Ultra Trust : Asset Protection - Irrevocable Trusts and Estate Planning

Steve Jobs Appears to have Stiffed the IRS Out of $3.06B

Wed, 26 Oct 2011 06:44:40 -0800

Estate Street Partners affirms that through Steve's brilliant foresight, he may very well have saved his family $3.06B and public scrutiny with well-constructed irrevocable trusts

Boston, MA (PRWEB) October 26, 2011 Steve Jobs may not have been able to cheat death, but it appears that he has been able to legally avoid estate taxes. After examining his public financial documents and property assets he owned, it appears he used an asset protection tool such as an irrevocable trust to avoid probate and paying estate taxes. Estate taxes would have cost up to 34% of his estate. Reportedly he amassed close to $7 billion after the sale of his Pixar shares to Disney and he had approximately $2 billion worth of Apple shares before his death so with good estate planning he thwarted the IRS of an estimated $3.06B.

No one knows for certain what precise estate planning tools Mr. Jobs used though except his family. He was a private person and appears to have owned many of his assets with some type of trust whether revocable or irrevocable. Any trust (revocable or irrevocable) would avoid probate, but if Mr. Jobs used revocable trusts, he would still pay estate taxes.

We can conclude by Mr. Jobs's meticulous nature to detail though he would have used an irrevocable trust.

Without any trust, at Mr. Job's net worth, his probate expenses would have been about 4-7% and his estate taxes would be 34% of the value of his estate above $5M, respectively; in other words, a whopping $450M for probate and $3.06B for estate taxes. Probate is the process through which a court determines the value of the estate and approves the distribution of assets covered by a will if there is one.

"You don't have to be a billionaire to take advantage of the same strategies that Steve Jobs brilliantly executed. Almost anyone that has worked hard to build a nest egg needs to do similar estate planning for asset protection as well as Medicaid planning, and to avoid estate taxes and probate. John Maynard Keynes said it correctly, 'The avoidance of taxes is the only intellectual pursuit that carries any reward'," states Rocco Beatrice, Managing Director of Estate Street Partners in Boston, Massachusetts.

Probate and estate taxes are the only voluntary reporting systems in the entire IRS code and civil procedures. Both the probate process and the voluntary taxes applicable in death taxes are affected only to assets titled to the deceased individual's name on the date of death. More simply, the probate and estate taxes would have applied to Mr. Jobs's property and assets that were legally in his name at the time he passed away.

"These [probate and estate taxes] can be totally avoided by simply using an irrevocable trust. I hope, for the sake of his children and wife, that Jobs implemented an irrevocable trust as opposed to a revocable one. It [revocable trust] shouldn't even be in the dictionary - in my opinion. Revocable trusts clearly have no protection against anything other than the probating process. That's why we created the irrevocable Ultra Trust® for our clients," explains Mr. Beatrice.

Whether Jobs used a revocable or irrevocable trust only his executors and close family members would know for sure, but after previewing his public records he purchased some properties under JOBS TRUST and JOBS STEVEN P TRUST so it is safe to conclude that he had some asset protection strategy in place.

At one point, he owned an airport Stockton Municipal Airport appraised at $35M and owned another parcel of land worth $52M. With assets in trust the terms of the trust are not disclosed to the public.

"A record search of assets titled to Steve Jobs's personal name is chump change to what we will ever hope to find out about the extent of which irrevocable trust like our Ultra Trust® was used by Steve Jobs. In future years to come, we may get glimpses of the extent of his estate planning, but maybe only if there is a lawsuit from disgruntled family members or creditors who may claim that they should have part of the wealth."

About Estate Street Partners

Estate Street Partners has helped countless clients protect their assets from frivolous lawsuits. Rocco Beatrice, the founder of Estate Partners, developed the Ultra Trust®, a premium and tested irrevocable trust, which helped his clients minimize their taxes, eliminate the probate process and only voluntary estate tax, and allowed the tax efficient transfers of wealth to their heirs. The company has offices in Boston, MA and Las Vegas, NV.

Contact:
Rocco Beatrice, Director
Estate Street Partners, LLC
http://www.ultratrust.com
1.888.938.5872

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Offshore Asset Protection

Sat, 19 May 2007 11:07:40 -0800

The litigation explosion are forcing professionals and small business owners to focus on ways/strategies to protect their savings, investments and other accumulated assets that may become attractive to potential contingent fee trial lawyers.

