Questions to answer, documents to obtain, and important points to make

By Alan R. Eber

Excerpted from Asset Protection Strategies & Forms

On the initial phone call, I like to find out the following:

  • How did the potential client get to me?
  • Was it a referral from a client referral source?
  • Was it a referral from a professional I have not dealt with before?
  • Did he attend a seminar I gave?
  • Did he come from the Internet?
  • Did he come from a source he prefers not to reveal?
  • Why is the potential client calling at this particular time?
  • Has he just been served?
  • Has he just gotten or became aware of a threat?
  • Has he read something or heard something about asset protection and wants to explore it?
  • Has one of his advisors suggested it? Who?
  • Was he commencing estate planning and his attorney or accountant suggested he call?
  • I inform the potential client that my first available slot is in two weeks. Is that time acceptable?
  • If yes, good. There is no urgency.
  • If no, discern why the urgency.
  • Will the referring source be at our meeting?

Learning how the potential client found me gives me an idea of the extent of the client evaluation process that I need to undertake. [See §§5:70 et seq.]

Learning why the potential client is calling at this time is essential. Many of my calls are because the person has either (a) just been served, or (b) has just become aware of a threat. In those situations, the potential client must provide a Financial Affidavit. [See §5:91.]

It is helpful if there is a referring source and that person is at the meeting. That source knows more about the client than I do. I can get a better idea of the client’s issues, and can judge whether the client’s advisors can maintain a sophisticated plan or whether a simpler plan may serve the client better.

Planning the First Meeting

You want to obtain as much information as possible at the first meeting with the potential client.

At the minimum, obtain a Financial Affidavit shortly before commencing serious work.

Unfortunately, many clients who have already been sued or have other serious difficulties will ask for your “offshore” services. They will not be forthcoming about their difficulties. Extreme caution is required. You do not want to be in the position of helping your client perpetrate a fraudulent transfer. You do not want to be in the position of placing assets beyond the reach of a U.S. court.

By using the Financial Affidavit, you have protected yourself, and with a proper vetting of your client, you can go forward (or not) to protect him or her.

[For more on analyzing potential or actual lawsuits, see §5:70.]

FORM:

1-1 Estate Planning Worksheet (in Chapter 1)

2-3 Financial Affidavit (in Chapter 2)

Documents Client Should Bring

Questionnaire—Pre-Meeting

After the initial phone call I send the potential client my standard questionnaire. We insist that the client return the questionnaire prior to the initial meeting.

Writing down all the information in advance allows both the attorney and the client to focus on substantive issues in the meeting. Perhaps more importantly, the attorney can get an idea of client “buy-in.” That is, how committed the client is to getting the work actually completed. A thoughtfully and well answered questionnaire shows that the client has spent the time required and is committed to the process.

With a questionnaire, the attorney has the time to become familiar with the client’s situation before the initial meeting, and to identify topics that merit further discussion. You can also think through the ramifications of the client’s goals without the distraction of an ongoing conversation, and ensure that you don’t forget to ask something.

A good questionnaire will provide:

  • A picture of the client’s family.
  • A general description of the client’s wishes and needs.
  • The financial information needed for the client and attorney to make judgments about planning.
  • A list of all assets.
  • Contact information that the attorney can place in a prominent position in the client’s file.
  • Correct spellings of all pertinent names and addresses.

FORM:

5-1 Client Worksheet

Two Years Tax Returns

I am not always insistent on obtaining tax returns prior to the first client meeting. Some clients are comfortable sending them, some are not.

However, I will require them prior to the transfer of assets if I have not by that time met with the client’s advisors, particularly the accountant. I want to be sure that the magnitude of the assets being transferred is consistent with the taxable income the client has been reporting. If it is not then I need to find out why not.

[§§5:93-5:99 Reserved]

Discussion at First Meeting

I have read the client’s questionnaire and have an idea of his estate. Now I want to get an idea whether he believes that the work that needs to be done is in the range of a living trust or, based on his objectives, he understands that serious planning needs to take place.

I begin by asking, “If things go as you hope, what will we accomplish today?”

This gives me an idea of the client’s seriousness and level of sophistication.

Spousal Conflicts of Interest

If the client is married, both spouses must be clear about who the client is.

Conflicts can arise whenever a lawyer represents a married couple, or represents any two members of the same family.

Example:

Assume that a husband has $1 million of separate property, and his wife has the same.

They each have total control of their assets. However, if I place both of their assets into a family limited partnership, who is the general partner? If it is one of the spouses, the other has lost control of his or her assets. If it is both of them, both have lost control of their assets because now they must agree on a course of action where previously they could pursue their individual action without requiring the other to agree.

Address this issue at the beginning of the representation, before assets are funded into planning vehicles. Both spouses can agree to joint representation. A written consent can also contain an acknowledgement that the spouses are aware that the attorney will withdraw from the representation if a conflict arises.

