernard Madoff, who took investor money promising steady returns. Instead, he defrauded thousands of people out of an estimated $65 billion over the course of 17 years, paying early victims with money from later victims until it all came crashing down in December of 2008.

Many lost their entire life savings. There were suicides. Bernie died in prison. The key that he was running a Ponzi scheme was that he promised steady returns that never varied.

In the real world of investments, that’s now how it works.

Ever Hear of Bitcoin Mining?

“Mr. Beaver, I’m sure you are well acquainted with the digital currency, Bitcoin,” “Iggy” began.

“I work for a digital asset creation organization, based in Austin, Texas and mine Bitcoins with powerful computers.

“We arrange for you to buy computers that we lease from you and use them to mine cryptocurrency, paying a fixed and consistent monthly cash flow. After five years, we buy back the computers for what you paid.

“We make our money by selling the bitcoins that your computers generate.”

(As he was talking, I Googled “cryptocurrency, Ponzi scheme, bitcoin mining scams’ and came up with several articles warning about bitcoin mining scams.)

“I replied, ‘If I understand correctly, these computers solve mathematical riddles and, out of thin air, create something that exists in the digital realm —something I can’t hold in my hands, can’t deposit in my bank, that isn’t tangible and when Donald Trump was President, he declared bitcoin was ‘not money’ and criticized it as ‘highly volatile and based on thin air.’”

Thinking to myself, “Hang on, the price of Bitcoin has never been stable, so how can they guarantee a 21% steady return?”

Beautiful Advertising Material

I asked for, and Iggy immediately emailed, documentation on his company. It is as smooth as a newborn’s behind, describing company philosophy, how the purchase-leaseback works, and shows photos of the contracts customers sign, but they were unreadable.

As it was clear to Iggy that I just didn’t understand this new world of digital currency, the following day one of his managers phoned. Over about a half an hour I listened to a polished explanation of why something I could not touch was the next greatest thing.

“Look at our online reviews. They are all excellent,” he boasted. Most were, but fake reviews can be purchased.

“Well, it is obvious that you are old school, Mr. Beaver. I’ll bet that years ago if someone told you about an investment in cellular networks, or Wi-Fi, you would have had the same skeptical attitude,” he said with a condescending tone of voice.

I replied, “Not at all. Those thing exist! They are real! I can make a cell call! But I do appreciate your time.”

Request from a Reader and Former Client

The next day, a reader and former client phoned our office having received the 21% sales pitch from this company, asking if I knew anything about them, and would I review the company’s contracts for them.

The reader is a retired pharmacist, but my former client sustained a brain injury in an accident and receives monthly checks from an insurance settlement that he wanted to cash in and invest. That scared me.

So, I called Iggy and requested a specimen of their contract to review. And then it became worthy of a Saturday Night Live skit.

The same manager again phoned and explained that everything is DocuSigned online, so there is no sample contract available.

“Oh, so you can’t just run off a blank one?”

“No, we only process a contract after you become a client of ours and are ready to invest.”

And the kicker?

“Besides, we will not have any computers to sell until November.”

“Really? What does that have to do with sending me a sample contract?” He did not answer.

So, is this a Ponzi scheme, a scam or is it legit? I do not know. But anytime someone wants me to invest, lease a building, or establish an ongoing financial relationship, I want to see their contract and have it reviewed by my financial adviser and CPA.

If refused, my answer is no.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

The post Is this a ponzi-bitcoin mining scam? appeared first on Dennis Beaver.

If you ask most lawyers if it’s a good idea to loan a friend money to buy a car, you’ll probably hear a line from Shakespeare: “Neither a borrower nor a lender be.”

The second part of that famous quote is less often heard: “For loan oft loses both itself and friend.” If good old Willie were alive today, given our fractured sense of morality, he would have added: “Lender, prepareth thyself to be sued by friend.”

30 months ago I loaned Sam money to buy a car

“About 30 months ago I loaned “Sam,” $2,400 to buy a car because he lost his job, then his vehicle and without transportation was unable to find employment. He agreed to pay $100 per month after he got a new job,” Tim’s email stated.

“Within a month he found employment, faithfully paying until his marriage to a young lady with two small children. Sam was having a hard time but promised he would eventually pay me. The balance at this point was $378.

“I have the pink slip to the car and am listed as legal owner. I’ve been cutting him some slack and do believe he will eventually pay the debt. But this is not the problem.”