Presently, well over half the world's wealth moves around internationally, taking advantage of business opportunities. National political boundaries, from a financial point of view, are becoming virtually transparent. Many Americans have come to the realization that the only way for them to protect their assets is to hold international assets. This offshore asset protection strategy has nothing to do with tax evasion and everything to do with the creation and protection of wealth.

In the United States, the legal system is often stacked in favor of the plaintiff and against the defendant. The corporate veil is routinely ignored. This encourages the filing of spurious lawsuits.

For a mere filing fee, a contingent fee lawyer and his client risk very little to see how things turn out.

The possibility of being on the receiving end of a ruinous judgment can instantly result in the loss of a lifetime's accumulation of hard work. Lawyers for plaintiffs only prosecute cases they believe will pay off. The largest growing business in America is contingent fee lawyers, just look in the yellow pages of your phone book.

The Internet has facilitated an exponential rate of detailed information about your personal and/or your business accounts, property ownership, investment holdings, income, savings, and many other facts about you, your business, your associates, your buying/spending habits, and so forth.

Most trial lawyers will tell you, that forming U.S. based corporations for asset/wealth protection is not worth the certificate it's written on. Judges will inform you that if any asset is within their jurisdiction anywhere in the U.S. they have the power to redistribute your wealth.

SO WHY USE OFFSHORE ASSET PROTECTION?

Many international jurisdictions impose less governmental regulatory restrictions and reporting, less taxes on their assets and income, greater flexibility and disclosure requirements. Individuals, professionals, entrepreneurs, and their companies adopt an aggressive policy to safeguard and preserve their wealth/assets from predators and their very clever lawyers, while significantly reducing their costs of doing business.

An offshore asset protection Corporation or other offshore Foreign Limited Liability Company (FLLC's), or International Business Company (IBC's) or other legal entities can conduct any type of business in the United States. You sacrifice nothing by having a corporate veil with real teeth. An International Business Company (IBC) is an offshore corporate legal entity that does not have to comply with a U.S. based judgment.

Judgments are not enforceable in non-United States jurisdictions. U.S. contingent fee lawyers and their clients have a significant jurisdictional problem: only citizens of the tax haven jurisdiction can practice law. U.S. lawyers or their clients will have to hire a local law firm and pay up-front legal fees, post bonds, pay court costs, and pre-pay other expenses to pursue their claims. Generally speaking, the local authorities frown upon foreign-generated claims/judgments. "You are in your home-country."

The need for international diversification arises because of perceived shortcomings in the U.S. judicial, legislative, and political processes. Once the plaintiff see the uphill battle involved, plus the enormous costs out of his/her own pocket, he/she may either re-evaluate the merits of filing a lawsuit or settle for a fraction of the settlement he/she may have received in a U.S. Court. This fact alone can become your catalyst for good financial offshore asset protection planning and save thousands off your liability insurance premiums.

Foreign asset protection is the Rolls Royce of asset protection planning. For most Americans it would be overkill. For an asset protection fortress within the United States, the Cadillac of asset protection is the Irrevocable Trust combined with a Limited Liability Company.

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How the Rich Hide Their Assets

Wed, 16 May 2007 03:00:40 -0800

It's very simple, how the rich hide their assets is not to hide them at all.

The rich use laws to protect their assets. They use legal entities created under the different laws, trust laws, corporate laws, partnership laws, and tax loopholes available to all, not just the rich.

The average guy wants to "own" assets. The rich have learned that "control" is more significant than "ownership." By not owning the asset, they control frivolous lawsuits, they avoid probate, they avoid estate taxes, and they are able to significantly reduce their taxes.

Ownership is the absolute right to possess and use property to the exclusion of others. Control is the control of others or skillfully influencing others to one's advantage.

Ownership is absolute; control is not. If assets are in the absolute control of others, there's no control on how it can be transferred, thus avoiding frivolous lawsuits. Sue me! You'll never get a dime.

The rich have also learned to diversify their assets worldwide. The theory "don't put your eggs in one basket" applies to every one, not just the rich. Everyone has the same opportunity to diversify, the number may be smaller for the average guy, but there is nothing that the rich are doing that is not available to everyone.

