Session 14

Question 1

Tenancy by the Entirety

Answer 1

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

Question 2

Sole Proprietorship Risk

Answer 2

could lose everything

Question 3

General Partnership

Answer 3

an unincorporated association consisting of 2 or more…P/L flow directly through to the investors for tax purpose

Question 4

Limited Partnership

Answer 4

are assigned to general partners, but only have LIMITED Liability

Question 5

Limited Liability Company (LLC)

Answer 5

is a business structure that has LIMTED liab and tax advantage…MEMBERS not shareholders

Question 6

Max members of an LLC?

Answer 6

Unlimited

Question 7

S Corps

Answer 7

taxed like partnership and offer investors limted Liab…P/L pass through to shareholders

Question 8

Shareholder basis for S Corp

Answer 8

money invested or money lent

Question 9

Max Investors for S corps?

Answer 9

100

Question 10

C Corp

Answer 10

is a business structure that separates the business from the owners…double taxed

Question 11

Suitability for C Corp?

Answer 11

when the business is expected to raise a large amount of money

Question 12

Who are the three parties in a trust?

Answer 12

1- Settlor
2- Trustee
3- Beneficiary

Question 13

Settlor

Answer 13

is the a party in the trust that is giving the assets away

Question 14

Trustee

Answer 14

is the party that follows the trust will…they are the fiduciary and is obliged to perform in the interest of the beneficiary

Question 15

Beneficiary

Answer 15

is the party that will benefit the property in the trust

Question 16

Reminderman

Answer 16

is the a trust has run its course and all expense and distributions have been made, the person whose receives the remaining balance

Question 17

Simple Trust

Answer 17

all income earned on assets are placed in the trust and all must be distributed annually…Trustee has no say in distributions

Question 18

Complex Trust

Answer 18

is permitted deductions for distributions of net income or principal (Including Capital Gains for dis unless reinvested) trustee has some say

Question 19

Living Trust (Inter Vivo Trust)

Answer 19

is established during the maker’s lifetime

Question 20

Testamentary Trust

Answer 20

the settlor retains control over assets until death and @ death assets will be placed in trust (DOESNT AVIOD PROBATE)

Question 21

Revocable Trust

Answer 21

must be a living trust because only the living grantor has the power to change or revoke the trust

Question 22

Irrevocable Trust

Answer 22

settlor must give up ALL ownership in the property transferred

Question 23

Exceptions for the Irrevocable Trust that must not allow an reduction of estate taxes: (4)

Answer 23

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

Question 24

Grantor Retained Annuity Trust (GRATs)

Answer 24

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

Question 25

Estate Account

Answer 25

is directed by directly by fiduciary on behalf of the beneficiary or beneficiaries

Question 26

Qualified Domestic Relations Orders (QDROs)

Answer 26

assets held in a qualified retirement plans are exempted from the 10% penalty (this is what happens in terms of a divorce)