Most homebuyers – especially those doing it for the first time – are faced with a tough challenge when it comes to closing costs. Enough consumers who have saved for many years may not have enough available funds to cover fees related to a major real estate transaction. But there are ways to at least minimize the costs, and there are several strategies for buying without incurring any immediate closing costs.
With excellent credit you may qualify for loans over and above the price of the property you’re buying. And if that happens, you can cover your closing costs with the extra funds you borrow. For example, you might be able to qualify for a loan of 107 percent of the selling price, enough funds to pay for the house plus all of your closing costs. If the price of the home you intend to buy is $200,000 and you borrow $214,000, the first $200,000 covers the house and down payment, and the rest pays your closing fees. Because the lender considers you a low risk borrower thanks to your high credit rating, they see the bigger loan as good business for themselves, while it offers great convenience for you.
Another common way to avoid closing costs is by using a “80/20” or “piggyback” loan. This type of loan is actually two loans packaged together. One of the loans works in a conventional way, and is for 80% of the purchase price. The 2nd part of the loan is a smaller 20 % loan that is used to cover the down payment. So in reality, the lender is letting you borrow your 20% down payment. You can expect to pay higher rates on the down payment portion of the loan, but you get to buy a house with essentially zero down.
Sometimes a seller will offer owner financing and also pay your closing costs, to help you close a transaction. Or you can buy from your landlord and use a “lease purchase” contract. The way those work is that the landlord/seller lets you apply monthly lease payments toward the purchase price until enough money has changed hands to compensate for the down payment. So you can avoid the biggest closing cost of all, by gradually using monthly rent to come up with your down payment.
If you are self-employed, be sure to investigate whether or not you qualify for special loans that are intended to help people buy houses. Some apply to those who are veterans of military service, and they offer loans with little or no down payments and reductions in other closing costs. Other loans are created by the government to assist lower income families; and there are even programs managed through various non-profit organizations that fund grants to help consumers buy homes. If you find a loan that fits your circumstances, don’t hesitate to apply for it – sometimes special grants and loan funds are budgeted and dispersed on a “first come, first served” basis and then they run out quickly.
Saturday, May 8, 2010
Friday, May 7, 2010
Avoiding Bank Fees
Occasionally many of us will experience the dread of a bounced check, this will result in an abundance of fee’s that include an overdraft charge and a fee for the bounced check with the bank alone. Not to mention the fee charged by the establishment that accepted the check. This article is geared towards helping you avoid fees that are typically associated with bouncing a check. It is important that you consistently keep track of everything that goes in and comes out of your checking account.
Each time you perform anything on your checking account it is important that you update your register. This holds true with each check that is written, any withdraws made via an ATM machine, if make use of your debit card for a purchase, or if you use your account as a direct payment method for our expenses. Any time that you do any of these actions and do not have the proper amount within your checking account; it will result in your account being overdrawn.
When this happens your bank has a few choices, they could either pay the amount owed even if you do not currently hold the correct amount in your account. If they choose this option, you will be charged what is called an overdraft charge. Your bank could also choose to simply return the check marked NSF (Non Sufficient Funds) without paying a penny on it, you will then be charged a fee for bouncing the check with the bank as well as the merchant.
To avoid these fees make sure you are consistent within your register, make sure that you write every check, withdrawal, or purchase within it immediately, along with any fees that are charged with these actions. Keep your register balanced at all times, this will help ensure that you have an up-to-the-minute track of what you do and do not have. Furthermore, make sure you always keep track of any online payments and direct debit payments that you could have created for utility payments or other types of expenses. When you receive your statements every month, always balance and review them with your register. This will help you know which checks have or have not cleared as of yet.
If you do happen to make an error, you should immediately deposit the proper amount of funds into your account to try to avoid any additional fees that may be charged. In addition, you ca help with these fees if you have a savings account linked directly to your checking account to help cover these types of events. You could also apply for credit with your bank to set up a limit of overdraft; this allows the bank to “lend” you the money you would need to cover your bounced check or overdraft.