Available to all who would like to hide their assets:

Truly Independent Trustees
Irrevocable Trusts
Foreign Trusts
Limited Liability Companies
Foreign Limited Liability Companies
International Business Companies
Limited Partnerships
Corporations under Chapter C
Corporation under Subchapter S

In a post 9/11 world everything is transparent. Everyone is living in a glass house. All transactions are magnified. Economic substance over form is examined, there's no way out.

The rich are taking extra steps to leave the control aspects to others who they trust. The arm of the law is very reaching. Taxes are on a worldwide basis. You can run but you can't hide. Yet the law does not prevent anyone to reposition their assets and to manage their income taxes to their best advantage. Having a foreign asset protection trust is not illegal. They merely want to know if you have such a structure by filling in the box on your tax return with a simple yes, and if you have positively a foreign structure, the mere reporting does not trigger an examination of your records. It's perfectly legal. The rich hide their assets by repositioning.

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Asset Protection Trust

Thu, 10 May 2007 08:00:40 -0800

A "TRUST" is nothing more than a "CONTRACT" between the person who wishes to protect his assets (the Grantor) the person who will manage the assets (the Trustee) for the benefit of all Beneficiaries which may include the Grantor, his spouse, children and grandchildren.

The Trust Contract requires the transfer of assets from the original owner (Grantor) to a legal entity for the purpose for which the Trust Contract was created.

What type of trust, Grantor, or Non Grantor? What's the distinction? A Grantor Trust take a special place within the tax code. A "Grantor-Type Trust" for tax purposes is treated as a disregarded legal entity. The disregarded entity is "Income Tax Neutral" meaning that the original Grantor retained strings attached so that for purposes of the IRS he retains the assets in his complete control, thus he did nothing for the purpose of asset protection. Income tax benefits and income tax expenses are retained by the Grantor, thus he pays income taxes on the income of the trust. The Trust is a "pass-through" to his form 1040 i.e. real estate tax deduction and mortgage interest deduction on his person income tax return.

Revocable, irrevocable trust, what's that mean? Revocable is when the original person with the assets transfers (repositions) the assets to a trust with strings attached. The Grantor, the Trustee, and the beneficiary are the same person. Effectively you have kissed yourself on the hand and blessed yourself as the Pope. A revocable trust does absolutely nothing for asset protection. Many lawyers recommend revocable trusts for avoiding probate, recognizing that the trust is not worth the paper it's written on for protecting assets against frivolous lawsuits and the avoidance of estate taxes.

An irrevocable trust is when the Grantor (the person with the assets) gives-up complete control to an independent Trustee who in turn will use his judgment as Trustee to manage the assets for the beneficiaries of the trust. The fiduciary relationship of the Trustee is to the protection of the assets at any cost. The Trustee must protect and must diligently invest under the prudent man rules, he cannot ever deal for himself. The courts do not look favorably on dereliction of duties while serving as Trustee. An irrevocable trust is the only significant asset protection device for avoiding frivolous lawsuits, avoiding the probate process, avoiding estate taxes, and is the only device for avoiding the mandatory spend-down provisions for qualifying into a nursing home.

An irrevocable asset protection trust when combined with a Limited Liability Company is an asset protection fortress, short of a foreign asset protection trust. A foreign asset protection trust is the Rolls Royce of asset protection, the irrevocable trust with an LLC is the Cadillac.

To learn more about irrevocable trusts and asset protection visit:

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Asset Protection from Medicaid

Tue, 08 May 2007 05:00:40 -0800

The Deficit Reduction Act of 2005 established a June 30, 2006 deadline for the Secretary of Health and Human Services (HHS) to release regulations for states to come in compliance with the new severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.

The law extends Medicaid's "lookback" period for all asset transfers to 5 years, it was originally 3 years and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters the nursing home. Qualification to enter the nursing home is achieved when the individual is out of funds, meaning he/she cannot afford to pay the nursing home. The new federal law applies to all transfers made on or after the date of enactment, February 8, 2006. Any transfer made before February 8 falls under the old transfer rules. Exact enactment provisions are state by state, but it's clear that non-compliance by 50 state legislatures puts their federal funding at risk.

