Kevin Moore was recently featured as a guest on the Legacy Leaders Podcast, hosted by Tim Garrity. During this conversation, Kevin provides a glimpse into the essence of what has made KJM Law Partners stand out in the field of estate planning and business taxation since 1992, and speaks candidly about the intricacies of estate planning, the pivotal role of estate tax returns in preserving financial legacies, and the importance of asset protection.
About Kevin Moore
Before establishing KJM Law Partners, Kevin honed his skills as an international business tax attorney in Salzburg, Austria, which provided him with a unique global perspective. His academic background in International Taxation and Business Law has been instrumental in developing a wide array of services, while his deep-rooted connection to the Pasadena community has driven him to focus on personalized, one-on-one attention, especially when dealing with complex financial matters.
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Full Transcript
Below you will find the transcript of Kevin and Tim’s conversation. Read on to discover how a personalized approach to estate planning and legacy building can fundamentally alter the course of your financial future.
Tim Garrity:
Good afternoon. My name is Tim Garrity and I’m the president of Paragon Capital Partners, and this afternoon I have the pleasure of interviewing Kevin Moore, an attorney from Pasadena. I’m just going to take some time to read his bio, so I get it absolutely correct.
Kevin’s a third-generation Pasadenian who founded K J M Law Partners in 1992 as a way of investing in his hometown community. The law firm specializes in the focused areas of estate planning, trusts, and probate services with additional expertise in both domestic and international business transactions and tax planning and tax controversy representation for individuals and companies. There’s a lot to unpack there in Kevin I’ll expand on that. Over the past two decades, Kevin’s built a reputation for repeated wins in court on behalf of the firm’s clients. Today, KJM Law Partners distinguishes itself from other firms of its stature by providing personalized attention to clients, particularly when it comes to financial matters.
Prior to founding the firm, Kevin served as an international business tax attorney with the esteemed law firm, Salpius and Partners in Salzburg, Austria. Over the course of his four years with that firm, he represented clients on international and domestic investments. He acquired and broadened his legal skills, helping clients build and protect their wealth.
Kevin holds a master’s of law LL.M degree in International Taxation and Business from McGeorge School of Law in Sacramento, a juris doctor degree from Western State University in Fullerton, California, and a business administration degree in accounting from San Diego State University School of Accountancy. Kevin frequently serves as a guest speaker and guest lecturer for investment advisors and their clients by sharing his insight and depth on topics relating to estate planning and business taxation, known for his sponsorship of local youth, high school, and professional sports teams. He’s actively involved in giving back to his local community.
Kevin, it’s great to have you here and welcome to the podcast.
Kevin Moore:
Thank you, Tim. Great to be here.
Tim Garrity:
Yeah. I’ll start with an easy one. Why did you go to law school?
Kevin Moore:
Well, I wanted to be a lawyer ever since, gosh, I was probably 12, 13 years old. I’m probably going to date myself here, but back in the seventies, there was this mini-series called Rich Man, Poor Man. It was with Nick Nolte before he became famous. He was the poor man, the poor brother, and he had the rich brother. I think his name was Robert Strauss, and he became a big famous corporate attorney. And that just appealed to me. I liked the corporate world. I liked dealing with business. I like the clients that I deal with in that. And ever since that series came out, I wanted to be a lawyer.
Tim Garrity:
So you actually, as you entered undergrad, you had that end goal in mind, is that right?
Kevin Moore:
I did. I did. I didn’t know that it would necessarily be accounting. Maybe it would’ve been finance or management, but I took an accounting course my first semester and I got an A in it. I said, well, I must be a natural, so I ended up in the accounting on the accounting road.
Tim Garrity:
Yes. Well, I know quite a few state and trust and tax attorneys, but I don’t know that many with a strong accounting background like you. And so as we get into some of our questions, you might be able to let us know how much that helps you and sets you apart from other attorneys.
Kevin Moore:
Yeah, for sure it does. I mean, and we will get into it a little bit, but that is the added value I bring to the situation is the strong income and business tax background to estate planning and family situations.
