First question:
A gent wants to set up an escrow account for the lady.  Every year he will put money into it and if the couple stays in the arrangement for 5 years the account becomes the sole property of the lady or if they want to continue after 10 years.  My worry is if the gent dies during the five years (or he renigs) and I am trying to cover all the legal basis of ultimate ownership of the funds.

Second question:
If said gent wire transfers two 6 figure sums of money into the lady's account twice per year and has agreed to pay the taxes.....what does the lady need to keep on file to show that.

Third question:
Can the lady just stop filing taxes at that time since she will no longer have income from a business but be a kept woman?

What kind of lawyer can set all these up or does she need several different types to oversee all facets?

Thank you for your help guys.

I am probably missing the real issue here, but since a lawyer often answers a question with more questions, so here goes, question and answers:
1.  Why an escrow?  Assuming your "arguement" is this arrangement has nothing to do with sex for money and what that means, why do you NOT want the money today?  I mean, if you work for it you should be able to take it now.
2.  If you use an escrow holder, it will require all sorts of identification information about you, etc.  If the gentleman or his heirs tell the escrow holder to hold on to the money, then the money will be held or maybe "interplead" into a court account and you need to fight in court over that money.  And explain to a judge why its your money.
3. If a gift, the gift giver pays/owes the taxes, subject to a lifetime gift tax exemption.  Unless he pays you within the annual limit.  But I assume you are worth more than $13,000 a year.
4.  Get married with a pre-nup.  That probably will do what you want.  E.g. you get some money for staying together a certain period of time and an "unlimited maritial gift exclusion" applies.
5.  I think you still need to file a tax return.  If you don't, you just risk being audited at some point.
6.  Type of lawyer.  Probably a shady one.  But sounds like a tax/estate planning lawyer unless you do the pre-maritial agreement option (with marriage).  Probably Anna Nicole should have done that, it would have been much neater for her in the long run and Howard Stern et al. wouldnot have been in a position to promote her death.
Good luck.

He is single.
This is an arrangement with full transparency.
Neither of us want to get married.
He will provide a 6 figure amount in cash per year.
He wants additional funds in escrow and if and only if we make it to 5 years it becomes mine.
He is 68 thus my want to have something legal that it is 5 years or death and the money is mine as it is a considerable amount of money.
he does have children which is why I want it legal.

I think I answered most of the questions.  I figured an estate lawyer would be able to help set up something in writing about the escrow account.

Even with a marriage certificate, children are often able to challenge even the most carfully drawn up will.  Nothing is ever 100% sure.  A judge or jury can be swayed and decide to cut you out of the will.

I would suggest rather that he make a gift of a considerable amount of money to you now and that you then shield that money, off shore even.

(still not a lawyer)

PS  Look up stories of Groucho Marx's unsuccessful attemp to will a considerable part of his estate to a long  time female freind and show-biz associate if you need any convincing.

An escort friend of mine had a client that was 82 and she'd been seeing him for about 4-5 years.

He wanted to put her in his will and even took the step of inviting her to dinner with his two sons so he could explain his wishes to everyone at one time.

Dinner was cordial enough, but afterwards, the sons made it very clear to their father that they would do whatever they had to do to stop that from happening.  The old man finally dropped the whole plan.

Your guy is only 68, so unless he's in bad health you should have a lot of time to work out some sort of way for him to help you while he's alive.  If he has children, putting you in his will is probably the last thing you want to do.

(Also, not an attorney)

I think she should get an amount added each year & she owns the acct.  Maybe a bonus at milestones.  
A Joint ownership & contract would be less of an issue this way.  Since illegal acts can not be contracted for legally, certainly not enforceably.  He can not reneg on what she already owns.   A joint account with survivor's rights...  could be cleaned out by either.  ie, You could get screwed (as in double crossed).  What if at 4 1/2 years he decides to save the money & dumps you?  Trade you in for a younger model?  

I recall a gent, a friend of mine was an Internation Sales Mgr for a major manufactering company back when USA built things.  (You'd recognize it, Fortune 500 Co).  He died tragically in a car wreck.  The woman who he lived with...  turned out to not be his wife.  He had a good Catholic Family.  The woman he'd been with for 15 years was booted out of the house within 24 hours.   I went to the funeral & I was stunned when his GF was in the back pew & strangers were in the front.   I hope to G*d he'd taken care of her.

You will have to check this out with an estate lawyer for pros and cons, but he could buy an annuity and list you as the beneficiary.

It is my understanding that the proceeds from insurance (which an annuity basically is) are not subject to probate and not subject to most legal challenges.

Just a thought.

(still not a lawyer)

You have been a professional for many years; the gentleman presumably has been a customer in the past. These are, of course, illegal transactions, and you can no more go to court to compel his payment than he can your service.