You can protect yourself from the Medicaid nursing home care by taking action now while you still have your health.

You can reposition (transfer) your assets from you to an irrevocable trust with a truly independent trustee. The key is the "Independence of your Trustee." The trustee cannot be any-one related to you by blood or marriage. And, you must be willing to give-up complete control over your assets. This lack of perceived control is the most difficult to achieve. Seniors have a deep sense of independence by their ability to control and manage their assets.

Revocable or irrevocable trust, what's that mean? Revocable is when the original person with the assets transfers (repositions) the assets to a trust with strings attached. The tax lingo is "grantor-type trust. The "strings" when the original grantor (person with the assets) elects himself as the trustee, and the beneficiary of the trust. The grantor, the trustee, and the beneficiary are the same person. Effectively you have kissed yourself on the hand and blessed yourself as the pope. This simply will not work. Period.

An irrevocable trust is when the grantor (the person with the assets) gives-up complete control to an independent trustee who in turn will use his judgment as trustee to manage the assets for the beneficiaries of the trust. The fiduciary relationship of the trustee is to the protection of the assets at any cost. The trustee must protect and must diligently invest under the prudent man rules, he cannot ever deal for himself. The courts do not look favorably on dereliction of duties while serving as trustee. An irrevocable trust is the only significant asset protection device for avoiding the Medicaid spend-down provisions.

Asset protection from Medicaid requires foresight and a strong conviction to walk away from perceived control. Inaction is devastating. Seniors must use all their funds first, then qualify for the nursing home. It's clear, that these new rules are designed to impoverish the healthy spouse.

To learn more about irrevocable trusts and Medicaid asset protection visit Medicaid Asset Protection , Hide My Assets Medicare, Protect Assets Nursing Home Costs, Medicaid Estate Planning or Hide My Assets.

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Protecting Assets from Nursing Home Costs

Mon, 07 May 2007 03:00:40 -0800

Protecting assets from nursing home costs is the latest challenge for seniors where government is demanding an uncapped spent down of their asset if one of them falls victim to a nursing home. Canada and some other countries offer this benefit as part of their rights, since they contributed to their Medicare Medicaid system during their working years.

The United States apparently, is going the route of demanding that seniors cover their own expenses, eve if they carry private plans. What hurts the most is that there's no cap on what has to be the spent down under the new provisions mandating that all states adopt the new federal guidelines on nursing home eligibility or lose their federal funding.

The evidence is clear, the baby boomers generation cannot expect government to cover their medical and nursing home costs. They have begun with existing seniors, who before they can even qualify for the nursing home cannot move their assets (asset protection) without the 5 year look-back, it was 3 years.

You don't need a fortune teller to point out, that if one of you gets sick, your hard earned assets will vaporize - right before your very eyes. Even if you planned carefully for your retirement, a catastrophic medical event will leave both of you devastated, one sick one without any resources.

Planning for your reducing your nursing home costs has to be done early and definitively 5 years before you plan to get sick. Any string attached to your planning will void your plan to protect your assets from the nursing home costs. Your plan must be irrevocable. You cannot be the Indian giver, or the kid with the basket ball making-up the rules as he sees fit whereby if he doesn't like the way the game is progressing takes back the basket ball and goes home to his mommy.

Any asset transferred from you to something else, some legal structure has to be at the "fair market value" the price paid by a willing buyer and a willing seller neither under a compulsion to buy or sell, each acting in their best interest. If it's a taxable gift, it has to be justified with a legitimate appraisal and taxes have to be paid on the gift by the transferor, the receiver of the gift is always tax-free. If it's a sale, the cash has to be exchanged. There are methods by which no cash need to change hands and still be a legal exchange. It's called the "private annuity."

A private annuity is nothing more than a contract between the guy with the money and a custodian whereby in exchange for the cash the custodian promises to pay over the transferor's lifetime a certain amount, thus limiting the amount that can be used to defray the cost of the nursing home.

To learn more about irrevocable trusts and senior elder care visit Medicare: elder care , Asset Protection from Medicaid, Hide My Assets Medicare, Medicaid Asset Protection, Nursing Home Spend-down Program, Medicaid Estate Planning.

