Guardianship IQ for Plaintiff's PI Attorney

If the plaintiff has a cognitive/intellectual disability, the plaintiff’s attorney must examine the interplay of the individual’s incapacity and the statute of limitations governing the suit. As the plaintiff’s attorney, you don’t want to be racing against a deadline in order to have someone appointed to act on behalf of the individual. 

GAL versus Guardian

 In some jurisdictions, a Guardian ad Litem can be appointed for the individual in order to represent the plaintiff’s best interests.  A Guardian ad Litem (“GAL”), literally is a guardian for the suit. The power of a GAL is very specific and it ends when the suit ends.  A GAL is not a guardian, a GAL does not have the authority to make decisions beyond the suit.

The appointment of a guardian is beneficial if the plaintiff will have an ongoing cognitive disability. This type of guardian can have responsibility for the individual’s personal needs and/or their property management. The court may authorize the guardian to invest assets, pay bills and make purchases for the individual. A guardian with personal needs power can make medical decisions and decide who will provide care for the person. Such a guardian would also be able to obtain or maintain government benefits for the individual. 

The Authority Granted

Individual states treat guardianships differently. In New York, for instance, we have two different types of guardianship, one based on an individual’s intellectual or developmental disability and another based on an individual’s functional limitations.  In New York, guardianships based on functional limitations are carefully tailored, and the guardian will only have the power set forth in the order appointing them.  If that authority doesn’t expressly include authorization to commence an action on behalf of the individual, the power of the guardian must be expanded.  It’s very important to begin this process early. Guardianship courts in many states have a very heavy case load, and the delay in obtaining the proper authority will impact the filing of the action, as well as discovery.

Think Outside the Box

Plaintiff’s counsel should also consider whether other family members are entitled to damages. If the injured party is married, their spouse may also have a compensable claim against the defendant. When a married couple is injured in the same accident, plaintiff’s counsel should consider factors influencing the allocation of damages between the injured parties, including the loss to one spouse caused by the more serious injuries to the other spouse. 

When and Why to Consult a Special Needs Attorney

In my opinion, a special needs attorney should be brought in once plaintiff’s counsel establishes that there is a viable cause of action. At that point, the special needs attorney can assess a number of factors that may be important to the plaintiff and their family, including steps to be taken to preserve government benefits. For example, if the individual is under 65 and is expected to need means- tested government benefits, consideration should be given to creating a first party special needs trust (SNT) to hold proceeds from the suit. The opportunity to create and fund the SNT disappears once the person turns 65. If the guardian does not have the authority to establish and fund an SNT, an application for such power must be made to the court. During the time the application to create and fund the SNT is pending, the plaintiff will likely lose their means-tested benefits because the settlement funds are deemed available to them. Failing to consult with a special needs planning attorney, and to advise the client in a timely manner of the need to expand the guardian’s authority to create an SNT, is a potential disaster. 

A special needs attorney can explain to the plaintiff and their family the way SNT assets are to be used.  Most families understand that the money is to be used for the person who has been incapacitated and that there will be oversight by the court and/or a government agency providing the benefits.  A special needs attorney can explain the trustee’s responsibilities for managing the SNT through the beneficiary’s life and the distribution of SNT funds on the death of the beneficiary of a first party SNT. 

Understanding the Options and Creating the Right Plan

While an SNT is a wonderful option, it is not the only option and sometimes it is not the best option. The special needs attorney can provide the plaintiff and their family with a plan of action to be implemented upon settlement of the action. If the plaintiff is on Medicaid and has a community spouse, some states allow the transfer of assets to the community spouse.  In many jurisdictions, it’s possible to transfer those assets to the community spouse without losing benefits.  If the plaintiff lacks capacity, it is important to have a guardians authorized to make those transfers.  Other options can include transfers to an adult child with disabilities or the purchase of exempt resources. Creating and implementing a proper plan takes time and careful consideration of all relevant information. Consulting with the right special needs attorney allows a plaintiff’s attorney to do what they does best instead of trying to address matters beyond the scope of their  experience.  

Why Is it Taking So Long? Must be the Lawyer’s Fault

Non-attorneys are used to watching legal dramas on television and in the movies where everything is tied up in a neat and tidy package in no more than two and half hours. Managing client expectations concerning how long it will take to address guardianship and to settle the lawsuit can avoid hours of time spent explaining “why things are taking so long.” Nothing happens as quickly as non-attorneys tend to expect. In some states it will take six months to conclude a guardianship with the authority to handle everything needed. In some cases, the court will appoint a guardian with temporary powers, but this also takes time. The special needs attorney can help the client understand that addressing the guardianship issues will avoid unnecessary delays and can help to move the suit forward.

Helping You Do What You Do Best

It is hard enough to stay current on your own practice area. A special needs attorney will be able to provide your client with current information and assist with their planning needs. Consulting with a special needs attorney once a viable cause of action is identified benefits the client and frees up the plaintiff’s attorney to do what they do best.

Posted on April 3, 2019 .