Each time you perform anything on your checking account it is important that you update your register. This holds true with each check that is written, any withdraws made via an ATM machine, if make use of your debit card for a purchase, or if you use your account as a direct payment method for our expenses. Any time that you do any of these actions and do not have the proper amount within your checking account; it will result in your account being overdrawn.
When this happens your bank has a few choices, they could either pay the amount owed even if you do not currently hold the correct amount in your account. If they choose this option, you will be charged what is called an overdraft charge. Your bank could also choose to simply return the check marked NSF (Non Sufficient Funds) without paying a penny on it, you will then be charged a fee for bouncing the check with the bank as well as the merchant.
To avoid these fees make sure you are consistent within your register, make sure that you write every check, withdrawal, or purchase within it immediately, along with any fees that are charged with these actions. Keep your register balanced at all times, this will help ensure that you have an up-to-the-minute track of what you do and do not have. Furthermore, make sure you always keep track of any online payments and direct debit payments that you could have created for utility payments or other types of expenses. When you receive your statements every month, always balance and review them with your register. This will help you know which checks have or have not cleared as of yet.
If you do happen to make an error, you should immediately deposit the proper amount of funds into your account to try to avoid any additional fees that may be charged. In addition, you ca help with these fees if you have a savings account linked directly to your checking account to help cover these types of events. You could also apply for credit with your bank to set up a limit of overdraft; this allows the bank to “lend” you the money you would need to cover your bounced check or overdraft.
Thursday, May 6, 2010
Avoid Foreclosure -- Save Your Credit
Are you several months behind on your mortgage?
Is the phone ringing off of the hook?
Do you feel like just giving up?
This is the scenario that is sweeping across America!
The banks made it way too easy over the last few years to get more money out of our homes. Property values kept rising, the real estate market was booming and every homeowner was sitting on a gold mine. This was sure to lead to disaster and it has.
Now with the market declining and home values taking a dramatic plunge, most homeowners are sitting on over inflated mortgages and under valued homes.
The unfortunate part is that a lot of people can no longer afford their mortgage. They are facing the possibility of foreclosure and losing their homes is a very real threat.
The good news is that the banks are realizing this and are now giving homeowners options. Otherwise, the banks will be sitting on all of these homes after foreclosure and will be stuck paying the property taxes and insurances until they sell. Factor in the foreclosure costs, attorney costs, and marketing this is not in their best interest.
One option that is being offered is called a short sale.
This is where the bank allows you to sell your home at or below the current market value in order to get a quick sale, regardless of what you owe. Let’s say that your mortgage is $180,000, but similar homes in your area are selling for $150,000. You can ask for $150,000 and can even possibly take lower bids.
The bank in turn will take a loss on the home, since the sale will not cover the full mortgage, but they will not be stuck with the home. As far as the homeowner, they just walk away after the sale, free and clear.
It is suggested that you hire a real estate agent that is knowledgeable on short sales and preferably has had some experience and success with them. This is in your best interest, since they know the ins and outs and the paperwork involved. Not to mention, since you are already walking away with no money and this option will not cost you anything, it really is a no-brainer.
That’s right, not only does the bank take a loss on the home, but they also negotiate and pay the realtor fees.
Now there are disadvantages, and it is not as wonderful as it sounds. Your credit will suffer, just not as much as a foreclosure. It is estimated that your credit can drop 80-100 points with a short sale. However, it will drop over 200 points with a foreclosure.
You will not be able to buy a new home for up to 2 years with a short sale. It would be 3 years with a foreclosure.
Obviously, with this in mind the best solution would be to catch up your mortgage and then to make on time payments. Since this option is not viable for many people, I would seriously look into a short sale before it is to late.
Just remember that the mortgage company is not the enemy and not to be afraid of them. They are willing to help; you may just have to talk to several people until you find someone to work with. Ask if they have a loss litigation department. These are the people that are ready to and able to help you.
Stay Positive, Stay Strong, and Good Luck!
Is the phone ringing off of the hook?