Tim Garrity:
And then at what point, whether at some point in law school or when you got out, did you start focusing really on the estate and then the tax side?
Kevin Moore:
So I kind of took a different route than maybe other attorneys after law school, and I did special. I took all my elective courses in taxation and business and so forth, and then I went off to McGeorge School of Law and I got my master’s in tax with an emphasis in international tax. And that took me to Salzburg, Austria where a portion of the program was held through the University of Salzburg. And I met an attorney there who was teaching one of the classes, and he really liked me, and when I finished the program, he offered me a job. So I went out to Salzburg, Austria, where I worked for almost four years with his firm, Salpius. And when I say it was a little bit different than most other attorneys was that I was really focusing on a real narrow area of the law on basically international or taxation US taxation of non-resident aliens investing into the US. So that was pretty exciting, but it was a really narrow niche, asked me at that time how to do a family law petition or a bankruptcy petition, or what was a civil action versus a probate action. I would’ve had no idea.
So I was focused in on this real niche area of international tax. So when I came back and I opened up my practice, I really did a wide variety of things. I did a lot of bankruptcies, I did a lot of business bankruptcies, and really developed a strong business background. You don’t do bankruptcies. You don’t file Chapter 11 bankruptcies unless you’ve got a business plan, unless that’s going to prevail, that’s going to be feasible. And you really learn a lot about the economics of business through that.
I did family law, granted, it was mostly in the business context with business-type clients, but I did that, and of course, I did my trust in estate planning work. And I just found that over the years, over the 10 years or so, my first 10 years of practice, so the early nineties to the 2000’s that I just enjoyed really doing estate planning, I really enjoyed drafting the trusts, creating structures for business clients that would meet their particular tax and business needs. I just found it exciting, and I found that with the background that I had in doing litigation work and doing bankruptcies, even in the family law context, it really kind of helped me be a more, or having a broader-based background to offer my clients, my estate planning clients. It really added value to the estate planning structures that I would create.
Tim Garrity:
Yeah, it seems like so often the business planning and the estate planning really intersect, and yet oftentimes you have to have multiple attorneys because one may not have the expertise. So it’s got to be a nice advantage and something that you can really bring to the table having so much experience with both.
Kevin Moore:
Yeah, I agree. I agree. And the same is true with taxation. So during those formative years, I did a lot of partnership taxation, corporate reorganizations, things like that. So when I’m representing my business clients, I know partnership tax. So I know if I’m going to dissolve a partnership, what it takes to do it on a tax-free basis. If I am going to reorganize a corporation or spin off some business into a separate corporation, I can do it on a tax-free basis. So that’s really some added value. As you said earlier, most estate planners and very good estate planners don’t have that level of expertise in the income tax area of corporate tax.
Tim Garrity:
Yeah, no, absolutely. So what’s so important about the estate plan, for some of our listeners who may not be aware of all the components or what’s really important, well
Kevin Moore:
Look, even for the client who just has a house and kids, I mean, estate planning is extremely important because you want to provide for those kids. You want to make sure that if the unexpected happens and you pass away and your spouse passes away, that your kids are going to be protected, that they’re not just going to get this property when they’re 18 years old, that someone’s going to manage that property for them and make sure that it’s available for them to pay for their health, education, maintenance, and support related expenses until they reach an age that they could start handling it on their own. So those are the issues you get into with estate planning, even at the most basic level, who’s going to make legal decisions for those children if they’re minors and so forth. And then of course you have that and even more when you get into the more sophisticated clients who have large business holdings or real property holdings.
Now it’s about saving taxes, saving money, exit strategies, and passing your business onto your children. Maybe you have some children who are interested in the business, others who aren’t coming up with solutions to pass that business on to those who are interested in other assets, to those who aren’t saving estate taxes, utilizing your exemption. And of course of all of that, it’s protecting assets for your family, and preserving wealth. Estate planning, while saving you estate taxes while saving you income taxes, a big part of estate planning encompasses asset protection so that when you give your assets to your children, they’re not going to be subject to the claims of their creditors. They’re not going to be included in their marital assets or become community property assets. These are the things that are important with estate planning.