Tim gets huge bill for towing, storage

A frequent consequence of marriage to a woman with children is that a lot of men lose all sense of responsibility to their friends. Sam lost his, as Tim explained:

“Something happened to the car and Sam left it parked on the street, where it was eventually towed away. As legal owner, I received a notice about the situation, called Sam, he said he was going to take care of it.”

So, did Tim verify that Sam would keep his word? Of course not.

“My wife and I then went on an Alaskan Cruise and when we got home there was a bill in my mailbox for $1500, a $200 towing fee plus $65 per day storage charge! I learned that after 30 days the car could be sold and I would then be sued for the balance owed.“

A warning to others

You and the Law was not present when Tim and Sam had their “Let’s get real” discussion, but are informed that, Sam ‘suggested’ the best thing to do at this point was to give the tow company the title and negotiate the storage fees, which is what I did, with amazing results!”

Tim was lucky. The owner of the towing company, “Was very accommodating and said he would waive the storage fees if I would provide the signed pink slip, the keys and the $200 tow fee. I couldn’t comply fast enough, walking away feeling like I had dodged a bullet. I shook his hand and thanked him. I had the feeling that doesn’t happen too often in his business.”

“I am writing you so that others will understand the consequences of being a legal owner of an automobile. It could be very expensive,” he stated, happy with result and not realizing that he was standing in quicksand.

“Forced to lose the car”

I phoned Tim. As it turns out, I had met him when visiting Hanford for its Thursday Night Marketplace, which is a combination Farmers Market and Street fair. I come up several times during the spring and summer Marketplaces season to meet readers at the Sentinel’s booth.

“I’ll wager that you and Sam attend the same church, right?” I asked. “Yes, we do,” he replied. Regardless of the flavor, all churches are magnets for hypocrites and cons, believing themselves ‘forgiven’ then immediately repeating their same behavior.

“Yeah, that’s Sam,” Tim admitted.

“Was Sam eager and truly willing to lose the car, or do you think he caved in feeling pressured, forced to, I asked.
“Of course he felt pressured!! I was sick and tired of his irresponsibility and what it cost me,” Tim admitted.

“I will also bet that, because Sam attends your church and you trusted him, and felt there was no need for a written agreement dealing with your right to repo the car and sell it if Sam quit making payments.”

“You’re right again,” Tim admitted, slowly sinking into a quicksand of his own creation, beginning to get my drift.
“Could he sue us?” Tim and his wife now on the line, asked.

What could Tim be sued for?

“While I think it would be immoral – as Sam created the problem – he could go to small claims court and sue Tim for breach of contract and the civil tort of Conversion. This is wrongfully – under duress – taking property from another person,” Hanford attorney Bob Zumwalt commented.

If you were the judge, how would you decide the case?

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Mr. Beaver, I have read your column for many years and trust your advice,” were the opening words of an overly-friendly voice on the phone.

“I need your opinion about ways of making it difficult for someone to sue me, and if they do, to collect on a judgment. I’m considering setting up a Nevada, Wyoming or South Dakota corporation or LLC because I’m told it is possible to save big time on taxes, even though my business is in California’s Central Valley.

“If someone wants to sue me, the people who file corporations in these states tell me that I will be invisible — no one will know who owns my company, and also, the IRS will not be able to touch me. I have already had two business failures, filed for bankruptcy, and don’t want to go through this again. Is there a legal way of escaping from my debts?”

Asset protection planning is legal – Tax fraud isn’t

“Lawyers and CPA’s who specialize in legitimate asset protection planning get these questions all the time,” Los Angeles-based tax attorney Bruce Givner tells You and the Law, adding, “often from someone who feels there is a magic solution to avoid financial responsibility, attracted to misleading information often put out by companies who sell corporation and so-called asset protection services.”

We asked Givner if there is any truth to the radio and internet ads which claim that, with a Nevada corporation, you can avoid taxes in your home state — and the IRS can’t find you.

“If you set up a Nevada corporation and conduct business in another state which has an income tax, then your corporation will have to pay tax on income earned in that state. If your reader deposits his business income into a Nevada bank account, he still owes taxes in California, and, if he doesn’t pay, this could easily be seen as committing state income tax fraud.

“For years there has been a myth that Nevada, Wyoming or South Dakota refused to cooperate with the IRS. This resulted in thousands of corporations formed by people who had no other connection to these states, but thought they could hide from the IRS, remaining invisible. Again, this is complete nonsense. All states co-operate with the IRS,” he points out.

We asked, “What about claims that the only way to ‘keep a low profile’ is by setting up a corporation outside of California?”