Do you feel like just giving up?
This is the scenario that is sweeping across America!
The banks made it way too easy over the last few years to get more money out of our homes. Property values kept rising, the real estate market was booming and every homeowner was sitting on a gold mine. This was sure to lead to disaster and it has.
Now with the market declining and home values taking a dramatic plunge, most homeowners are sitting on over inflated mortgages and under valued homes.
The unfortunate part is that a lot of people can no longer afford their mortgage. They are facing the possibility of foreclosure and losing their homes is a very real threat.
The good news is that the banks are realizing this and are now giving homeowners options. Otherwise, the banks will be sitting on all of these homes after foreclosure and will be stuck paying the property taxes and insurances until they sell. Factor in the foreclosure costs, attorney costs, and marketing this is not in their best interest.
One option that is being offered is called a short sale.
This is where the bank allows you to sell your home at or below the current market value in order to get a quick sale, regardless of what you owe. Let’s say that your mortgage is $180,000, but similar homes in your area are selling for $150,000. You can ask for $150,000 and can even possibly take lower bids.
The bank in turn will take a loss on the home, since the sale will not cover the full mortgage, but they will not be stuck with the home. As far as the homeowner, they just walk away after the sale, free and clear.
It is suggested that you hire a real estate agent that is knowledgeable on short sales and preferably has had some experience and success with them. This is in your best interest, since they know the ins and outs and the paperwork involved. Not to mention, since you are already walking away with no money and this option will not cost you anything, it really is a no-brainer.
That’s right, not only does the bank take a loss on the home, but they also negotiate and pay the realtor fees.
Now there are disadvantages, and it is not as wonderful as it sounds. Your credit will suffer, just not as much as a foreclosure. It is estimated that your credit can drop 80-100 points with a short sale. However, it will drop over 200 points with a foreclosure.
You will not be able to buy a new home for up to 2 years with a short sale. It would be 3 years with a foreclosure.
Obviously, with this in mind the best solution would be to catch up your mortgage and then to make on time payments. Since this option is not viable for many people, I would seriously look into a short sale before it is to late.
Just remember that the mortgage company is not the enemy and not to be afraid of them. They are willing to help; you may just have to talk to several people until you find someone to work with. Ask if they have a loss litigation department. These are the people that are ready to and able to help you.
Stay Positive, Stay Strong, and Good Luck!
Wednesday, May 5, 2010
Auto loans are great ideas
Auto loans are great ideas to purchase a car, but wise shopping is required with these products too. There are areas where you can be ripped off in auto loans where you need to be careful about. To avoid future shocks make a purchase after a study that has given you all the information to make the best of auto loans.
Credit scores are undeniable areas that can dominate the scene of auto loans. If you have a good credit score you need not in the most case fear the interest rates. But chances are very high to be charged with illegitimate interest rates if you have bad scores. Bad scores lead to high interest rates for auto loans or any other loans, but there can be nasty and unruly hikes with bad scores that can be avoided if little caution is employed.
To make sure you just borrow what you need from auto loans you can sell your old car and use that money in the purchase to contribute to a big down payment thereby reducing the need for less money as a loan, which mean less interest rate and less EMI!
Getting a used car which has at least a couple more years of manufacturer warranty can get you better loan amounts. Lenders do not lend more margins if the vehicle is very old or has exhausted the mileage or has undergone a road hit and repair previously. You need to scrutinize the insurance records of the car to make sure of the repairs that it has undergone.
You can get some better deals with auto loans in terms of less interest rates if you negotiate with the lender directly; however, if you are going to let the dealer shop the loan for you, he is going to add some commission price in to auto loans making it a bit high for you.
You need to be very sure to just accept the EMI that you can afford. If the lender is not agreeing you can get it from someone else; never feel pressurized to close an auto loans purchase fearing that someone else may not give you a loan. Be patient to find the best and affordable from the many auto loans lenders.
Compare auto loans by using the loan repayment calculator. Read reviews and get some expert help before finalizing the car rate and the auto loans interest rate!