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Medicaid Asset Protection

Wed, 02 May 2007 13:00:40 -0800

As tax preparation time begins, many seniors are asking to include Medicaid asset protection as part of their tax planning strategies. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicare nursing home provisions. Under the new provisions, before a senior qualifies for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5 year look-back, used to be 3 years. And used to be that each spouse had a one-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not seen specific regulations but it appears that the healthy spouse will be left without any assets if one of them gets sick.

Suggestions by seniors have been to transfer their assets to their children. Although this option is available, I'm not sure that it's a good option. What if the child decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wife's decree, what if the child get's sued?

There are also tax implications. If the assets are transferred to the child for less than fair market value, then it's a taxable gift. Even worse, if this type of transfer to the child is completed before the 5 years-look back, is it a "fraudulent conveyance?"

Medicaid asset protection has to be done very carefully. Planning in this area is evolving. There are a lot of eldercare law firms popping up all over the place. I have been approached by such a firm to send them clients. They claim that they can structure a new deal whereby the nursing home won't be able to attach assets even after they enter the nursing home.

I know this much, any method used to deflect assets from the original owner has to be done at it's fair market value. For example you just can't transfer your house from you to your child. There are tax consequences. Did you just sell your house? Or did you just gift your house? Who will determine the fair market value? Did you get a genuine appraisal? If therefore, it's at less than fair market value (willing buyer and willing seller, neither under compulsion to buy or sell, each acting in their best interest) did you just create a more challenging problem?

Any method whereby there's an element of strings attached, it's revocable and therefore you have done nothing to disassociate yourself from your asset. One can challenge your intent, to divert assets for the purpose of defrauding a potential creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am aware of only one method of disassociating yourself from your asset (personal residence, your CD's, your investments, vacation spot) is to give it away. Period. You can gift it to your children, pay the tax and that's it. The problem is that you no longer have any control and you are at the mercy of your child's good intentions and a blessed spouse. Risky? You bet!

An irrevocable trust with an independent trustee (not related to you by blood or marriage) will fit the bill. An irrevocable trust, is an irrevocable contract between you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can become beneficiaries along with your children and grand children.

Timing is extremely important. If the transfer (repositioning) of your valuable assets is done before the 5 years, chances are good that it will stand-up in court. What if it's before the 5 years are up? Is your Medicaid asset protection plan still good? In my book it's better to have done something than nothing.

Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.
Mr. Beatrice is an asset protection award winning trust and estate planning expert.

To learn more about irrevocable trusts and senior elder care visit Medicare: elder care , Asset Protection from Medicaid, Hide My Assets Medicare, Protect Assets Nursing Home Costs, Nursing Home Spend-down Program, Medicaid Estate Planning.

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How to Hide Assets

Fri, 27 Apr 2007 02:47:40 -0800

In social functions, I always get asked about the new How to hide assets. From who are you trying to hide your assets from? Is there a legitimate way to hide your assets?

You will know if you have succeeded in hiding your assets if an asset search by an extremely interested party does not reveal your identity. In a post 9/11, it's not possible. Everything has become more transparent with the passage of government banking acts.

Interested parties have a way of finding the true owner for the right price. The Internet is running on high steroids. Anything you do is public knowledge.

However, the original owner and its present owner can legally be changed without having to go offshore. Legitimate repositioning of assets from you to an irrevocable trust is perfectly legal. The fact is, if your assets are owned by a subchapter S. Corporation or a Limited Liability Company and in turn the shares of the Sub S or membership units of the LLC are owned by an irrevocable trust, it's the fortress of US Asset Protection.

Hide Your Assets with Irrevocable Trusts

How to hide your assets is a simple as the repositioning your assets through an irrevocable trust with a true independent trustee. The key to the transfer is the exchange of equal value in return for the asset, or the receipt of a fair market value for the asset transferred.

If you reposition your assets, you will no longer own them. If you don't own assets, no one will want to sue you; no one will want to track you; no one will want to know your name. You don't have to go offshore. US Laws, US courts will defend and support your asset protection system.

Give Up Control of Your Assets to an Independent Trustee

These laws have been defined by numerous court cases, over and over, right up to the Supreme Court. You must however, give-up control over your assets to a true independent trustee. Your asset protection system is enhanced when a Limited Liability Company further re-defines your asset protection system.

How the LLC Can Help Protect Your Assets?