And Givner’s response to that claim?

“A misleading selling point of many of these asset protection programs goes along these lines: ‘By filing your corporation or LLC in our state, the identity of everyone connected to your business is completely hidden.’

“But The California Secretary of State’s website tells you that for LLC’s, partnerships and corporations they do not keep owner, shareholder, or employee information, and makes it clear that if you want that information, you’ll have to contact the business itself. The key paragraph on their website tells us:

Personal information such as telephone numbers, email addresses and social security numbers of business entity members (officers, directors, managers, members, partners, agents and employees) is not made of record with the California Secretary of State.

But there is something extremely important that you will find on the California website, and, as Givner notes, “It’s the identity of the Agent for Service of Process. That’s the person or company is designated to receive important correspondence, legal documents, law suits, and then, forward them to the business owners. This is not unique to California — all states have this requirement.”

“You’ve got to have a corporation”

Listeners to satellite radio can’t escape ads which scream the importance of setting up a corporation or LLC, “Or you can lose everything you own!” To Givner, this is a dangerous half-truth.

“It is totally false to suggest that just by setting up a corporation, anyone will automatically be immune from the consequences of being sued for a debt or accident that they might have caused.

“A corporation is an appropriate business structure and offers its owners some — but not total — protection from personal liability which is easy to lose if you do things like paying your personal bills from the corporate account, failing to pay corporate taxes, and many other ways.

“Asset protection–such as having auto and home owner’s insurance–is one way most people protect a lifetime of hard work,” he observes, but points out that, “It is only a partial solution. A frivolous lawsuit by a lawyer who has nothing to lose except a court filing fee will leave you with many sleepless nights, and a risk of losing over 40 years of hard work.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“My father died recently with no will or trust, and we are just going crazy trying to locate deeds to property, insurance policies, bank accounts and so on. We urged him to address these issues when he was first diagnosed with aggressive prostate cancer, however, being very old-fashioned Chinese, talking of death is taboo.

“We miss him so badly, but we are angry at him and yet feel guilty because we feel this way. You could do a public service by writing about the need to plan so that your loved-ones are not left in such a horrible situation. Thank you, Helen Chang.”

We ran Helen’s question by Boca Raton-based Elder Law attorney Howard Krooks, past president of the National Academy of Elder Law Attorneys, who practices in New York and Florida.

“Dennis, your reader beautifully stated the way so many families in this situation feel. Generally speaking, it is true that people do not like to talk about illness, loss of independence and death. When it comes to doing the things which will reduce the headaches for family members, people fall into one of five categories:

1. A failure to do anything. Some people think about, are urged by spouse and children to do something but still fail to plan or take action.

2. Some people don’t even think about planning. They’re living their lives and it just doesn’t occur to them to plan for what will happen when they are no longer here.

3. A third group, is aware of the need to do something, but are not sure what. Surprisingly, they do not consult with an estate planning attorney to talk about goals or objectives and to find out what it would take to implement their plan.

4. Some people go so far as to meet with a lawyer, find out what they can do and yet still choose not to go forward. This is frustrating to their family, and the lawyer who can see where things will wind up.

“Finally,” Krooks has praise for, “The doers, the people who find out what they can do and set their plan into action. The benefit of a well thought out estate plan — making life for heirs easier and more seamless when the individual is no longer here — is the greatest gift of all to their loved ones.”

You can just picture Helen’s family trying to make sense of dad’s financial life, searching for bank statements, deeds, safe deposit keys, all the result of his failure to organize and have the family’s financial records accessible. A loving memory has been tarnished.

Failure to organize financial affairs creates obstacles for the next of kin

I don’t think that a week goes by without a reader emailing, “My husband took care of everything. I don’t know what we own or what bills to pay. What should I do now?”

That happens, Krooks observes, “When there is a failure to organize your financial affairs. In one accessible place you need:
A list of all assets, including insurance, real estate, Social Security, IRA, bank and financial institutions. Where were the accounts opened? What branch? If you own shares of stock, where are they physically located, where are they held?”

By not taking the time to do this, Krooks warns, “This creates obstacles for the next of kin. If you become incapacitated or die, it becomes extraordinarily difficult to put the pieces of a person’s financial life back together. And don’t forget digital assets, such as user names and passwords,” he underscores.

“The ability to access account information must be available. Today, many financial accounts are paperless, and without a password, significant assets could be overlooked. You also will need to shut down social media. So, all of this is part of document and financial affairs organizing making it easier for your next of kin.”