Credit scores are undeniable areas that can dominate the scene of auto loans. If you have a good credit score you need not in the most case fear the interest rates. But chances are very high to be charged with illegitimate interest rates if you have bad scores. Bad scores lead to high interest rates for auto loans or any other loans, but there can be nasty and unruly hikes with bad scores that can be avoided if little caution is employed.
To make sure you just borrow what you need from auto loans you can sell your old car and use that money in the purchase to contribute to a big down payment thereby reducing the need for less money as a loan, which mean less interest rate and less EMI!
Getting a used car which has at least a couple more years of manufacturer warranty can get you better loan amounts. Lenders do not lend more margins if the vehicle is very old or has exhausted the mileage or has undergone a road hit and repair previously. You need to scrutinize the insurance records of the car to make sure of the repairs that it has undergone.
You can get some better deals with auto loans in terms of less interest rates if you negotiate with the lender directly; however, if you are going to let the dealer shop the loan for you, he is going to add some commission price in to auto loans making it a bit high for you.
You need to be very sure to just accept the EMI that you can afford. If the lender is not agreeing you can get it from someone else; never feel pressurized to close an auto loans purchase fearing that someone else may not give you a loan. Be patient to find the best and affordable from the many auto loans lenders.
Compare auto loans by using the loan repayment calculator. Read reviews and get some expert help before finalizing the car rate and the auto loans interest rate!
Tuesday, May 4, 2010
Assistance For Seniors In Nevada Seeking Long Term Care
The state of Nevada has several services and advocacy groups that help the elderly who are in need of long term care. Some of the groups are listed below:
Advocate for Elders : Just as the name implies, they are advocates and offer assistance to seniors 60 or older who are primarily homebound.
Community Home-Based Initiatives Program (CHIP ) offers non-medical services to seniors 65 and older to help them maintain independence in their own homes rather than being placed in a nursing home.
Elder Protective Services (EPS) provides services for seniors 60 and over who may be experiencing abuse, isolation, neglect or exploitation.
Homemaker Program: A community based service that believes in home care can help preserve or improve quality of life and reduce the need for unnecessary out of home care.
Long Term Ombudsman: Long Term Care Ombudsman Program was created to deal with issues and challenges that residents in long-term care facilities face. The Ombudsman ensures confidentiality of a resident's records and protects the in the event of a complaint.
Senior Ride Program: (Clark County only): Senior Ride program provides discounted taxi fares to seniors and people with disabilities living in Clark County .
State Health Insurance Assistance Program (SHIP): Provides counseling, information and assistance to Medicare beneficiaries statewide in Nevada. They offer one on one counseling and assistance for problems that seniors encounter with Medicaid supplemental health insurance and long term care options.
Tax Assistance/Rent Rebate Program: Seniors 62 and older may receive a rebate of a portion of their property taxes on their own home or by property taxes paid by renter though their rent.
Waiver for the Elderly in Adult Residential Care (WEARC): A program for seniors 65 and older that offers a less expensive alternative to supervised care in a residential setting.
Please view our recommended sources for insurance quotes and low rates. These are also great sources for information on how to lower your rates and save money every month on your insurance.
Advocate for Elders : Just as the name implies, they are advocates and offer assistance to seniors 60 or older who are primarily homebound.
Community Home-Based Initiatives Program (CHIP ) offers non-medical services to seniors 65 and older to help them maintain independence in their own homes rather than being placed in a nursing home.
Elder Protective Services (EPS) provides services for seniors 60 and over who may be experiencing abuse, isolation, neglect or exploitation.
Homemaker Program: A community based service that believes in home care can help preserve or improve quality of life and reduce the need for unnecessary out of home care.
Long Term Ombudsman: Long Term Care Ombudsman Program was created to deal with issues and challenges that residents in long-term care facilities face. The Ombudsman ensures confidentiality of a resident's records and protects the in the event of a complaint.
Senior Ride Program: (Clark County only): Senior Ride program provides discounted taxi fares to seniors and people with disabilities living in Clark County .