The LLC is nothing new, but (until recently) states refused to legislate its existence. The LLC resembles the German GmbH the French SARL and the South American Limitada forms of doing business. The LLC allow small groups of individuals to enjoy limited personal liability while operating under partnership-type rules (rather than the complex rules that apply to corporate-type structures).

The LLC is recognized by the IRS as a "pass-through type" of disregarded tax entity. That is, the profits or losses of the LLC pass through the business and are reflected and taxed on the individual' member's tax returns of the owners, rather than being reported and taxed at a separate business level.

Other pass-through entities include general and limited partnerships, sole proprietorships and "S" corporations. The IRS now lets an LLC elect corporate tax treatment if it wants it (by filing IRS Form 8832, consult with your tax advisor).

To learn more about how to hide your assets from Medicare visit Hide My Assets from Medicare , How the Rich Hide Their Assets, Hide My Assets Medicare, Asset Protection Trusts, I'm Getting Sued-Hiding Assets , Revocable Trusts vs. Irrevocable Trusts.

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Hide My Assets From Medicare

Wed, 25 Apr 2007 12:52:40 -0800

In social functions, I always get asked about the new Medicare nursing home qualifications. Seniors become very anxious about having to spend-down their assets with no cap on the amount that they can keep. This unlimited drain on their funds is of major concern to the healthy spouse, and because the sick spouse can't do anything about getting sick, they become more and more depressed.

These folks are of the World War II generation and the market crash of 1929 mentality. If you don't have the cash you don't buy it. Most of them got a credit card only because they had to pay their prescriptions over the mail.

Their health and well-being depends on knowing that they can tap into their resources to get what they need or when their grandkids come to visit they want to reward their visit with a few bucks. My mother is of this vintage, and I know that when my kids drop in for a visit, it makes her day.

She wants to give them something in return, not because it's an enticement to come back, but she doesn't get out enough visits and she values their time, especially in this day of instant gratification with Ipods, Internet, cell phones, video, etc. and because they valued their grandmother more.

How Do I Hide My Assets from Medicare Then?

So, how can I hide my assets from Medicare is relevant to their lives. My answer is that if they did not do something as far back as five years ago, chances are that trying to do something now, could very well be considered a fraudulent conveyance in order to defraud a potential creditor.

For example, if they were to put their son or daughter on the deed of the house without adequate consideration, it would be considered a "fraudulent conveyance" because they did it for less than the fair market value, they received nothing back in return. Or, if they did recognize that they gave away the house to their children it was a taxable gift and taxes are due on the transferor (the person giving the gift has to pay the tax, the person receiving the gift is always after taxes).

But like many people they don't think it through in terms of filing of a gift tax return or fraudulent conveyance. They just do it for their convenience.

Restrictive Medicaid Spend-Down Provisions

The new Medicaid spend-down provisions are very restrictive. The intention is that if you (the elderly) have assets, before you qualify for nursing home assistance, they want you to become a welfare recipient.

And that's what seniors are afraid to become. Their generation never asked for assistance if they had a strong back, they worked for their dignity. They don't want to become "welfare recipients" it a very humiliating concept to them.

Common Mistakes Committed by Seniors When Trying to Hide Their Assets:

Naming their children as (Parent's name "and" Child's name) (Parent name "or" Child's name) on their savings, checking, investment accounts, or near cash accounts. THIS IS NOT A GOOD IDEA. Too much risk, what if child gets sued, or divorced, or worse dies. You open a new can of worms.
Give the house to the children. You name one or more of the children. Again not a good idea. What if the children get sued, divorced, or prematurely dies. There's too much risk.
Cash under the mattress, in between the walls, in the basement, etc. Well it works, but unless you tell someone the hiding place, then what? Or, leave the cash to lose interest or depreciate with inflation?

In God we trust.

Trusts are the most common and useful legal devices. An "Irrevocable Trust" works best for hiding your assets. Your assets are RE-POSITIONED from you to an irrevocable trust. You "legally" no longer own the assets.

This involves the actual transfer of assets to an independent trustee who will independently manage and actually own the assets for the benefit of all beneficiaries. This type of control over assets is not new, it goes back to medieval times when landlords went off to the crusades and left their lands in trust of monks for when they returned.

