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Thursday, October 9, 2014
Recommend a good book for RE investor
[From online forum]
only $16.19. It speaks directly to you--if you're an investor with a portfolio worth $100,000 or more. The author addresses the bread-and-butter issues facing that underserved segment of the equities investment community. He will tell you--
How to custom tailor your asset allocation to your personal circumstances
How to capture the recognized outperforming market anomalies in your portfolio
How to keep what you've got and avoid Wall street's wealth extraction machine
Author also passes along some invaluable retirement investing advice learned from Warren Buffett, and he explains the primary asset protection and tax minimization strategies that work for those in the high-net-worth bracket. Here are investment strategies for the affluent, as well as for those who are approaching affluence and are trying to take that big step forward.
http://www.amazon.com/The-Affluent-Investor-Financial-Protect/dp/076416564X
only $16.19. It speaks directly to you--if you're an investor with a portfolio worth $100,000 or more. The author addresses the bread-and-butter issues facing that underserved segment of the equities investment community. He will tell you--
How to custom tailor your asset allocation to your personal circumstances
How to capture the recognized outperforming market anomalies in your portfolio
How to keep what you've got and avoid Wall street's wealth extraction machine
Author also passes along some invaluable retirement investing advice learned from Warren Buffett, and he explains the primary asset protection and tax minimization strategies that work for those in the high-net-worth bracket. Here are investment strategies for the affluent, as well as for those who are approaching affluence and are trying to take that big step forward.
http://www.amazon.com/The-Affluent-Investor-Financial-Protect/dp/076416564X
good discussion on estate planning - by JY
By JY - From online forum
good discussion on estate planning 2009-06-07 21:50:07
good discussion on estate planning, thanks to baysouth...
来源: baysouth
严格说, 美国没有避税天堂.
很多人认为有了Trust就可省税, 这是误导. Trust的主要功能是避免Probate. Trust 本身是一个单独的纳税实体. A/B A/A trust等有上限限制, IRS 不可能让你设立一系列的Trust来逃避遗产税.
利用保险并非说你不缴纳遗产税, IRS 还是照常要收税, 只不过是利用保险创造出的leverage 给你提供了税款, 从而到达了省税的效果.
来源: jy101
Agree that A/B or A/B/C types trusts still have to face death taxes, most of the time, you purchases a life insurances policy in C trust to pay to taxes.
I think the best way to avoid death taxes will be small company like S-corp or LLC/LLP, you gift portion of shares as you grow old.
来源: baysouth
Small companies need to have buy/sell agreement, which is still an arrangement through life insurance, to raise the cost basis of the company to minimize taxes
As we can see from these threads, Life Insurance is an effective instrument to reduce death taxes, few other methods can as cost-effective
来源: jy101
the main adv of family limited partnership - ability to transfer / gift between partners without gift tax or estate tax.
family Limited Partnership (FLP)
A Family Limited Partnership, or FLP, is a limited partnership in which ownership is restricted to a confined group—family members. This aspect differs from other types of partnerships and corporations where transfers of interest are unrestricted or are publicly traded. The FLP is a valuable tool for centralizing management of a family business and passing limited partnership interests to the next generation.
A Family Limited Partnership is formed with a written Partnership Agreement. Provisions in the partnership agreement can restrict how or if partnership interests are transferred, sold, or encumbered. The FLP consists of general voting partners and limited non-voting partners. Typically, the senior generation acts as the general partners for the FLP and maintains control over partnership activities. The younger generation enters the partnership as limited partners, who hold an ownership interest in the partnership but little or no management authority. Eventually, limited partners transition to general partners.
Advantages of the FLP include:
* limiting ownership interests to family members,
* allowing for an incremental and smooth transfer from one generation to the next,
* having the ability to transfer partnership interests free of gift tax, and
* providing limited financial liability for limited partners.
An FLP must be registered with the state
来源: baysouth
有一利必有一弊 搞不好弄巧成拙
Family Limited Partnerships can be abusive tax-free wealth transfers. How does the family limited partnership work and what are the disadvantages? Two discount estate tax valutions of underlying assets are used as a tax deferral strategy when gifting to the younger generation.