State Health Insurance Assistance Program (SHIP): Provides counseling, information and assistance to Medicare beneficiaries statewide in Nevada. They offer one on one counseling and assistance for problems that seniors encounter with Medicaid supplemental health insurance and long term care options.
Tax Assistance/Rent Rebate Program: Seniors 62 and older may receive a rebate of a portion of their property taxes on their own home or by property taxes paid by renter though their rent.
Waiver for the Elderly in Adult Residential Care (WEARC): A program for seniors 65 and older that offers a less expensive alternative to supervised care in a residential setting.
Please view our recommended sources for insurance quotes and low rates. These are also great sources for information on how to lower your rates and save money every month on your insurance.
Monday, May 3, 2010
Assets Haven Protects Financial Privacy In Post 911 Era
Ordinary Americans are discovering the vast asset protection, offshore and privacy opportunities previously only available to the extremely wealthy. With growing government surveillance in the post 9/11 era everyone should be concerned about financial privacy. Many financial websites now offer ground breaking information on offshore financial contacts, bankers' secrets and tricks , and banking tools and tips revealed for the first time to the public. The information is easy to use and up-to-date, and allows small investors to bypass middlemen and set up their own accounts offshore and in Switzerland. By setting up accounts themselves, investors can save thousands of dollars in consulting fees.
In today's post 9/11 world, financial privacy is being invaded at a rapid and alarming pace. The information contained in these websites can help preserve your assets, but only if you act on the instructions provided.
The information is available on many related topics, such as the names of the most important tax havens and offshore financial centers and their most common usage, and of course also the local contact names and addresses of banks, financial services, advisors, mail drops, accountants, company formation services, and other useful contacts. There is cutting-edge information data on virtually everything an investor could want to know about asset protection, anonymous and offshore banking, mail forwarding, international regulations and legal requirements for account holders, privacy, dual citizenships and second passports, tax avoidance, tax reduction and tax and asset haven related matters, and much more.
There are many reasons to use offshore accounts. Some people want to hide income from spouses or greedy, sponging relatives. Entrepreneurs, whose incomes vary widely from year to year, may wish to keep some of their assets overseas in order to avoid having them seized in case of bankruptcy. Tax resisters and libertarians, who wish to live free from the federal government, place their money in asset havens to avoid taxes. A fear of publicity may also lead the very rich to hide their assets from public view, to avoid being targeted by kidnappers, extortionists, and thieves. Newspapers and tabloids publish lists of the richest Americans, creating unwelcome publicity for individuals who wish to live private lives.
However, it is important to note that illegal activities can no longer be easily hidden by overseas banks. The Bank Secrecy Act (or BSA) requires financial institutions to assist government agencies to detect and prevent money laundering. Financial institutions are required to keep records of cash purchases of negotiables and file reports of cash transactions exceeding $10,000 (total daily amount), and to report suspicious activity that might be construed as money laundering, tax evasion, or other criminal activities.
In an effort to stop terrorists from importing funds to be used in terrorist acts within America, the 2001 USA Patriot Act created many new rules for U.S. Banks in an attempt to stop secret money transfers. A list of suspect banks has been created and American banks are no longer allowed to wire money to them. Also, all new customers opening an account at an American bank are asked if they are a U.S. citizens, and if not, if they are involved in politics abroad or connected to foreign political figure in any way. They must also provide their occupation and state if they plan to have foreign funds wired to their accounts.
In today's post 9/11 world, financial privacy is being invaded at a rapid and alarming pace. The information contained in these websites can help preserve your assets, but only if you act on the instructions provided.
The information is available on many related topics, such as the names of the most important tax havens and offshore financial centers and their most common usage, and of course also the local contact names and addresses of banks, financial services, advisors, mail drops, accountants, company formation services, and other useful contacts. There is cutting-edge information data on virtually everything an investor could want to know about asset protection, anonymous and offshore banking, mail forwarding, international regulations and legal requirements for account holders, privacy, dual citizenships and second passports, tax avoidance, tax reduction and tax and asset haven related matters, and much more.