Tim Garrity:
Oh, absolutely. And I think we certainly get focused on the technical and the legal, and yet also it’s a way to, in some ways pass along values. And you can be written in a certain way that you make sure things happen that you want to happen. And it’s not just all about the money so much, and we focus on estate taxes, but as we know, a large portion of the United States right now will likely not be subject to the estate tax. And yet what you can do from a planning perspective that has nothing to do with the taxes is pretty crucial. Right?
Kevin Moore:
Absolutely. Because even if they’re, as I said with estates that are not subject to estate taxes, I mean, it’s equally important that those assets pass to your children, pass to your loved ones in a smart, efficient way, avoiding court processes, being sure to name designated persons, expressing values in there in those documents that you want to pass down to your children. I had one client, well, actually I’ve had several clients, but one in particular that comes to mind that his children were to lose a certain amount of their inheritance for every tattoo or body piercing procedure that they went through.
Tim Garrity:
Yeah, that’s something that’s a little more prevalent today than 20, or 30 years ago. So that’s
Kevin Moore:
Interesting. Yeah, that’s true. That’s true. But maybe it makes more sense today than it did in prior years.
Tim Garrity:
And so often I’ll be sitting with clients and just start general conversations about trust and wills and things of that nature. And I find there’s almost always a little confusion. People sometimes have a will, but they don’t have a trust, and I think they’re covered. And then I mentioned probate and they wonder what that is. Then if they know a little bit. I’ll also talk about the importance of some of the other documents that might be part of that in terms of a power of attorney and stuff. So maybe just give us a little 30 second or a minute on that, and also why probate really is not something you want to be a part of.
Kevin Moore:
Well, first of all, the probate process is the process by which your estate assets are administered in the courts. And if you have a will, or even if you don’t have a will, you die without a will. Your estate is administered through the court process. That court process can be costly. You have to hire a lawyer. The fees are set by statute. It’s a court process, so it’s public information. It’s easily accessible to the public. It takes time. I think your average probate in California is nine months, and that’s for very basic estates. I mean, if anything more complicated, I mean you’re looking at a year and a half, 18 months or even longer. So that’s the probate process is going through the process of supervising the administration of your estate and distributing it out. So we find that administration can be best done without court supervision.
The courts are always there if you need them, but they don’t have to be involved in every aspect of supervising the administration of your estate. So as estate planning attorneys, we look for ways to avoid probate.
One of the ways of avoiding probate, and there are several ways, I mean a joint tenancy, so many husband and wives will have their properties is joint tenants. That’s avoiding probate. Husband dies, wife gets the property without having to go to probate. The issue there is now when the wife dies, unless there’s another joint tenancy, you have to probate that asset.
But just like joint tenancy, another way of avoiding probate is through the use of trust. So trust is a current document, a living document, a document that takes effect now, and you put assets into that trust. And that trust says that, okay, during my lifetime, this is how the trust is going to be administered and on my death, this is what’s going to happen with my assets. So your successor trustees on your death will come in and they administer the trust without supervision of the court. And that can be done typically on a less costly basis. It’s certainly private. There’s no documents that are filed with court. There’s no documents that get published, and it can be done in a relatively short order. So these trusts, we call these will substitutes. It’s a substitute for your will. It acts like your will, but it doesn’t have to go through the probate process like your will does.
Tim Garrity:
Excellent. Well, that’s a good segue. So trust or not, if a married couple, one passes away and then the other, there’s a whole process. There’s a 706, which is a tax form and a state tax return in general. Sometimes those are done by CPAs, sometimes attorneys, I know you have a real expertise in that area, especially as people have a little bit more complicated wealth. So maybe you could speak on that in general and also what you bring to the table.