FORM:

5-2 Conflicts Disclosure Letter and Consent

Client Attitude Toward International Planning

Having noted the size of the estate in my initial review, in larger estates (those in excess of $4 million or so), I need to get an idea of the client’s thoughts about international planning.

If international planning is on the table, I will set up a follow-up meeting with the client, his or her spouse, and their accountant. I want to be sure that the clients understand what is involved and that I can count on the accountant’s support.

If there is a financial advisor, I also want him at the second meeting. Financial advisors can become adversaries if they believe that by placing assets offshore they are losing the management of a large account. Once the advisor understands that he can be appointed as the investment advisor to the IAPT, I find that negativity disappears and I have a team member. [For the appointment of an Investment Advisor, see §5:113.]

Execute a Retainer Agreement

If both parties decide to proceed with the engagement, a fee agreement should be signed to prevent misunderstandings and future problems.

You may prefer to use a two part Retainer, with the preliminary part for the Financial Affidavit and the second part for the work that will be undertaken provided the Financial Affidavit permits it.

Form 5-3:      Attorney Retainer Agreement

Comment:

Paragraph 1 states that the client agrees to disclose all relevant information. I have had clients who do not disclose the magnitude of their holdings until they really get to know me. I can only plan on the facts I am given. If at a later date they make a second disclosure, my initial planning may not be appropriate with the new facts. If they want me to revise the planning, we will need to take the additional work into account and revise the Retainer accordingly.

Paragraph 3a refers to trustee fees. Many clients are unaware that international trustee charge on a yearly basis and sometimes as a percentage of the funds for which they are responsible. Many clients are unaware of the costs of international wire transfers, courier costs, and other items. Be sure they understand that they are responsible for these costs.

Paragraph 3b clarifies that accounting fees are paid to the clients’ accountant. Be sure that the accountant is aware of the structure being set up and is comfortable accounting for it. Assist the accountant by providing the accounting forms in this book and you may become the accountant’s main referral sources for international engagements. Furthermore, I make sure that I document clearly in a letter to the accountant the work that I have undertaken and the work that the accountant needs to undertake. I do not want the client to believe that I am undertaking any accounting functions or that I am responsible for IRS reporting.

Paragraph 4 states that payment is due at the final document signing. I do not turn over final documents without having been paid in full.

This form provides five different options at Paragraph 5 for the determination of fees depending on the work involved:

1. Option A: International Asset Protection Trust

2. Option B: International Estate Planning Trust

3. Option C: International Asset Protection Trust (Low Profiler)

4. Option D: Collapsing Bridge Technique

5. Option E: Withdrawing Bridge Technique

As long as the client understands and is in agreement, you may want to call the trust a [NAME COUNTRY] Discretionary trust. Couching your engagement in the estate planning context is better than in the asset protection context.

Paragraph 5a in Option A describes matters that will be undertaken on a fixed fee basis. I prefer to fix fee all the work that I have a clear understanding of the time involved. I include in my fee quote a certain amount of time for working with the client’s other professionals and for several first year phone inquiries. This is good for the client and good for obtaining referral sources for my practice.

Paragraph 5b in Option A describes matters that will be undertaken on an hourly basis. The hours required to accomplish these tasks is not under my control. With the tremendous increase in due diligence requirements, opening bank accounts can hit snags. For example, I had a client who inadvertently transposed his Social Security number. The number he gave was that of a person several years deceased. After that, it took weeks of discussions before the account was opened.

Paragraph 5c provides that implementation of other techniques are not included. Once the structure goes operational, my work is complete. If the client needs me to communicate with the bank or the trustees, then my normal hourly billing rate applies. In the international arena, a great deal of hand-holding may be required. Some I do as a matter of practice, most I charge for hourly.

Paragraph 5d(ii) provides that this engagement does not include representation in court or before any regulatory agency. If at a latter date the client runs into difficulties and requires my assistance in hearings, court or IRS matters, or if my appearance is “requested,” I want the client’s agreement as part of his retaining me, that I will be paid.

Paragraph 5d(iii) provides that the attorney is not obligated to advise of subsequent changes in the law. Unless an arrangement is worked out in advance, I am not responsible for changes in laws over the years. Of course, I find it appropriate to inform my clients of changes that affect them across the board.

RETAINER UNDERSTANDING

[DATE]

 

Dear [CLIENT NAMES]:

We appreciate your retaining us to assist you in your planning. We wish to outline our responsibilities to you as your attorneys and your responsibilities as the client. We also wish to inform you of our billing procedures that apply.