There are many reasons to use offshore accounts. Some people want to hide income from spouses or greedy, sponging relatives. Entrepreneurs, whose incomes vary widely from year to year, may wish to keep some of their assets overseas in order to avoid having them seized in case of bankruptcy. Tax resisters and libertarians, who wish to live free from the federal government, place their money in asset havens to avoid taxes. A fear of publicity may also lead the very rich to hide their assets from public view, to avoid being targeted by kidnappers, extortionists, and thieves. Newspapers and tabloids publish lists of the richest Americans, creating unwelcome publicity for individuals who wish to live private lives.
However, it is important to note that illegal activities can no longer be easily hidden by overseas banks. The Bank Secrecy Act (or BSA) requires financial institutions to assist government agencies to detect and prevent money laundering. Financial institutions are required to keep records of cash purchases of negotiables and file reports of cash transactions exceeding $10,000 (total daily amount), and to report suspicious activity that might be construed as money laundering, tax evasion, or other criminal activities.
In an effort to stop terrorists from importing funds to be used in terrorist acts within America, the 2001 USA Patriot Act created many new rules for U.S. Banks in an attempt to stop secret money transfers. A list of suspect banks has been created and American banks are no longer allowed to wire money to them. Also, all new customers opening an account at an American bank are asked if they are a U.S. citizens, and if not, if they are involved in politics abroad or connected to foreign political figure in any way. They must also provide their occupation and state if they plan to have foreign funds wired to their accounts.
Sunday, May 2, 2010
Asset Protection - Who Needs to Protect Their Assets?
America has often been referred to as a litigious society, meaning that we are prone to engaging in lawsuits for even the most frivolous of offenses. Ordinary people have been sued for anything and everything including: having wireless internet in their homes, not raking their front walkways, coughing in public, and giving bad reviews of former employees. Thus, no matter who you are, it is important to stay vigilant about protecting your assets.
You may not be able to protect yourself from falling victim to lawsuits. However, you should take every measure possible to ensure that a plaintiff cannot deplete your estate, should the court rule in his or her favor. After all, if your estate is vulnerable, you risk losing not only all of your money, but the entire estate intended for your children and other desired beneficiaries.
We have compiled a short list and corresponding explanation of the four most basic methods that will help you protect your assets from lawsuits.
The Children’s Trust
The Children’s Trust is set up to directly benefit your child. You will not have access to funds once they are placed into the Children’s Trust. However, you will ensure that your children will have sufficient monies for use on things such as an education or first home.
Each spouse may put a maximum of $12,000 per year into the Children’s Trust. If you and your spouse both put money into the Trust, you can put a combined total of $24,000 per year into it.
If your child is over the age of 14, you shift income tax on the gifted assets when you put money into the Trust. As stated before, once you put money into the Trust, you cannot retrieve it. You also cannot transfer the money during a lawsuit, when a claim against you is pending. Thus, it is smart to periodically invest money into your Children’s Trust so that your children will have sufficient support in the event that your estate is depleted.
The Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust, otherwise known as an ILIT, is a smart move for individuals even if they are not faced with litigation. An ILIT allows you to pass your life insurance policy on to your heirs tax-free upon your death. If you did not have an ILIT, then the death benefit would be subject to estate taxation.
Here’s how an ILIT works: a trustee that you name manages your ILIT. The trustee purchases a life insurance policy on you. You provide the funds for him to purchase the policy through tax-free gifts.
Unlike a direct beneficiary designation, you can control how the funds from an ILIT are spent. You can designate a portion of funds to education, individuals, and other causes to ensure that your hard-earned money is spent how you want.
Family Limited Partnership
A Family Limited Partnership is like a limited partnership for business assets in that you and your family members will have control over a mutual pool of assets.
There are two different types of Family Limited Partnership interests: General Partnership interest and Limited Partnership interests. The General Partnership interest allows you to have control over the funds and how they are used. The Limited Partnership interest keeps your involvement at a minimum.
