As an attorney I may now be focused on real estate and estate planning, but in college I majored in environmental studies and was originally planning to go into environmental law, so the tragic oil leak in the gulf hits me on a very personal level.  Every day I see new articles, videos and news reports further chronicling the heartbreaking situation taking place just off our shores. These reports have at times both saddened and angered me, but most of all they have me wondering what can be done to help.

When you own real estate—whether it’s your home, a rental property, or a family vacation retreat—you know that a huge part of keeping up the value of the property is keeping the property clean, safe, attractive and maintained.  Our global real estate is no different.  The environment may not be something we can put in our last will and testament, but in a very real way it belongs to us, and we do pass it down to the next generation; we should protect it as vehemently as we would protect our other assets, because in many ways our environment is our greatest asset.

BP will have to take responsibility for this particular tragedy, but the truth is that the fault lies with all of us. If you are as concerned as I am about the recent oil spill, and would like to help, click here to take action.  To find out more about how do to your part—both simple and great—to preserve our environment every day, follow the links below.  And if you’re wondering how helping the environment may end up helping the value of your property, call our office!

Information to Help You Go Green Every Day:

National Resources Defense Council

WorldWatch Institute

MSN Real Estate: 10 Ways to Green Your Home

Popularity: 31% [?]

What is a QPRT?

Chances are you’ve never heard of a QPRT (Qualified Personal Residence Trust.)  QPRTs are not as familiar as the Revocable Living Trusts (RLT) used by estate planners, and they’re not as prominent as the Irrevocable Life Insurance Trusts (ILIT) recommended by many financial planners; but for the right family and situation, the Qualified Personal Residence Trust can be the perfect solution to your concerns about how to transfer ownership of your home. Think about these questions:

• Would you like to protect your personal residence or vacation home from creditors and lawsuits?
• Would you like to pass your property to your children with as little estate tax or gift tax as possible?
• Would you like to continue to live in your home, but know that it will pass smoothly and tax-free to your children when you no longer need it?

A QPRT is one tool that can help you accomplish all of these goals by taking the property out of your taxable estate and putting it “in trust” for a specified number of years before ownership is transferred to the beneficiaries. During the specified number of years the grantors retain the right to live in the home and continue to take responsibility for maintenance and upkeep; however, at the end of the term the value of the “gift” to the beneficiaries is not based on the current market value of the property, but on the much lower actuarial value of the property as determined by the IRS actuarial tables.

In this way, creating a Qualified Personal Residence Trust is a useful way to give property to your children without incurring high estate taxes or gift taxes—and it allows you to continue living in your residence until a time of your choosing.

Setting Up A QPRT

Before you set up a QPRT you’ll need to decide 3 things:

1. Who will serve as the initial trustee(s)?—This will usually be the property owners—the people who will continue to use the property until the end of the term.
2. How long will you want to continue to live in the home?—This should be a length of time that is useful to the grantors, but not so long that the grantors are likely to pass away before the end of the term.  If the grantor dies before the end of the term the entire value of the property will end up being included in the taxable estate.
3. Who will be the ultimate beneficiaries of the trust?—This is most often the grantor’s children. But have caution when choosing your beneficiaries, once the term is over the property belongs to the beneficiaries, who may or may not choose to allow the grantors to continue their residence in return for fair market rent.

Once you’ve answered the above questions you’ll want to talk to an experienced attorney who can help you safely set up your QPRT.

What are the benefits of a QPRT?

The main benefit of a Qualified Personal Residence Trust is that it allows you to give a gift of significant value to your heirs without incurring heavy estate or gift taxes.  A QPRT removes a valuable piece of property from your taxable estate while allowing you to continue to enjoy the benefit of living in it.  Mom and dad have the security of knowing they won’t be kicked out of their home, while their children rest easy knowing that the inheritance of the family property is a foregone conclusion.  Additionally, during the time that it is in trust, the property is safe from lawsuits or creditors because it is not yet officially owned by either the grantor or the beneficiaries.

Are there any drawbacks to creating a QPRT?

A QPRT will not be the right solution for everyone. First of all, a QPRT will not be of much benefit if your property is still mortgaged.  Secondly, if the grantor dies before the term of the trust is up the property goes right back into the taxable estate and any benefits will be lost.  Thirdly, due to the exacting nature of the IRS rules and regulations, the creation of a QPRT requires the help of a knowledgeable and experienced attorney or tax planner—this is not a trust to attempt on your own!

Popularity: 23% [?]