Family limited partnerships, one such traditional limited partnership, have been over marketed as wealth transfer devises. Family limited partnerships are red flags for the Internal Revenue Service as abusive tax-free wealth transfers. Family partnerships have been widely propagated as the devise of choice for transferring the family business and other highly appreciated assets tax-free from parents to their children.
Different programs are available to transfer ownership and the management of a family business. The Family limited partnership is nothing more than the traditional partnership for which "only family members" can be partners as either general partners or limited partners.
Did you know that general partners of family partnerships are exposed to frivolous lawsuits, court judgments, and creditor seizures? The problem is avoided if an irrevocable trust such as the Ultra Trust174; (not a revocable trust) is used as the general partner of your family limited partnership.
How does the Family Limited Partnership Work?
The older generation (i.e. parents) become owners with 2% stake in the business and thereby establish themselves as general partners in a family limited partnership. Over a period of time, by gifting limited partnership interests, the younger generation (i.e. children) end up as limited partners with a 98% stake in the business. This all sounds wonderful and an almost ideal tax deferral strategy. But is there a catch to all of this great tax-free wealth transfer and strategy?
Gifting to the Younger Generation with a Family Limited Partnership
The result is highly appreciated assets are transferred from the estate of the parents to the children presumably tax-free. When carefully and properly implemented the family limited partnership is a useful tool. But there are better ways to achieve a significantly more efficient transfer of wealth.
Did you know the IRS considers these family limited partnership arrangements abusive when overzealous practitioners over claim two commonly used discounts in the valuation of underlying (highly appreciated) assets in estate tax valuations? The IRS comes down significantly hard, when these arrangements are made over a deathbed especially in the hours or days before death. Please note that there's an increasing congressional opposition to the use of family limited partnerships.
Two Discount Estate Tax Valuations of Underlying Assets in Family Partnerships are:
1. Lack of marketability discounting which is typically 15% to 35% reduced estate tax valuation due to a limited market for the business or the assets, if sold.
2. Limited minority interest discounting which is typically an additional 15% to 35% reduced estate tax valuation to the minority position (lack of control) in the business or underlying assets.
Combined, these two discounts can amount up to 70% or more. But how much is too much?
Disadvantages of Family Limited Partnerships:
1. Gifted property does NOT receive the "stepped-up" basis treatment that bequeathed property receives. Therefore the children, who have received "gifted partnership interests" may face unexpected capital gains tax liability. If discounting is reasonably and carefully applied, it's a significant tax saving devise. Keeping in mind that it's great for the parents, not so good for the children because of the unexpected capital gains tax liability that can be imposed on the children.
2. General partners are not insulated from potential lawsuits, judgments, or creditor seizures. This problem can be avoided if the general partner is the Ultra Trust. The parents as general partners are 100% in control of the assets and 100% responsible for a potential lawsuit. General partners will have no asset protection in these cases.
Family Business Succession Estate Planning:
If you have an interest in family business succession planning, there are several financially-engineered devises addressing the following important issues:
* Ownership of family business - Which of the family members will become the future owners of the business? What method or combination of methods is the most effective in consideration of asset protection and wealth preservation, elimination of probate, deferral of capital gains taxes, elimination of estate taxes, and reduction of taxes on earned income or possibly eliminate income taxes.
* Control of your family business - Which of the family members will become the future managers. Not all family members have management skills. Some family members should have voting control, while others must become silent partners.
* Dispute resolution - How will family members deal with potential disputes? What mechanism is fair to controlling and non-controlling family members?
* Employment - Which family members will be employed by the business?
来源: jy101
haha, good discussion, I totally agree the 2 disadvantage.
1. no step up value. this can be good and bad, no step up meaning assets pass on next generation tax free, the problem is when you try to sale, you will pay capital gain taxes, but 45% estate tax vs. 15% capital gain, it still a good deal.
2. partners are liable from law suit arise from assets, this can be solve by liability insurance.
good discussion on estate planning 2009-06-07 21:50:07
good discussion on estate planning, thanks to baysouth...
来源: baysouth
严格说, 美国没有避税天堂.
很多人认为有了Trust就可省税, 这是误导. Trust的主要功能是避免Probate. Trust 本身是一个单独的纳税实体. A/B A/A trust等有上限限制, IRS 不可能让你设立一系列的Trust来逃避遗产税.