There are specific laws and it's generally accepted by the judicial system as a legal, acceptable method of protecting one's assets for legal protection and tax minimization.

To learn more about irrevocable trusts and senior elder care visit Medicare: elder care, Asset Protection from Medicare, Medicaid Asset Protection, Protect Assets Nursing Home Costs, Nursing Home Spend-down Program, Medicaid Estate Planning.

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Private Annuity Trust, Ensured Installment Sale (Structured Sale)

Sun, 15 Apr 2007 09:07:40 -0800

A Private Annuity Trust works very similar to an Immediate Annuity, although you will use assets other than money to fund this Annuity. Typically, you transfer ownership of a home or land with high value to a Trust. The Trust agrees to make lifetime payments to you, and can then sell the asset you gave them and use the money to fund this Annuity agreement through investments.

You cannot use other retirement funds such as a 401k to fund a Private Annuity Trust, but you can add multiple properties to increase your tax break and Annuity payment. If you decide to add an additional property to your Private Annuity Trust you must create a new Annuity agreement for each property, unless your original agreement contained a provision to include additional assets at a later date.

Each new agreement will have a different deferral period which creates an added benefit to you by providing both immediate and long term income. The withdrawal period from a Private Annuity Trust must begin by age 70 �, but you can always choose to receive payments sooner.

When structuring a Private Annuity Trust, you must name a Trustee who will be responsible for controlling the investments of your assets in the Private Annuity Trust. The Trustee can be an adult child, relative, close friend, attorney, or anyone else other than you or your spouse. By law, the annuitant is not allowed to have any direct control over the investments of their Annuity. You may make council to the Trustee but cannot have any direct contact with the assets once they are transferred into the Private Annuity Trust, and your transfer of ownership is irrevocable.

Assets Transfered to a Private Annuity Trust: How to Estimate the Annuity Payments?

It is fairly easy to estimate what your Annuity payments will be for the asset transferred into a Private Annuity Trust. The IRS uses the following factors to determine your payment:

Your life expectancy
The selling price of your asset
The Annual Federal Mid-Term Rate (AFMR) effective when your property was transferred (this rate will be the rate used for the duration of your Annuity)
The length of time you defer payments

Using these factors, the amount you will receive from an Annuity is a fixed amount and you cannot start and stop payments from a Private Annuity Trust. Once the withdrawal period begins you will continue to receive payments for life.

The "life expectancy" factor is only used by the IRS to help determine what your payments should be and is not to be confused with a payment "cutoff" age. If you live beyond what the IRS factored as your life expectancy, you will continue to receive payments for life.

Joint Annuity for Spouse to Receive Payments

Owning a joint annuity will allow your spouse to continue receiving Annuity payments should you die first. After your spouse dies, payments will cease and your beneficiaries will inherit any surplus money remaining in your Private Annuity Trust created by wise investment options of the Trust's reserve.

By law there must be enough money set aside for the Trust to fulfill its Annuity agreement with you, and there will usually be a reserve account established of five to ten percent of your asset's value as a safety precaution. Remember, your Annuity payment is fixed and will not increase regardless of profit your assets create via the Private Annuity Trust.

No Estate Tax, Income Tax or Gift Tax on Private Annuity Trust Transfer

When you establish a Private Annuity Trust, you are not subject to estate, income, or gift taxes. The transfer of ownership of an asset to a Trust is "paid for" by the Annuity agreement. The IRS cannot accurately determine your life expectancy, and therefore cannot determine how many payments you will actually receive.

Taxes will be deferred on the transfer until you start receiving payments, and a portion of your payment will be taxed based on your income amount. The transfer of ownership involving your assets is not considered a gift to the Trust because they are agreeing to pay you for the asset at a later date, and as a result you will not have to pay a gift tax.

Once your asset is transferred to the Trust, it is removed from your taxable estate. This is of particular benefit to your beneficiaries who will not be held responsible for paying estate taxes when they receive excess funds from your Annuity. After your death it is the responsibility of the Trust to cover any unpaid taxes due on the assets.

Ensured Installment Sale (Structured Sale)

The Ensured Installment Sale was developed by the Allstate Insurance Company in 2005 and works in a similar manner to the Private Annuity Trust. The major difference between the two is that when you sell your assets, the Annuity is purchased directly from an insurance company. The insurance company, and not the Trustee for a Private Annuity Trust, is responsible for making investment decisions and ensuring you receive Annuity payments for life.