  1. Information. We shall keep you informed of significant developments during the course of representation. You agree to disclose all relevant information and make available all documents under your control.
  2. Statement and Fees. To the extent non fixed-fee work is undertaken, you will receive a monthly statement with a description of work done and time involved. Fees will be calculated based upon the time spent by the attorney and by the paralegal assistant. Our present hourly rate is $______.00 per attorney hour, and $______ per paralegal assistant hour.
  3. Costs. The bill will include expenses incurred on your behalf, including but not limited to international telephone costs and air courier costs. Outside costs such as trustee fees, corporate nominees, recording and filing fees are not included in our fixed fee quote and will be billed separately.

In addition to the foregoing, there are other fees that will be incurred in connection with administering the trust and any other entities set up. For International Trusts these costs include, without limitation, the following:

  1. Trustees Fees. These will depend on the Trust company you select and the fee agreement you enter into with them. The Trust company you select will most likely charge you for all fees they pay the situs utilized by the trust and for managing and maintaining trust assets. These fees are paid in accordance with your agreement with them.
  2. Accounting Fees. Paid to your accountant for compliance with IRS reporting.
  1. Retainer. We require a retainer to cover our estimate of work to be done. In non fixed fee matters, time spent will be deducted from the retainer. Additional fees will be billed to you when time spent on your matter exceeds your retainer. All amounts remaining outstanding will be presented to you at the final document signing meeting and will be due and payable at that time.

[Option A – International Asset Protection Trust]

  1. Fixed Fee and Hourly Work.

a. Matters Undertaken on a Fixed Fee Basis:

International Asset Protection Trust with Protector Provisions               $1x,xxx

  • An IAPT that Qualifies Under the Law of [SITUS]
  • Letter of Wishes re Discretionary Trust
  • Deeds of Indemnity for Bank and Trust Company
  • Financial Affidavit for Myself, Trust Company, and Bank as needed
  • Declaration of Solvency
  • Declaration of Non Criminal Origin of Funds
  • Supervision of the Due Diligence Data Gathering Process

Research of the law and meetings are included in the fixed fee, as well as reasonable length discussions with client’s accountants and attorneys pertaining to the fixed fee work. Travel time, if required, is not included.

b. Matters Undertaken on an Hourly Basis:

  • Selection of Trustees
  • Bank Account or Brokerage Account Opening Documentation and set up Account(s)

The hourly fees will be billed as undertaken and shall be due when billed.

The fixed legal costs involved is $1_,000

Your retainer for $1_,___ would be appreciated.

 

[Option B – International Estate Planning Trust]

  1. Fees

a. Fixed Fee and Hourly Work

International Estate Planning Trust                                $1x,xxx

  • Discretionary International Estate Planning Trust Which Qualifies Under the Laws of [SITUS] with Domestic Pertinent Living Trust Provisions
  • Pour-Over Will
  • Letter of Wishes re Discretionary Trust
  • Deeds of Indemnity for Bank
  • Declarations of Solvency
  • Declarations as to non criminal origin of Funds
  • Supervision of the due diligence data gathering process
  • Financial Affidavits for myself and for Bank as needed

Research of the law and meetings are included in the fixed fee, as well as reasonable length discussions with client’s accountants and attorneys pertaining to the fixed fee work. Travel time, if required, is not included.

b. Hourly

  • Selection of Trustee
  • Bank Account or Brokerage Account Opening Documentation and set up Account(s)

The fixed legal costs is $XX,X00.00.

Your retainer for $X,X00.00 would be appreciated.

 

[Option C – International Asset Protection Trust-Low Profiler]

  1. Fees

a. Fixed Fee and Hourly Work.

International Asset Protection Trust-Low Profiler           $1x,xxx

  • Letter of Wishes re Discretionary Trust
  • Discretionary IAPT Which Qualifies Under the Laws of [Situs] with Low Profiler Provisions. Customized Trust Drafting to Comply With the “Court” and “Control” Test
  • Deeds of Indemnity for Bank, U.S. trustee and international Trust Company
  • Declarations of Solvency
  • Declarations as to non criminal origin of Funds
  • Supervision of the due diligence data gathering process
  • Financial Affidavits for myself and for Bank as needed

Research of the law and meetings are included in the fixed fee, as well as reasonable length discussions with client’s accountants and attorneys pertaining to the fixed fee work. Travel time, if required, is not included.

b. Hourly

  • Selection of Trustee
  • Bank Account or Brokerage Account Opening Documentation and set up Account(s)

The fixed legal costs is $XX,X00.00.

Your retainer for $X,X00.00 would be appreciated.