利用保险并非说你不缴纳遗产税, IRS 还是照常要收税, 只不过是利用保险创造出的leverage 给你提供了税款, 从而到达了省税的效果.
来源: jy101
Agree that A/B or A/B/C types trusts still have to face death taxes, most of the time, you purchases a life insurances policy in C trust to pay to taxes.
I think the best way to avoid death taxes will be small company like S-corp or LLC/LLP, you gift portion of shares as you grow old.
来源: baysouth
Small companies need to have buy/sell agreement, which is still an arrangement through life insurance, to raise the cost basis of the company to minimize taxes
As we can see from these threads, Life Insurance is an effective instrument to reduce death taxes, few other methods can as cost-effective
来源: jy101
the main adv of family limited partnership - ability to transfer / gift between partners without gift tax or estate tax.
family Limited Partnership (FLP)
A Family Limited Partnership, or FLP, is a limited partnership in which ownership is restricted to a confined group—family members. This aspect differs from other types of partnerships and corporations where transfers of interest are unrestricted or are publicly traded. The FLP is a valuable tool for centralizing management of a family business and passing limited partnership interests to the next generation.
A Family Limited Partnership is formed with a written Partnership Agreement. Provisions in the partnership agreement can restrict how or if partnership interests are transferred, sold, or encumbered. The FLP consists of general voting partners and limited non-voting partners. Typically, the senior generation acts as the general partners for the FLP and maintains control over partnership activities. The younger generation enters the partnership as limited partners, who hold an ownership interest in the partnership but little or no management authority. Eventually, limited partners transition to general partners.
Advantages of the FLP include:
* limiting ownership interests to family members,
* allowing for an incremental and smooth transfer from one generation to the next,
* having the ability to transfer partnership interests free of gift tax, and
* providing limited financial liability for limited partners.
An FLP must be registered with the state
来源: baysouth
有一利必有一弊 搞不好弄巧成拙
Family Limited Partnerships can be abusive tax-free wealth transfers. How does the family limited partnership work and what are the disadvantages? Two discount estate tax valutions of underlying assets are used as a tax deferral strategy when gifting to the younger generation.
Family limited partnerships, one such traditional limited partnership, have been over marketed as wealth transfer devises. Family limited partnerships are red flags for the Internal Revenue Service as abusive tax-free wealth transfers. Family partnerships have been widely propagated as the devise of choice for transferring the family business and other highly appreciated assets tax-free from parents to their children.
Different programs are available to transfer ownership and the management of a family business. The Family limited partnership is nothing more than the traditional partnership for which "only family members" can be partners as either general partners or limited partners.
Did you know that general partners of family partnerships are exposed to frivolous lawsuits, court judgments, and creditor seizures? The problem is avoided if an irrevocable trust such as the Ultra Trust174; (not a revocable trust) is used as the general partner of your family limited partnership.
How does the Family Limited Partnership Work?
The older generation (i.e. parents) become owners with 2% stake in the business and thereby establish themselves as general partners in a family limited partnership. Over a period of time, by gifting limited partnership interests, the younger generation (i.e. children) end up as limited partners with a 98% stake in the business. This all sounds wonderful and an almost ideal tax deferral strategy. But is there a catch to all of this great tax-free wealth transfer and strategy?
Gifting to the Younger Generation with a Family Limited Partnership
The result is highly appreciated assets are transferred from the estate of the parents to the children presumably tax-free. When carefully and properly implemented the family limited partnership is a useful tool. But there are better ways to achieve a significantly more efficient transfer of wealth.
Did you know the IRS considers these family limited partnership arrangements abusive when overzealous practitioners over claim two commonly used discounts in the valuation of underlying (highly appreciated) assets in estate tax valuations? The IRS comes down significantly hard, when these arrangements are made over a deathbed especially in the hours or days before death. Please note that there's an increasing congressional opposition to the use of family limited partnerships.
Two Discount Estate Tax Valuations of Underlying Assets in Family Partnerships are:
1. Lack of marketability discounting which is typically 15% to 35% reduced estate tax valuation due to a limited market for the business or the assets, if sold.
2. Limited minority interest discounting which is typically an additional 15% to 35% reduced estate tax valuation to the minority position (lack of control) in the business or underlying assets.
Combined, these two discounts can amount up to 70% or more. But how much is too much?