What is the greatest threat to an aging population who has acquired some assets?

Krooks cites, “Fraud and financial elder abuse as the greatest threat to our aging population. And it can come from anyone, but often there are three story lines. In the first, an adult child falls upon hard times, moves in with mom or dad, begins managing and spending down their finances, leaving nothing.

“In the second, the kids are out of state and a care giver is hired, quickly becoming the new best friend. This becomes a relationship where the care giver isn’t just paid for their services, but given even more money, out of the elderly and vulnerable person’s fear of losing them.”

Finally, Krooks describes the, “New boy or girlfriend who moves in, taking care of your loved one and then money is leaving the account in large chunks.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Mr. Beaver, we have a very unique, messed up family situation, desperately needing some guidance,” the phone call from “Jimmy” began. The longer we spoke, what he described was anything but unique as many families confront similar challenges.

“My parents are in their late 70s, own their small home, are financially secure with no debt, but recently dad has begun attending free steak dinner seminars and investing in all kinds of things, losing money. When I talk with him about this, he gets defensive and tells me, ‘I know what I’m doing – I don’t want to out-live our money.’

“Even though everyone in the family gets along well, he is talking about moving to a retirement community, two thousand miles from us!

“Next,” Jimmy continued, “two of our three adult sons are total failures – lazy, irresponsible goof-offs. One is a 30 year-old momma’s boy from my first marriage. She gives him an allowance, pays his rent, car payment, cell phone, and he works part-time at a medical marijuana dispensary.

“The other is 21 and until we gave him a 30 day notice to move out, he did nothing except for playing video games. He has no ambition, is lazy with a capital L and financially irresponsible, like his older brother. Yet, we love them and worry about their future.”

And Jimmy’s concerns?

“How do I deal with my dad and address his worries of outliving his money so he doesn’t lose any more or moving away from their support system, our family. Is there a way we can provide our sons an income source that will keep a roof over their heads for the rest of their lives, but which they could not cash out and blow? Is there some book you can recommend we read?

“What to do when I get stupid”

“What To Do When I Get Stupid,” by Professor Lewis Mandell is the answer to Jimmy’s prayers. The former Dean of Business at the State University of New York at Buffalo has thoughtfully – and clearly – prepared a financial road map for the elderly, their children, and families with kids who will likely remain life-long failures, needing to be protected from their own financial incompetence.

Mandell is a founder of the field of Financial Literacy, and the book’s sub-title is, “A Radically Safe Approach to a Difficult Financial Era.” The opening chapters are what my reader and his father must read.

“After 60,” Mandel points out, “our ability of making sound financial decisions begins to decline.

Unfortunately, confidence in financial decision-making abilities, particularly in the areas of investment and insurance, actually increases with age as ability declines, leading to the likelihood of disastrous outcomes.”
I read Jimmy that paragraph the January day California emerged from its drought.

“That’s my dad!” he shouted. He would repeat that after hearing:

“Of far greater importance is the fact that as we age, we become more susceptible to sales pitches and pressure from those who target older people with assets…[at] free luncheons or dinners offered with sales seminars. We should resolve to not hurt the ones we love while we still have the mental capacity to do so.”

Why move? Aging in place

Introducing the concept of “Aging in Place,” you can almost hear Mandell asking readers: “If your house is the right size for just the two of you – and is paid for – then why move away from family and friends?”

“Living safely and comfortably in accessible homes as we get older, often to the very end of our lives,” that’s aging in place and requires, “accepting the fact that mobility decreases with age….ideally this means the safety of a single story,”

An income stream you can’t outlive

Who wouldn’t like to have a guaranteed monthly income for the rest of your life, regardless of how long you live or what dumb mistakes you might end up making along the way? “This is what an annuity can do for you,” Mandell tells us, and observes that, “Social Security or a defined benefit pension are forms of annuities, paying lifetime income.”

Benefits the elderly and Jimmy’s sons

Mandell is not selling annuities, rather, he strongly believes in this method of securing a guaranteed income stream which cannot be outlived. His book tells you which types to avoid, and looks at ways to make it impossible to cash it in early, thereby remaining clear of temptation – or being swindled.

In our discussion, he referred us to www.stantheannuityman.com, which is a highly informative annuity website. And, yes, there is a “Stan,” whom we spoke with, finding him a knowledgeable source of accurate information.
Regardless of your age, “What to do When I get Stupid” is an eye-opener, a great read.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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