Kevin Moore:
I find it best for the attorney to do the estate tax return. That’s the form 706 that you were referring to. Many couples, many decedents don’t have to file estate tax returns because their estates aren’t large enough. Right? Currently, the exemption is $12.92 million. So as a general proposition, if your estate is less than that, you don’t have to file an estate tax return. But even if your estate is less than that, your surviving spouse may still want to file an estate tax return because that’s how the surviving spouse can claim your unused, your meaning the decedent’s, unused exemption from estate taxes. Great point. Without filing that estate tax return, any portion of the decedent’s exemption that’s not used is now lost. If the surviving spouse files an estate tax return, that unused portion can be carried over and used by the surviving spouse during his or her life or on her death.
Estate tax returns are much different than different income tax returns, 1040’s for individuals, 1041’s for trusts, corporate returns, and partnership returns. I really leave those to the accountants because they are the best persons. They deal with these tax returns on a regular daily basis and require a real intricate knowledge of the income tax deductions and how to prepare the numbers on the forms and so forth. And it’s in large part a numbers game and what numbers you’re putting on the form. The 706 is radically different from that. Yes, you’re putting numbers on the forms, but they’re based on legal concepts. They’re based upon concepts of valuation, what kind of values you can use for the assets that you’re reporting on the estate tax return, how you can reduce those values. These are legal principles that we employ to get these lower values, these discounted values. There are also documents that need to be provided with the return, oftentimes legal documents. So as a result, I think it’s always best for the attorney. If the attorney specializes in that, I do, it’s best for the attorney to file the 706 return because they’re not just a number cruncher game. It’s a lot of legal concepts. And who’s better to deal with those legal concepts than the lawyers?
Tim Garrity:
Absolutely. And then just going back a little bit, what made you choose to start your own practice and how has it grown over these many years?
Kevin Moore:
So as we alluded to, I work with Dr. Eugen Salpius, by the way, they call lawyers in Germany and Austria. They’re doctors.
Tim Garrity:
Doctors, interesting.
Kevin Moore:
So he was Dr. Eugen Salpius, right? He had his JD. So they like to use those terminologies. Anyway, he was a big influence on me working for his firm for almost four years. I was really excited about the way he ran his firm, the mechanics of his firm dealing with clients, the way he dealt with his clients, the real one-on-one nature of that. So when I came back to the United States, I wanted to emulate that, quite honestly. Really liked that. I liked the one-on-one with the clients, dealing with the clients in the way that I thought clients should be dealt with. I wanted to operate my clients and provide the service that I wanted to provide those clients, that top-level service. So I really modeled my firm after him. I mean, when I got back, I opened up my own practice right away. I didn’t look for a job. I knew what I wanted to do. So my practice, even after 30 years now, is in large part modeled of upon the law office of Dr. Eugen Salpius.
Tim Garrity:
Excellent. Maybe give us a picture of how the practice is set up now. I know oftentimes on the one end you have state attorneys that kind of hang out their shingle like when you started, and it’s pretty much them. And they might have a paralegal or half a paralegal on the other side. Sometimes the estate planners are just a silo in a larger firm. So you’re a bit unique, I know in the fact that you’ve grown a very specialty practice, added some specific resources, but maybe just share the scope of things right now.
Kevin Moore:
Yeah. So I started out, when I opened up my firm, when I got back from Salzburg, I just started out, I was just me. After about a year, I hired my brother. Then a couple of years later I hired a paralegal or a law clerk. Then I went to a paralegal, and several years later, I hired an attorney and a paralegal, and then another attorney and another paralegal. And to the point now where I have seven attorneys and I don’t know, five paralegals and an office manager and a receptionist and office file clerks, and we have a lot of employees now, but it was all slow growth. It was nothing that just, it wasn’t like winning a big case and just growing. It wasn’t by acquisition. I’ve never acquired any other practice. I’ve always, just by providing good quality service, being responsive to my clients, communicating with my clients, it’s always grown. I think other than the 2008 year when the market collapsed, might’ve been the only year where I experienced a little bit of decrease. But otherwise, I can say in all honesty, every year in my practice, we’ve always been an element of growth.
Tim Garrity:
Excellent. Well, then who would an ideal client be? What does that look like for you and your firm in general?