 

[Option D – Collapsing Bridge Technique]

Collapsing Bridge Technique                             $1x,xxx

  • Letter of Wishes re Discretionary Trust
  • Discretionary IAPT
  • Deeds of Indemnity for Bank and Trust Company
  • Declarations of Solvency
  • Declarations as to non criminal origin of Funds
  • Supervision of the due diligence data gathering process
  • Financial Affidavits for myself and for Bank as needed

 ____________(State) Family Limited Partnership:           $x,xxx

  • Collapsing Bridge Provision
  • File State Certificate-LP-1
  • Memorandum of Partnership
  • Limited Partnership Agreement
  • Annual Meeting Agenda
  • SS-4 Filing – Tax ID Number
  • Operations Manual
  • Research of the law and meetings are included in the fixed fee, as well as reasonable length discussions with client’s accountants and attorneys pertaining to the fixed fee work. Travel time, if required, is not included.

[Option E – Withdrawing Bridge Technique]

Withdrawing Bridge Technique              $1x,xxx

  • Letter of Wishes re Discretionary Trust
  • Discretionary IAPT
  • Deeds of Indemnity for Bank and Trust Company
  • Declarations of Solvency
  • Declarations as to non criminal origin of Funds
  • Supervision of the due diligence data gathering process
  • Financial Affidavits for myself and for Bank as needed

 

Note the Family Limited Liability Company may be EITHER DOMESTIC OR FOREIGN

 

__________ (State)(or Foreign Jurisdiction)] Single Member FLLC:        $x,xxx.

  • Withdrawing Bridge Provision
  • File Certificate-LLC-1
  • Memorandum of LLC
  • LLC Operating Agreement
  • Annual Meeting Agenda
  • SS-4 Filing – Tax ID Number (After Discussion Accountant)
  • Operations Manual

Accountant to File Check the Box if Foreign LLC Utilized

Research of the law and meetings are included in the fixed fee, as well as reasonable length discussions with client’s accountants and attorneys pertaining to the fixed fee work. Travel time, if required, is not included.

b. Implementation. Implementation of other techniques beyond the recommendations, described above, is not included in the above agreed to fee.

c. Matters Specifically Excluded From the Engagement

i. We represent you only on the matters described above and not on independent or related matters that may arise. If additional matters arise and we agree to represent you in those matters, you agree those matters shall be paid by you based on our hourly fees.

ii. This engagement does not include representation of you in any court or other proceedings or before any regulatory agency. Should any of the issues raised by the planning undertaken hereunder require us to appear at a latter date as a witness or attorney in any court or other proceedings or before any regulatory agency on your behalf, you hereby agree to compensate us for our time spent (including travel time) at our hourly rate and our expenses incurred. Should the issues raised require us to retain counsel, you hereby agree to compensate us for our cost of counsel.

iii. Attorney has not accepted any obligation following the preparation of the above described documents (if any), and is expressly not obligated to Clients to advise them of changes to laws, or to periodically review Clients’ estate plan or other matters. Any such obligation would have to be the subject of a separate representation agreement.

iv. Following the signing of documents, our representation ends.

v. IRS and state tax compliance and reporting requirements either for you or any of the entities created pursuant to this engagement are not covered by this engagement.

If you want us to represent you for any matter not specifically listed in “5.a. Matters Undertaken on a Fixed Fee Basis” including, without limitation, any of the matters listed in “Matters Specifically Excluded from the Engagement,” then we must enter into a separate agreement to do so.

  1. Discharge and Withdrawal. You may discharge us on written notice, and we will after receiving notice cease to render services. Such discharge does not relieve you of the obligation to pay costs incurred prior to termination, and we will have the right to recover from you the reasonable value of our legal services to the extent they exceed your retainer. We may withdraw from representation of you upon reasonable notice.
  1. Late Fee. Amounts paid thirty (30) days or more after the billing date will incur a late fee at the rate of 18% per annum (1.50% per month).
  1. Disputes. If a dispute arises regarding Attorney’s work, representation, fees or costs under this Agreement and Attorney or Client files suit in any court, Attorney or Client has the right to stay that suit by timely electing to arbitrate the dispute, in which event the parties must submit the matter to arbitration.
  1. Fees. The prevailing party in any proceeding to enforce any provision of this Agreement is entitled to attorneys’ fees and costs incurred.
  2. Jurisdiction. This Agreement is governed by the laws of [INSERT].

We look forward to working with you on the above referenced matters.

Very truly yours,

[NAME OF ATTORNEY], Attorney at Law

The undersigned hereby accepts and approves all of the terms and provisions contained in this Retainer Agreement and acknowledges that the fee paid by the undersigned, simultaneous with the execution of this Retainer, represents a Nonrefundable Retainer.


Alan R. Eber is a pioneer in the asset protection field and a highly sought after speaker on estate and wealth planning and protection.  Since 1974, Mr. Eber has assisted clients in establishing a wide variety of wealth preservation structures. Currently, Mr. Eber is presenting seminars on Advanced Asset Protection and Techniques and Domestic and International Trusts for the National Business Institute (NBI), the Lorman Group, and numerous other groups.  He is the author of Asset Protection Strategies & Forms, from which this article is excerpted.