Session 14 Flashcards
Tenancy by the Entirety
only giving to married couples and difference is the consent of the other tenant is required before the other tenant can sell or give away his inter in the property
Sole Proprietorship Risk
could lose everything
General Partnership
an unincorporated association consisting of 2 or more…P/L flow directly through to the investors for tax purpose
Limited Partnership
are assigned to general partners, but only have LIMITED Liability
Limited Liability Company (LLC)
is a business structure that has LIMTED liab and tax advantage…MEMBERS not shareholders
Max members of an LLC?
Unlimited
S Corps
taxed like partnership and offer investors limted Liab…P/L pass through to shareholders
Shareholder basis for S Corp
money invested or money lent
Max Investors for S corps?
100
C Corp
is a business structure that separates the business from the owners…double taxed
Suitability for C Corp?
when the business is expected to raise a large amount of money
Who are the three parties in a trust?
1- Settlor
2- Trustee
3- Beneficiary
Settlor
is the a party in the trust that is giving the assets away
Trustee
is the party that follows the trust will…they are the fiduciary and is obliged to perform in the interest of the beneficiary
Beneficiary
is the party that will benefit the property in the trust
Reminderman
is the a trust has run its course and all expense and distributions have been made, the person whose receives the remaining balance
Simple Trust
all income earned on assets are placed in the trust and all must be distributed annually…Trustee has no say in distributions
Complex Trust
is permitted deductions for distributions of net income or principal (Including Capital Gains for dis unless reinvested) trustee has some say
Living Trust (Inter Vivo Trust)
is established during the maker’s lifetime
Testamentary Trust
the settlor retains control over assets until death and @ death assets will be placed in trust (DOESNT AVIOD PROBATE)
Revocable Trust
must be a living trust because only the living grantor has the power to change or revoke the trust
Irrevocable Trust
settlor must give up ALL ownership in the property transferred
Exceptions for the Irrevocable Trust that must not allow an reduction of estate taxes: (4)
1- grantor retains a life interest or life income
2- If the grantors of the trust receives more than 5% of income stream
3- grantors has power to pick who the property will go to
4- Grantors places life insurance policies in the trust and make loans from the cash value
Grantor Retained Annuity Trust (GRATs)
1- The Grantor transfer the prop into a trust that provided the grantor receives an annuity payment yearly until the end of term reminding balance to bene
2- If the assets are more than the IRS discount rate excess is taxed free
3- if the grantor dies the remaining assets are considered part o the decreased estate
4- Grantor has a retained interest
Estate Account
is directed by directly by fiduciary on behalf of the beneficiary or beneficiaries
Qualified Domestic Relations Orders (QDROs)
assets held in a qualified retirement plans are exempted from the 10% penalty (this is what happens in terms of a divorce)