Kevin Moore:
So for me, the ideal client is the client who is involved either in a closely held business or a family business and may own real property and may be married and may have children who may or may not be interested in that family business.
The reason why that is an ideal client for me is because I can offer a wider range of services for that client. So there would obviously be the estate planning component to that. There would be the business succession component to that. What’s going to happen when the patriarch or the matriarch passes away? What is the exit strategy or strategies that are going to be employed as a business? They’re going to have business tax issues, whether it be sales tax, income, tax issues, issues, corporate issues, corporate compliance, business transactions. It’s the full panoply of services that I could provide to that client that makes that kind of client the ideal client.
Tim Garrity:
Absolutely. And as many of us know, those situations are just kind of growing every year with baby boomers trying to retire and their businesses getting passed on. There’s so much in California of these types of businesses, closely held family oriented, but they’ve gotten quite large and complex. Now they’re selling overseas. So that brings in your international component. But you did touch on one thing that is pretty common from my seat, in that to the extent there’s one or two children involved, there’s often one or two not involved. And that can be a really tricky situation. So maybe, I dunno if you have an example or just one way you’ve dealt with that, that’s kind of worked pretty well.
Kevin Moore:
At a very basic level, but sometimes those are good to use as examples because it’s easy to understand. So you have a business that’s usually a significant part of the client’s wealth, maybe the house, and you don’t want to give the house to one child and not to another. So maybe that’s kind of off limits and it’s going to go to both the children, but one child’s involved in the business, the other child’s not, and you really don’t want to give the business to the child who’s not involved and then have them become a shareholder and all the rights that go with being a shareholder. So you may want to leave the business to the one child, but then of course that raises the question, well, what about the makeup to the other child now who doesn’t get the business? So life insurance can be a good strategy in that case, assuming that’s a possibility that that’s available. So get some life insurance that might equate to the value of the business and have the life insurance proceeds go to the child who’s not getting the business. So that would be one example. Or there might be other assets in the estate, maybe some rental property or something that can go to the child and so forth. So those are some of the things that you’d be looking at.
Tim Garrity:
Yeah, there’s a popular show right now called Succession that you could probably do some great work there, although I don’t know if you would like to work with those caliber of humans. They don’t seem to be fun clients.
Kevin Moore:
I hate to admit it, but I’ve heard a lot about succession, but I have not seen one episode yet.
Tim Garrity:
That’s okay. Don’t get stuck. My daughter got me hooked and I watched a season and I had to walk away. It’s
Kevin Moore:
A time, well, maybe I’m waiting for it so I can binge it. Right. There you go. I’m going on vacation in a couple of weeks, so
Tim Garrity:
There you go. Yeah. How about other common issues you see cropping up other than business? Anything on the real estate side or things that people should be really looking out for and planning that they’re not really aware of?
Kevin Moore:
Well, yeah, you see a lot of it to this day, it still surprises me that a lot of people hold their rental property, their business property in their own name or in the name of their living trust. I mean, it’s really real estate 101, basic asset protection planning. They should always be held in an LLC. So those are some of the issues that you see frequently.
Tim Garrity:
And why is that? Just for our listeners?
Kevin Moore:
Well, because if there’s any liability that arises out of that property, then the liability stays with that entity. If it’s owned by you, now all of your assets are subject to now, you might say, and an accountant might say, well, you have insurance to cover that. Well, that’s true, but insurance doesn’t cover certain things. There are exclusions and so forth. Try water damage or mold. You’ll see all kinds of exclusions in insurance policies on that. And someone sues you now for millions of dollars because their child had eaten lead-based paint from the window seal or something like that. So with the LLC, it confines the liability
Tim Garrity:
For sure. And we live in a very litigious society, and if they’re just looking for low-hanging fruit and they see a setup where there’s LLCs and things, they might just go on to the next person, hopefully. Right. It’s like when you have your sign that you have your security system on your house, maybe they’ll go to the next folks. How about common misconceptions about planning and trusts and things of that nature?
I’ve got one for you. For example, I’ll oftentimes talk to clients and I’ll just start talking about legacy planning, estate planning, and sometimes they’ll have a family trust set up a basic one, and they think that will cover tax implications and other things of the estate, but not always the case, correct?