       Now you are declaring apparently that you have a “relationship,” although you call it an “arrangement” in your post. There is no sex for money involved, you proclaim to the bank officer who will act as escrow agent, but rather you will operate as kind of a domestic partner and the former client in turn will make yearly “gifts” and place additional money in an escrow account.

       The first problem is going to be finding a bank or other professional who will be willing to buy this story and agree to be the escrow agent. Given the sums of money involved, relying on a friend to be the escrow agent is not a good idea either.

       But the real problem is that if the gentleman dies and you attempt to claim the funds per the escrow agreement, one of the children can claim that this money belongs to the estate. He can plunge you into litigation by claiming this is simply illegal prostitution on on going basis and can get an injunction to stop the escrow agent from making the distribution you. Undue influence will also probably be alleged.

       In litigation you ultimately will have to prove that “hey we really changed our relationship” and I’ve been an honest woman ever since. But the stakes are higher for you than merely losing the escrow amount – if the jury says this was an illegal agreement, those six figure gifts to you now become income.

    And you did not pay income taxes on the money over all those years. Now you face a whopping tax bill and IRS investigation.  

      So if you consult an estate or domestic relations lawyer to draw up the escrow agreement, and he says “no problem,” keep on walking until you find someone who sees the big picture, and can figure out a way to protect you from this worst case scenario.

-- Modified on 8/2/2011 11:23:09 AM

Seriously, I think these other guys have outlined the problem.  To wit:  you cannot put a round pet into a square box.  Substance over form.  Two wrongs don't make a right, etc.

He just needs to pay your expenses, or give you cash gifts, or checks, etc., and you take your chances.  If you pay your taxes then no IRS issues.  If he gives you a bequest (testimentary gift) great, if not, well you got what you could.

The children will get you.  I know several "conventiional" couples who were not married but lived together for decades then one died (two I think of recently were where the girlfriend died) and the families screwed the boyfriend and kicked them out, etc. with nothing.  Well, I got one of them some dough, but if you don't follow societal conventions, don't expect society's rules to help you.  Good luck.

An old fashoned way of shielding money...  old fashoned paper savings bonds in both names.  She physically has possesion.  Once purchased, they are invisible until cashed.  Earnings acrue but taxes are not due until cashed & earnings recieved.  There is an annual limit but you can use both names & SS#s.  The taxes are paid by the one who cashes them.  
It is useful for shielding moneys no less than a full year prior to students entering college.  

Bonds need to be in her safety deposit box not his.

I've heard of this sort of thing many times and it always seems like there's an element of the guy dangling money in front of the woman in order to gain some sort of favor or leverage.  And somehow, the money never seems to get transferred- there's always some sort of problem that emerges that derails his good and generous intentions.

If he wants to give you money he gives you the money.  It's easy when you cut through all the BS.

If he wants to play around and act like a generous benefactor, but never quite write the check, then he does this sort of thing.  Sorry, it just always seems to be the latter in my experience.  But I'd be happy to be proven wrong.

Sara's problem is easily resolved:
1) Either she gets the money now or it remains his. Either he gives her money or not. But they can not and should not pretend that it belongs to both.
2) Marriage with a pre-nup is the logical solution or para 1 applies.
3) No escrow account, no will, nothing that ever has to go to a court (where she will surely lose).
4) Funny: none of the respondents have asked the question whether the gent and Sara TRUST each other!
I am not sure that they do. Hence: para 1 applies.

This is the best answer I have seen in this thread. Other then cash in hand there is no guarantee for either party that could be enforced. If he is worried about the OP sticking around for 5 years then have a system of increasing bonuses either monthly, quarterly or yearly. That way if he fails to pay or something happens you have some of the money already. For the OP, the longer you stick around the bigger the bonus becomes so you still have a reason to stick it out.

You have given me alot to think about and I really appreciate you all taking the time to post.  

You are correct in that we are new friends so trust will have to be earned by both parties.  I will be taken care of up front so there is no way I will lose however you are all correct that I should not count on getting anything at the 5 or 10 year mark.  If I do great and if I dont well not so great. lol  Eithere way though I will still come out way ahead.

I have a little time as we are still in the feeling out our options phase but should have something concrete within a month or so.  I will keep you all posted and again thank you all so very much it is greatly appreciated!

Best,
Sara

Dear Curt23, thank you for the compliment, very nice indeed. Since I am a lawyer and she wanted a lawyer: how much should I charge dear Sara Prescott? I hope she reads my advice.
BUT: nobody reacted to the question of mutual trust?

Well I think it is obvious there is a trust issue, but that is not unusual for any arrangement of this type. A lot of things can go wrong that would cause her to lose out on money she is counting on, or him to waste money and not getting the companionship he is counting on. This is a pay as you go activity regardless if its a 1 hour session or a 10 year arrangement.

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