Charitable Gift Annuity: Immediate, Deferred, College, Flexible Annuity

Mon, 09 Apr 2007 21:07:40 -0800

For some people, a Charitable Gift Annuity (CGA) is a convenient way to donate funds to an educational, religious or other charitable organization. A Charitable Gift Annuity works very similar to other annuities you might purchase through your insurance company, but in this case you will receive an annuity payment directly from the organization. Typically, you donate a monetary amount to the organization of your choice and then begin receiving payments either immediately or at a predetermined date in the future.

Donations to charities are subject to the charitable tax deduction, and you are entitled to make this deduction on your income tax return for each year you make a new donation. You can choose to receive your annuity payments yearly, quarterly, or monthly, although most people choose quarterly payments. Quarterly payments from a Charitable Gift Annuity are received on the last day of the quarter, not the first.

Similar to other annuity options, Charitable Gift Annuities are subject to state and federal regulations. The American Council on Gift Annuities (ACGA) sets uniform gift annuity rates for use by charitable organizations. These rates set the recommended limits for payout rates to the donor.

If a charity stays at or below these rates, they are not required to justify that their rates are within state regulatory laws. If the charity chooses rates above those set by the ACGA then an actuary is necessary to ensure compliance to the individual state laws. Rates are determined by the age of the annuitant and when the withdrawal period for the annuity begins.

A charity may spend a portion of a donation immediately but must retain enough money in its reserve to satisfy its annuity agreement with the donor. The agreement for Charitable Gift Annuities states that the annuitant will receive fixed payment amounts for their lifetime only and not an additional period of time thereafter for their beneficiaries.

This means that once an annuitant dies, payments cease and the remainder of the annuity is absorbed by the charity. The donor can opt to extend the annuity agreement to an additional annuitant, as with the joint and survivor or two lives in succession options, but the annuity payments will be split between the two individuals and will cease after both parties have died.

Different Types of Charitable Gift Annuities

Immediate Gift Annuity
If you choose an Immediate Gift Annuity, payments will begin in the payment period immediately following the final contribution date. As mentioned previously, the annuitant can choose to receive payments annually, quarterly, monthly, etc. Depending on when the contribution was made, you can request your first payment to be for the full, and not prorated amount.
Deferred Gift Annuity
With a Deferred Gift Annuity, the annuitant is allowed to receive payments at a future date predetermined by the donor. The date chosen must be at least one year from the contribution date, but the payout schedule offers the same flexibility as the Immediate Gift Annuity.
College Annuity
A parent or grandparent may want to establish a college fund for a child to offset the rising cost of higher education. In this case, they would donate money for a College Annuity which will only pay out over the lifetime of the child (annuitant). Payments usually begin at age eighteen, or when the child/annuitant is old enough to attend college. The annuitant may choose payments for life or receive larger payments spread out over the number of years they attend school.
Flexible Annuity
A Flexible Annuity allows the annuitant to decide the starting date for payments. Usually the annuitant chooses retirement or another date of importance to begin receiving payments. Keep in mind that one factor for the annuity payment rate is age, so you will receive larger payments if you wait until you are older.

How does a Charitable Gift Annuity Work?

You may be asking how this works in a real life example. Let's assume you just turned seventy-five and have $25,000 that you would like to donate to your alma mater as a Charitable Gift Annuity. You opt to receive immediate annuity payments on a yearly basis, and your calculated annuity rate is eight percent. Based on your annuity agreement with your alma mater, you will receive a payment for $2000 every year for the rest of your life, and an immediate tax deduction of over $9000!

This is only an estimate, and your actual deduction will vary according to changing tax laws and changing rates established by the ACGA. You should always consult with a knowledgeable financial advisor such as Estate Street Partners before donating or investing large sums of money to guarantee your rights are protected.

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Charitable Gift Annuity: Immediate, Deferred, College, Flexible Annuity

Different Types of Charitable Gift Annuities

Immediate Gift Annuity

Deferred Gift Annuity

College Annuity

Flexible Annuity

How does a Charitable Gift Annuity Work?