Kevin Moore:
Well, for sure. The misconception with Living Trust is that they provide asset protection and they don’t. Let’s be absolutely clear. A revocable living trust provides no asset protection, at least while the creator, the settler, the trustor of the trust is alive. Maybe after not, maybe certainly after that settler dies. If the trust is drafted properly, it can provide asset protection for the spouse, the surviving spouse, or for the children. And we do a lot of that and we make sure that we utilize those asset protection techniques when necessary. But that’s a big misconception. Oh, I just put it in my living trust though. I can’t get sued now.
Tim Garrity:
Absolutely. And I know you have clients all over, but I also know that you have a soft spot on your heart for Pasadena. You specifically I do set up the firm. So yeah, just talk about that. What makes Pasadena?
Kevin Moore:
Well, as you said, I’m a third-generation Pasadenian. My dad was born here and great grandfather was born. My grandfather was born here. We’re not part of the Pasadena Blue Bloods, but I am the third generation. My son’s a fourth generation. He was born here in Pasadena, went to schools here in Pasadena, and I just always loved Pasadena. It’s very Midwestern. It’s very community-oriented. It’s strategically located near downtown LA. You can get to downtown LA and anywhere else in LA that you want without having to live in some of the negative parts of LA and other parts of LA. It’s just really a nice secluded area. I love looking out the view of my office right now, the mountains in the background, which kind of reminds me of a little story that I always say that when I was in Salzburg, the office that I was in, I had, from my office, I had the beautiful view of the what’s called the Untersberg. That is a famous mountain in Austria. It’s absolutely beautiful, but in my humble opinion, it is nothing compared to the Majesty, the Majestic Mount Wilson, which I’m looking at right now. And even though I was sitting back looking at the Untersberg from my office in Salzburg, I always knew I was going to come back to Pasadena and I was going to have an office with a view of Mount Wilson in the San Gabriel Mountains.
Tim Garrity:
Absolutely. Well, and depending on where people are listening from, they may not know that from parts of November onto March and even April, sometimes snow-capped Mount Wilson. I should look a little bit in the other direction. You got Mount Baldy. It’s truly spectacular.
Kevin Moore:
I love it. I love it.
Tim Garrity:
Well, and you said the blue bloods of passing, and we are known a little bit because it’s sort of old for California, which is not old to the rest of the country, but indeed, there’s a lot going on here, new wealth, right? There’s a lot of tech. There’s some entertainment folks who’ve kind of led the West side and come over. So not such a sleepy town. In fact, if you drive around, you can see all townhomes and apartments. It’s becoming a place for new people and young people to come as well.
Kevin Moore:
It absolutely is. There no doubt that all of the people who, not so much the actors and the frontline people, but all the producers and the directors, they’re not living in Beverly Hills, they’re living in Pasadena.
Tim Garrity:
Yeah, absolutely. Well, this has been great, Kevin. What’s the best way for anybody to find you? Your website or just call up or –
Kevin Moore:
Our website tells a lot of our story. It gives all the information that you need to give us a shout. It’s KJM Law partners, Kevin John Moore Law.com. Kjmlaw.com
Tim Garrity:
Excellent. Well, it’s been a pleasure. Any parting thoughts?
Kevin Moore:
Tim, it’s always great. We’ve known each other for a long time. Knew your wife from the Pasadena JCS back in the day. I’m a member of the Pasadena Tournament of Roses, just as your wife was, and I don’t know, you’re not a member, are you?
Tim Garrity:
I’m not. I’m the guy who has to be with the other four kids while she’s off working in Pasadena. But it’s an incredible organization. So anyway, Kevin, this has been fun. Thank you so much. Really appreciate it and look forward to working with you in the future.
Kevin Moore:
Great. Good talking to you, Tim.
Tim Garrity:
You too.
The post Kevin Moore on the Legacy Leaders Podcast: The Complex World of Estate Tax Returns appeared first on KJMLAW Partners.