Using Structured Installment Sales to Reduce Capital Gains on the Sale of a Professional Practice

Today I'm going to be talking about the topic of whether a professional practice can be sold and take advantage of a structured sale so as to spread out a tax hit and lock in cash flow as lawyers, accountants, doctors and others start to retire and transfer their professional practices. Most people think of structured sales for just real estate, but you can use them for the sale of a professional practice and reap many of the same benefits provided you are properly organized and prepared at time of sale. 

Now when I talk about a structured sale, let's keep in mind that it's essentially a very common tax strategy called an installment sale. Installment sales have been enshrined in the US Tax code since just about forever, the process is well understood by just about every CPA and tax professional, as well as business brokers who work with you to sell professional practices. Just because someone decided to brand these as "structured sales" doesn't mean they take on some mysterious tax strategy, in fact it's just the opposite. It's pretty vanilla at it's core.

Where it does differ from an installment sale is that instead of the seller relying upon the credit worthiness and business acumen of the buyer to make the future payments, a structured installment sale TRANSFERS that obligation for the payments to a secure third party institution such as a life insurance company or trust company. This assignment of liabilty is a pretty simple process and essentially transfers the obligation to the third party with no strings attached to the buyer. That's a simple explanation but for now if you want to know more on the mechanics of that, go to my web page at Wahlstrom & Associates and you can see in greater detail how the assignment works. 

However, this video is about selling your professional practice so lets hit the three key points quickly that you need to know. They are Qualify, Notify and Planning. 

1. What is your business entity organized as? Sole proprietor, single member LLC, multiple member LLC, S Corp, etc. All of this matters big time as to how the IRS will classify the sale of your practice, so the first step before you even consider a structured sale is get top level tax advice as to the best entity organization for your company ahead of your exit strategy or asset sale. This has to be done first so you know what, if any, parts of your business qualify as capital assets. 

2. Is the buyer on board with you selling in an installment sale basis and agreeing to the assignment of the obligation to make payments to a third party. So many people wait until the very end to raise this with a buyer, who in many cases gets spooked by their unfamiliarity with the concept and refuses to execute the assignment or installment sale. I can't stress enough the importance of NOTIFYING the buyer early you intend to use this concept. 

3. Have a clear plan for your distribution of the installment payments. By this I mean look at the rates offered by the life insurance company on the funds held, decide how long you want payments to be spread out over time, but most importantly how you plan to reinvest or use those assets once they arrive each year. Map out your post retirement expenses, investment plans or estate planning and maximize the value of each year's payments to insure you leverage this tax planning tactic to it's maximum value. 

Ok that's it. You can, with careful planning and consultation with your tax professional and business broker, create a safe, secure tax advantaged cash flow on the sale of a professional practice if that's what you want. If you have questions, go to my web page at Wahlstrom & or call my office at 480-478-0183. I'm happy to help you and your team of advisors understand how to make structured installment sales work for you. 

Posted on March 6, 2019 .

What you need to know to make structured sales of real estate work for you in 2019

Structured sales of real estate, or as I prefer to call them, guaranteed and secured installment sales, have been seeing a surge of interest as baby boomers begin a massive conversion of real estate assets into financial assets as they approach retirement. 

What do you need to know in 2019 under the new tax rules and rates to make this safe, secured installment sale work for you by spreading out capital gains taxes and putting 100% of your sale proceeds to work for you?

Let me give you the THREE key points for you to consider if you are selling real estate, business property, a closely held corporation of any other capital asset this year.


While I won't steal the thunder of the life insurance company that has announced they are going to enter the structured sale market in early 2019, suffice it to say it is a major brand name and represents a dramatic upgrade in the options for investors large and small. If you have a property you are selling in 2019 make sure you call or email my office ( my contact number is on the screen and will be on the end of this video as well) so that I can inform you when this company is commencing new business operations in structured sales. 


A lot of people in the US are having the uncomfortable realization that tax reform, for high net worth or high income earners, has radically reduced the number of deductions, exemptions and write offs. The net result is more of your income is exposed to the highest rates of taxation. Taking a big hit on the taxes due after the sale of property, then trying to "catch up" with earnings to get back to that net sale figure before you paid taxes, well, it's almost impossible if you do the math. Spreading out your tax due over years or decades, with 100% of your funds invested makes a great deal of sense now and you need to see if this option works in your particular case. 


While everyone likes to talk about their ability to tolerate market risk and volatility, the fact is if you have a big chunk of cash for a property sale, have it in the market and we see a 15% to 20% market decline, you are going to be pretty miserable about that loss. 

As people move to retirement they need GUARANTEED cash flow that shows up every month, on time, in the account and is not subject to market volatility or risk. Remember, you can always reinvest your monthly proceeds into the market if you choose, on a dollar cost average basis, and not expose your entire proceeds to bad luck and bad timing if a market decline occurs. 


We have new major markets coming into play to guarantee payments and simplify the process of a guaranteed installment sale, which coupled with the reality that most people want to avoid higher taxes and lock in guaranteed income, makes this structured sale option more attractive than ever. 

If you are considering this technique, I encourage you to call and speak to us and see if this makes sense for you. It's no pressure, the call and consult is free and it is our firms pleasure to assist you in this important decision. For more assistance and information go to:

Posted on February 8, 2019 .