5 WAYS TO MAXIMIZE YOUR ESTATE THIS INDEPENDENCE DAY
Independence Day is here. What will you do to make the most of your freedom and American estate this year?
While we are warming up the BBQ grills, breaking out the flags, and making sure we’ll have a great view for the fireworks on the 4th of July, it’s worth taking a few minutes to think on what this holiday is really about, and how we can build more independence into our lives, and future estates.
Here are five things we can do this holiday week as we enjoy our freedom and the great place we get to live in…
1. Invest in Property
The great American dream isn’t just about buying and mortgaging a grand luxury home. It’s about the freedom to own our own estates, and invest in real estate. Beyond our residences that includes income producing property which can provide ongoing passive income for retirement, and even for the next generation. It’s a freedom we should definitely be flexing more often.
2. Reduce Taxes
The original battle for independence was a lot about protesting high taxes. Obviously, we are now being hit with a myriad of additional taxes, and 10 to 20 times more in taxes out of our incomes than back in the 1700s. Fortunately, we can find ways to generate income and invest for gain, while deferring or even eliminating some of these taxes. 1031 exchanges and self-directed retirement account investing are great ways to achieve this.
3. Update Your Will
For many, the freedom to earn, invest, and prosper is not just about personal gain. It is also about building an estate which can last for generations. Of course, that is only going to be successful, if there is a solid succession plan in place, with the right legal framework, well in advance. It might be worth taking another look at your will this weekend and seeing where you may need to make some updates.
4. Talk to an Expert about Trusts
Trusts can take on some of the functions of wills, while providing some potential tax benefits as well. They can also go further in helping to prepare for illness and injury, and protecting an estate during these times. If you don’t have one, or haven’t talked to a pro recently to get up to date on the latest options, make that a priority.
5. Make Memories
Some of the greatest wealth we can accumulate and give is not things at all. It’s not even family heirlooms. It is memories. So, have fun with your 4th of July celebrations this year. Make the time to make great memories, and document them too.
THOUGHTS ON CREATING A LEGACY THAT LASTS
Father’s Day 2017 is almost here. What key questions should we all be pondering this year, to help create valuable legacies that last for more than a generation?
Despite the headlines that declare many major American retailers are struggling, the National Retail Federation predicts that spending on Father’s Day gifts will hit a 15 year high in 2017, with around $14.3B being spent. A larger part of this spending this year is expected to be spent on experiences rather than material gifts, according to Market Watch.
Here are some questions we all might want to think about as June 18th comes around…
Father’s Day 2017 Gift Ideas
Still need gift ideas?
Whether you are a father, child, or just know some dads; there are lots of things to think about this Father’s Day. Just don’t forget to spend some quality time with someone special. Bookmark this page for whenever you need a gift idea for an important Father!
HOW TO CHOOSE AN AGENT TO HANDLE YOUR ESTATE SALE
How do you select a great real estate agent to help with your estate?
It still seems inevitable that at some point we’ll all face the point when we know we have to make serious end of life plans. If we are fortunate, we’ve tackled the details and decisions early. That’s ahead of becoming incapacitated or passing on, and while we still have our minds sharp. One of the big factors here is handling the sale of the estate. Specifically, and perhaps most importantly that means any real estate, including the family home. So, how do you choose a professional to handle this vitally important part of your finances and succession plan?
You may have an attorney and trust administrator, but you also want the power to select the specific real estate agent who will handle the sale of your property. Much of your ability to pass on what you want, to who you want, will all come down to this. This is true whether all you’ve got is a $100,000 teardown Upstate, or a $100M condo in Manhattan. So, how do you pick?
Most important of all is selecting a Realtor who will be considerate and put your interests first. This doesn’t always mean just telling you what you want to hear. Yet, you must have someone you can trust, as you might not be there to make the final decisions. With this in mind it is clearly far better to make this call in advance than going with the salesman going room to room at the hospice looking to drum up business. Build a relationship in advance.
More important than years with a license, or how many letters after their name, or the glossy materials they can present, is if they have hustle. There are too many overly comfortable and lazy agents who don’t really put in the effort for their clients. You need someone who is going to pick up the phone and make things happen fast, not just stick an ad on the internet and hope for the best.
Experience is important. Yet, what is most important here is the experience of understanding how to make a deal work. If someone calls with a lower offer, do they just let it go to waste? If a potential buyer calls, do they wait days before getting back in touch? Or is this an active problem solver who will maximize every opportunity to sell your home and other real estate in the optimal amount of time, with the best net proceeds?