Disadvantages of Family Limited Partnerships:
1. Gifted property does NOT receive the "stepped-up" basis treatment that bequeathed property receives. Therefore the children, who have received "gifted partnership interests" may face unexpected capital gains tax liability. If discounting is reasonably and carefully applied, it's a significant tax saving devise. Keeping in mind that it's great for the parents, not so good for the children because of the unexpected capital gains tax liability that can be imposed on the children.
2. General partners are not insulated from potential lawsuits, judgments, or creditor seizures. This problem can be avoided if the general partner is the Ultra Trust. The parents as general partners are 100% in control of the assets and 100% responsible for a potential lawsuit. General partners will have no asset protection in these cases.
Family Business Succession Estate Planning:
If you have an interest in family business succession planning, there are several financially-engineered devises addressing the following important issues:
* Ownership of family business - Which of the family members will become the future owners of the business? What method or combination of methods is the most effective in consideration of asset protection and wealth preservation, elimination of probate, deferral of capital gains taxes, elimination of estate taxes, and reduction of taxes on earned income or possibly eliminate income taxes.
* Control of your family business - Which of the family members will become the future managers. Not all family members have management skills. Some family members should have voting control, while others must become silent partners.
* Dispute resolution - How will family members deal with potential disputes? What mechanism is fair to controlling and non-controlling family members?
* Employment - Which family members will be employed by the business?
来源: jy101
haha, good discussion, I totally agree the 2 disadvantage.
1. no step up value. this can be good and bad, no step up meaning assets pass on next generation tax free, the problem is when you try to sale, you will pay capital gain taxes, but 45% estate tax vs. 15% capital gain, it still a good deal.
2. partners are liable from law suit arise from assets, this can be solve by liability insurance.
The incomplete idiot's guide to Living Trust - by JY
By JY - From online forum
the incomplete idiot's guide to Living Trust 2010-09-17 08:56:55
1. the advantage of living trust is preventing your assets going into court probation, which is a long and costly process.
your estate tax is base on your net worth, has nothing to do with setting up a trust. by setup a trust does not gain tax benefit, what you owe in death tax, you still owe, but you can prolong that tax till the second member die while your heirs can still receive a portion of your hard earn money.
there are many type of trust, each fit a special purpose needed, most frequently used is call A-B trust, where A is survivor, B is family, when one spouse die, assets at that time will divided in 2 parts, you can fund the B trust up to deceased spouse's federal estate tax exemption, and the remaining in A, which mean you don't need pay any estate tax at this time, but still able to pass thru portion of your assets to your heirs.
now, when you die, A trust then must distributed at the time, and pay the estate tax base on the asset in A.
you can direct how the asset is distributed, to whom, when or at what age.
if your net worth is XX mil, you should also consider A_B_C trust, where C can be just a life insurance policy on you, own by the trust and the face value can offsets the estate tax in A.
if your net worth is over XXXXX mil, then you should consider a charitable trust, where assets within goes to charity instead of going to IRS.
haha..
2. there is not much you can do to reduce the power of a trustee, when you name the trustee, you naming someone act for you, what you can do is to can name someone to audit the trustee's activities, if the trustee fail to perform or lie or steal, your heirs can file suit to release him from the trustee post, which is a painful process.
that is why I said the hardest part is to find someone you trust, I named my brother to oversee my kids, just because I am more close to my brother than the rest of my family..
3. you set of trust papers should include more than just the trust itself, you need an assignment agreement to assign all your personal affects, you should also appoint a durable general power of attorney before you lay in the hospitable, a medical power of attorney to decide you live or die, and you still need a living will for your own wish if you a vegetable, and lastly, your last will, tells your heirs what you want to with anything you left outside of your trust..
haha, now send me $500 for my time....
the incomplete idiot's guide to Living Trust 2010-09-17 08:56:55
1. the advantage of living trust is preventing your assets going into court probation, which is a long and costly process.
your estate tax is base on your net worth, has nothing to do with setting up a trust. by setup a trust does not gain tax benefit, what you owe in death tax, you still owe, but you can prolong that tax till the second member die while your heirs can still receive a portion of your hard earn money.