If there is one way to be sure money stays in the family and grows over time it is through real estate. Despite the year-to-year ups and downs of the real estate market, the value of real property continues to grow over the long term.

Real estate is often considered a comparatively easy way to maintain and grow wealth because it doesn’t require the kind of daily attention—or stress!—that a business demands. Depending on the type of property, real estate typically requires duties that are annual or month-to-month, such as maintaining the physical structures, paying property taxes, making insurance payments, getting updates from property managers, and the like.

What real estate investors might be slow to realize is that property ownership carries with it significant liability risks. Unless the precautionary measures are taken, one small misstep can result in the loss of all your real estate holdings. Imagine it, one person slips and falls in front of one of your properties, and suddenly ALL of your holdings are at risk.

Preventing this kind of mess is not as difficult as you might think—for example, putting each of your properties in its own separate legal entity is one technique that can be used to protect all of your properties (and yourself) from lawsuits. Our firm can help you with this and other asset protection techniques.

We know how important it is to keep your family and your finances safe, and we are dedicated to helping you achieve that security. Call our office and let us tell you how we can put our expertise to use for your benefit.

Popularity: 23% [?]

Do you own a home?  If so, do you know what is going to happen to that home when you die?

Perhaps you want your spouse to have the house when you die.  Or maybe you plan to leave it to your kids. The question is: how is that transfer of ownership going to take place?

If you own your home jointly with your spouse you are probably safe in assuming that title will automatically pass to that spouse when you die; no need for probate, no need to re-title, a joint tenancy transition is generally very smooth. Unfortunately, the real problems with joint tenancy appear when the surviving spouse passes away and your children or other heirs have to contend with the lengthy and expensive probate process. Not only this, but your estate will be subject to estate tax, your heirs may be forced to sell in a down market—or be prevented from selling in an up market—there are simply no guarantees without an effective estate plan.

The fact is—if you own a home, you need a trust.

Putting your home into a living trust essentially keeps it out of your probate estate.  A living trust is an entity that continues even after the grantor passes away, which means that the “owner” of the asset still exists, and probate is thereby avoided. When you pass away ownership is transferred smoothly and immediately to the beneficiaries of the trust. In this way, you can leave your home to your spouse and then to your children without having to go through the probate process.

Another benefit of living trusts is their flexibility.  Whether you want to transfer ownership to a spouse, hold the property for a certain number of years while your children mature, sell and divide the proceeds among your grandchildren, or leave it to a charitable organization, a trust can help you do it.

If you have rental or investment property you may want to consider an LLC or FLP in combination with a living trust as a way to own the property, avoid probate, and easily transfer ownership when you die. For more information about the best way to hold your property, contact my office today.



Popularity: 26% [?]

“No one wants to think about dying. But refusing to look at the documents that will determine where your money goes when you pass away will not make you live longer. It will just make sorting through everything more difficult for your heirs.”

So begins Paul Sullivan’s recent article in the New York Times, and we must admit, we couldn’t have said it better ourselves. Most people simply don’t want to deal with what they imagine will be a mountain of decisions and paperwork to create an estate plan, and they especially don’t want to think about their own death. It’s not that they truly believe avoiding it will help them live forever, it’s just that they know they aren’t going to die tomorrow or next week, so estate planning really isn’t a high priority… yet.

It’s time now for some straight talk. Any one of us—including you—could die tomorrow. Or next week. You could be in a car accident, your plane could crash, or you could simply be in the wrong place at the wrong time. If and when that occurs, what will happen to your spouse and children?

There are two answers to that question:

1. If you have no planning in place your assets will likely go through a lengthy and expensive probate process, losing some value in the process, eventually to be divided amongst your closest living relatives. If you are married your spouse may have to fight your parents about your wishes regarding burial and memorial. And if your spouse dies with you in that terrible car crash your children will be raised by whichever faintly qualified relative steps up to the plate—your parents? Your in-laws? Your 23 year old sister? And if nobody steps up…
2. If you DO have planning in place your assets will transfer quickly and smoothly to the beneficiaries you’ve named, in the amounts you have specified. If you have a spouse that person will be taken care of, while perhaps some of your estate is set aside for your children’s education, or to help them buy a home. Your children will receive their inheritance at a time of your choosing; when you feel they will be ready for the responsibility. Your parents and your spouse will know exactly how to arrange your burial and memorial, and will feel a sense of peace and closure knowing that they are following your wishes.

These are hard truths, and no one denies that they are difficult and uncomfortable to consider, but the heartache that can result from neglecting to think about these things is even more painful to imagine.

Popularity: 19% [?]