Madoff List: A Who's Who of Whom to Sue

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Israel Lustig, CEO of Intergenerational Wealth Preservation, Inc. Says Culpability Scope Widens to Client's Own Advisors, Gatekeepers

It is a who's who of whom to sue

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Release of the Madoff list is causing upheaval in the estate planning world, according to Israel Lustig, CEO of Intergenerational Wealth Preservation, Inc. (http://www.interwealthpres.com), a company that serves victims of Ponzi schemes and others seeking financial disaster recovery.

"It is a who's who of whom to sue," explains Mr. Lustig, who in his capacity as a non-lawyer estate planner, provides support for litigation cost justification analysis, and input. "Estate planning time capsules were unsealed prematurely, shining the spotlight on the lack of efficacy of some estate planning instruments, and inadequate risk disclosures, years before these issues would typically surface."

Analyzing the Madoff list, Lustig points to account titles which showcase estate planning instruments that clearly failed, such as GRATs (Grantor Retained Annuity Trust), CLATs (Charitable Lead Annuity Trusts) and CRTs (Charitable Remainder Trust).

Litigators may be asking the advisors/gatekeepers some of the following questions:

  •     Did they disclose the risks of the estate planning structures?
  •     Did they plan for the contingency of a reduction in estate values?
  •     Did they encourage clients to avail themselves of alternate instruments or hedging techniques which may have mitigated the extent of ultimate Madoff losses realized?
  •     What was the objective of the GRAT: discounting the gift tax upon transfer and/or appreciating the asset out of the estate? If so, was the GRAT the only such tool available? Was it the most suitable? Was it the best tool in 2008, when Estate Tax Repeal was unsettled?
  •     Why didn't the advisors factor in the possibility of decrease in asset value, when recommending GRATS in 2007 and 2008 especially the short-term GRATS?

"In fact, victims bent on recovering losses may sue any of their advisors," Lustig states. "This includes CPAs, trusts and estates attorneys, matrimonial attorneys, corporate attorneys, and anyone who may have referred those advisors to them, such as: business managers, law firms, accounting firms, multi-family offices, private bankers, and the like. Advisors trying to use the 'we were also duped' defense may not find that good enough, as litigators may question why they didn't suggest alternative tools, especially if the estate value decreased."

In 2007, Intergenerational Wealth Preservation, Inc., authored and filed two provisional patent applications for a Non-Lawyer Estate Planning System(sm/tm) that analyzes the relative suitability of each estate planning tool/ scheme/ vehicle/ instrument and pioneered a new paradigm in wealth preservation planning: configuring insurance and annuities to hedge the risks inherent in some estate planning instruments or as an alternative to them early in the planning stages.

Intergenerational Wealth Preservation, Inc. offers experienced litigation support as well as a new Non-Lawyer Estate Planning Suitability Analysis Module(sm/tm) software.

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Judith Lederman
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