there are many type of trust, each fit a special purpose needed, most frequently used is call A-B trust, where A is survivor, B is family, when one spouse die, assets at that time will divided in 2 parts, you can fund the B trust up to deceased spouse's federal estate tax exemption, and the remaining in A, which mean you don't need pay any estate tax at this time, but still able to pass thru portion of your assets to your heirs.
now, when you die, A trust then must distributed at the time, and pay the estate tax base on the asset in A.
you can direct how the asset is distributed, to whom, when or at what age.
if your net worth is XX mil, you should also consider A_B_C trust, where C can be just a life insurance policy on you, own by the trust and the face value can offsets the estate tax in A.
if your net worth is over XXXXX mil, then you should consider a charitable trust, where assets within goes to charity instead of going to IRS.
haha..
2. there is not much you can do to reduce the power of a trustee, when you name the trustee, you naming someone act for you, what you can do is to can name someone to audit the trustee's activities, if the trustee fail to perform or lie or steal, your heirs can file suit to release him from the trustee post, which is a painful process.
that is why I said the hardest part is to find someone you trust, I named my brother to oversee my kids, just because I am more close to my brother than the rest of my family..
3. you set of trust papers should include more than just the trust itself, you need an assignment agreement to assign all your personal affects, you should also appoint a durable general power of attorney before you lay in the hospitable, a medical power of attorney to decide you live or die, and you still need a living will for your own wish if you a vegetable, and lastly, your last will, tells your heirs what you want to with anything you left outside of your trust..
haha, now send me $500 for my time....
RE Success story - I can tell you what I know about me..
by JY - From online Forum
would not show me his bank account, but I can tell you what I know about me..
1. I hold a 7.4mil rental portfolio, total of 91 units, in the middle of nowhere in the state of Indiana, we Hoosiers got really excited lately since we never had any presidential candidates campaigning in our state, thanks to Hillary and Obama, but I am not voting for either one of them.
2. I grossed about 600k in rental income with positive cash flow a bit under 100k.
3. I paid over 250k in interest payment in varies kind, some bank notes, some contracts.
4. I paid over 120k in property taxes each year.
5. I wrote off over 150k in depreciation last year, of which 29k of it went against other business income from other things.
6. I file every year but had not pay federal a dime for last 5 years, actually uncle sam pays me each year for having 2 wonderful kids, but too bad I still have to pay in for state tax maybe about 4k or so.
7. I did not use a big accounting firm but I been with my CPA for 19 years, I bet I pay more than most people pay an accountant in 10 years, my bill for this year just for yearend was $9800, now if anyone questioning this bill, I will glad to show you but you have to chip in to help pay for it.
now you can call me a liar....
would not show me his bank account, but I can tell you what I know about me..
1. I hold a 7.4mil rental portfolio, total of 91 units, in the middle of nowhere in the state of Indiana, we Hoosiers got really excited lately since we never had any presidential candidates campaigning in our state, thanks to Hillary and Obama, but I am not voting for either one of them.
2. I grossed about 600k in rental income with positive cash flow a bit under 100k.
3. I paid over 250k in interest payment in varies kind, some bank notes, some contracts.
4. I paid over 120k in property taxes each year.
5. I wrote off over 150k in depreciation last year, of which 29k of it went against other business income from other things.
6. I file every year but had not pay federal a dime for last 5 years, actually uncle sam pays me each year for having 2 wonderful kids, but too bad I still have to pay in for state tax maybe about 4k or so.
7. I did not use a big accounting firm but I been with my CPA for 19 years, I bet I pay more than most people pay an accountant in 10 years, my bill for this year just for yearend was $9800, now if anyone questioning this bill, I will glad to show you but you have to chip in to help pay for it.
now you can call me a liar....
JY - I am involve with most phases of RE
By JY - From online RE Forum
I am involve with most phases of RE, from land development to 2008-07-17 19:36:45
I am involve with most phases of RE, I have a LLC or partnership setup for each phase, land development, concrete/excavating, new construction, rehab/remodel.
rentals are actually just a side products in the beginning, something we accumulated over 16 years, but it is began to show its cash flow power last few years, in 07, rentals counts about 100k of my income.
is land lording hard work? yes it is, but lucky I don't have to do any physical work, in the beginning, my construction crew help maintains them, but last 3 years, I have 2 full time handyman assigned just for rentals.