As with a business partnership, each partner (or family member) has access to a specified amount of funds when the assets are distributed.
Foreign Asset Protection Trust
A Foreign Asset Protection Trust is like having a foreign bank account because your transactions will take place overseas. Your Trust will be out of the hands of U.S. jurisdiction. In other words, the U.S. courts cannot access your money in the event that you are sued and found responsible for a portion of the damages awarded to the plaintiff.
With a little help and planning, you can protect yourself and your family from predatory lawsuits against you. The above methods not only save you from losing your entire estate, but they are also strategic ways to set aside funds for your beneficiaries.
It is easy to set up your Trusts wrong. Penalties for setting up your Trusts and bank accounts wrong range from your beneficiaries losing control of your assets to you being prosecuted for not recording your assets properly on your taxes. It is important that you speak with a qualified attorney when setting up your Trusts and Limited Partnership interests so that you never run into any unforeseen problems with your estate plan.
You may not be able to protect yourself from falling victim to lawsuits. However, you should take every measure possible to ensure that a plaintiff cannot deplete your estate, should the court rule in his or her favor. After all, if your estate is vulnerable, you risk losing not only all of your money, but the entire estate intended for your children and other desired beneficiaries.
We have compiled a short list and corresponding explanation of the four most basic methods that will help you protect your assets from lawsuits.
The Children’s Trust
The Children’s Trust is set up to directly benefit your child. You will not have access to funds once they are placed into the Children’s Trust. However, you will ensure that your children will have sufficient monies for use on things such as an education or first home.
Each spouse may put a maximum of $12,000 per year into the Children’s Trust. If you and your spouse both put money into the Trust, you can put a combined total of $24,000 per year into it.
If your child is over the age of 14, you shift income tax on the gifted assets when you put money into the Trust. As stated before, once you put money into the Trust, you cannot retrieve it. You also cannot transfer the money during a lawsuit, when a claim against you is pending. Thus, it is smart to periodically invest money into your Children’s Trust so that your children will have sufficient support in the event that your estate is depleted.
The Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust, otherwise known as an ILIT, is a smart move for individuals even if they are not faced with litigation. An ILIT allows you to pass your life insurance policy on to your heirs tax-free upon your death. If you did not have an ILIT, then the death benefit would be subject to estate taxation.
Here’s how an ILIT works: a trustee that you name manages your ILIT. The trustee purchases a life insurance policy on you. You provide the funds for him to purchase the policy through tax-free gifts.
Unlike a direct beneficiary designation, you can control how the funds from an ILIT are spent. You can designate a portion of funds to education, individuals, and other causes to ensure that your hard-earned money is spent how you want.
Family Limited Partnership
A Family Limited Partnership is like a limited partnership for business assets in that you and your family members will have control over a mutual pool of assets.
There are two different types of Family Limited Partnership interests: General Partnership interest and Limited Partnership interests. The General Partnership interest allows you to have control over the funds and how they are used. The Limited Partnership interest keeps your involvement at a minimum.
As with a business partnership, each partner (or family member) has access to a specified amount of funds when the assets are distributed.
Foreign Asset Protection Trust
A Foreign Asset Protection Trust is like having a foreign bank account because your transactions will take place overseas. Your Trust will be out of the hands of U.S. jurisdiction. In other words, the U.S. courts cannot access your money in the event that you are sued and found responsible for a portion of the damages awarded to the plaintiff.
With a little help and planning, you can protect yourself and your family from predatory lawsuits against you. The above methods not only save you from losing your entire estate, but they are also strategic ways to set aside funds for your beneficiaries.
It is easy to set up your Trusts wrong. Penalties for setting up your Trusts and bank accounts wrong range from your beneficiaries losing control of your assets to you being prosecuted for not recording your assets properly on your taxes. It is important that you speak with a qualified attorney when setting up your Trusts and Limited Partnership interests so that you never run into any unforeseen problems with your estate plan.
Subscribe to:
Posts (Atom)