08 is a tough year for real estate, construction side, I did not start any new construction project this year, first time ever. land development side, we only sold half the lots as we did last year, concrete side, only a few jobs, rehab side, so far 1 remodel.
I am involve with most phases of RE, I have a LLC or partnership setup for each phase, land development, concrete/excavating, new construction, rehab/remodel.
rentals are actually just a side products in the beginning, something we accumulated over 16 years, but it is began to show its cash flow power last few years, in 07, rentals counts about 100k of my income.
is land lording hard work? yes it is, but lucky I don't have to do any physical work, in the beginning, my construction crew help maintains them, but last 3 years, I have 2 full time handyman assigned just for rentals.
08 is a tough year for real estate, construction side, I did not start any new construction project this year, first time ever. land development side, we only sold half the lots as we did last year, concrete side, only a few jobs, rehab side, so far 1 remodel.
Eviction Bible
By JY - From online
JY's bible to eviction............. 2008-07-17 19:09:01
different state has different eviction rules...in Indiana, you can not evict an tenant yourself unless they move out voluntary, by state law, landlord can not just kick them out, or change the lock, or cut off utilities if landlord pays utilities.
here are steps I do.
1. oral notice on due day.
2. written notice after 5days later, demand tenant to move out in 10days, you must give them 10 days under state law.
3. if they refuse to move, file small claims court ASAP, request court order eviction. when you file, request notice to be deliver by sheriff, not certify mail, because tenant can reject certify mail and that will count as no delivery, only when the sheriff can hand them the notice counts.
4. soon as you obtain a court eviction notice, then you have the rigth to thru all your tenant's stuff out on the street( which I love to do, haha), if they refuse to leave, call the sheriff, have the cops come help put their stuff out on the street.
5. drag their ass back to count for damage and back rent, make sure you keep detail record of repair and damage. pictures tells everything, add up all the late charges and early termination penalties, plus the time you spend on it, charge the tenant $50 per hour for the time you make up( the judge may deny this fee, but would not hurt to try).
6. after the damage award, motion for a court ordered garnishment on their wage if they have a job.
7. if they don't have a job, then take their ass to court once a month. unfortunately, you can not put them in jail for owe you money, but if they miss any court date, then motion to cited for Contempt of Court, if they miss the second time, then motion the court issue a body attachment for failure to appear, which is a civil warrant they will spend up to 6 month in jail, and the cash bond goes to pay for the judgment.
8. on December of each year, request the court to garnish their tax return check before the file on January, if they cash their tax check, then you can again request the court for contempt, send their ass to jail for a couple day.
good luck
JY's bible to eviction............. 2008-07-17 19:09:01
different state has different eviction rules...in Indiana, you can not evict an tenant yourself unless they move out voluntary, by state law, landlord can not just kick them out, or change the lock, or cut off utilities if landlord pays utilities.
here are steps I do.
1. oral notice on due day.
2. written notice after 5days later, demand tenant to move out in 10days, you must give them 10 days under state law.
3. if they refuse to move, file small claims court ASAP, request court order eviction. when you file, request notice to be deliver by sheriff, not certify mail, because tenant can reject certify mail and that will count as no delivery, only when the sheriff can hand them the notice counts.
4. soon as you obtain a court eviction notice, then you have the rigth to thru all your tenant's stuff out on the street( which I love to do, haha), if they refuse to leave, call the sheriff, have the cops come help put their stuff out on the street.
5. drag their ass back to count for damage and back rent, make sure you keep detail record of repair and damage. pictures tells everything, add up all the late charges and early termination penalties, plus the time you spend on it, charge the tenant $50 per hour for the time you make up( the judge may deny this fee, but would not hurt to try).
6. after the damage award, motion for a court ordered garnishment on their wage if they have a job.
7. if they don't have a job, then take their ass to court once a month. unfortunately, you can not put them in jail for owe you money, but if they miss any court date, then motion to cited for Contempt of Court, if they miss the second time, then motion the court issue a body attachment for failure to appear, which is a civil warrant they will spend up to 6 month in jail, and the cash bond goes to pay for the judgment.
8. on December of each year, request the court to garnish their tax return check before the file on January, if they cash their tax check, then you can again request the court for contempt, send their ass to jail for a couple day.
good luck
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