Is this agent capable of delivering full service? In an estate situation you may have an elderly spouse left behind, or a minor, who needs help handling the belongings in the home, and managing the logistics of moving. Can they help with that? Can they find a surviving spouse a great new place which fits their needs better? Help with donations, securing moving services, and shipping heirlooms to relatives? Will they do a good job protecting your personal belongings when the home is being shown to buyers? Will they help fend off the vultures trying to take advantage of family members left behind? Do they also offer property management services for any investment properties you own and want held in a trust? Is their firm big enough to seamlessly help with real estate you may have out of state, or even abroad?
Who will you choose to be your ally in these most important times?
5 OF THE BEST WAYS TO SHOW YOUR LOVE THIS VALENTINE’S DAY
Valentine’s Day is coming up fast. What are some of the best ways you can show how much you love someone this year?
Jewelry, flowers, cards, chocolates, clothes, and even romantic weekend getaways are expected. Though they can be a little tacky, and are rarely original or long lasting. What may be some more meaningful ways to show you care this year?
Whether it is a life partner, child, sibling, or a parent you are most concerned with this year, incorporating them into your will can be one of the best ways to show your love. If you don’t have one, or at least an updated one, this is one of the acts which will really demonstrate your devotion. It is a tool that can ensure they are taken care of well after you can’t be there.
Wills are great are covering something, but not everything. A trust can handle a lot of the other details. It can also be a vehicle that can be used to grow more wealth today. Perhaps it can be a pet project you can work on together.
Give the Gift of Real Estate
It’s hard to beat real estate as a Valentine’s Day gift. It could be a new home, vacation condo, romantic cottage getaway, or an income producing investment property. Put a giant bow on it.
Sometimes we are a little too practical. Sometimes are loved ones are too practical and frugal. Sometimes we miss what is really most important. A property makeover is a great way to spoil someone. It could be bringing in a designer to remodel your home, giving them a budget to go shopping, or even funding a new office or office renovation for someone you love.
There is no substitute for spending quality time with others. Time is the most scarce and precious asset we have. There is a time to take a relaxing walk in the park, to share dinner together, and just kick back at home. However, consider making this time even more valuable this year by talking about your future, educating them on what you know about investing, and make plans together.
WILLS VS. TRUSTS VS. POAS
How do these estate planning and protection tools work to help? How do they differ?
Legal documents are among the most important tools for effective estate planning. Without the right ones in place efforts to build and maintain wealth, and to pass along assets and income to heirs can be greatly hampered. So, what are the bare minimum vehicles and structures which individuals and families need in order to properly and effectively preserve and growth wealth, and optimize succession plans?
Wills are one of the most basic, core documents everyone should have. Without it you can almost guarantee that passing along assets is going to be more expensive, less reliable, and more emotionally stressful, than if you have one done well.
A Last Will and Testament dictates the wishes of the benefactor in how they wish their estate, real estate and other property and assets to be distributed after they pass on. This can be very simple depending on how much you have, and the complexity of how assets are held. What’s important is that you have one made as soon as possible. Adjustments can always be made over time.
Note that it is important to consult an attorney to understand the limitations of what you can do in a will according to local laws, and what will ensure it is legal and enforceable.
There are many types of trusts and variations of them. A trust is a highly desirable addition to a will for many reasons. A will alone can mean public and outside meddling in an estate, and involving courts and judges. There can be high costs of third party control of assets and conservatorship. A properly structured trust can help avoid this, avoid the lengthy probate process which can leave heirs in the lurch, and protect flexibility and confidentiality.
Note that having good corporate and legal business structures for holding other assets, ventures, and real estate can also be important for streamlined succession, reducing taxes, and ensuring efficiency and optimizing what is transferred.
Durable Powers of Attorney
Many of the above solutions work for when you pass away. We all will one day. However, it is far more common for people to be injured, incapacitated, or declared incompetent. This is often precursor to passing away, but may be temporary or last years. Without clear Powers of Attorney, assets, businesses, and other personal property, and medical decisions can be mismanaged, wind up in the courts, be made difficult in being made public, and can generally cause a lot of stress and unnecessary loss. With as complicated as our judicial and healthcare system is today, it is vital to have clean and clear lines of authority for decision making in these situations. This should not only cover the head of the household, but other family members who may hold title to assets, businesses, and bank accounts as well.
Make sure you are well covered by all of these tools as soon as possible.
7 THINGS TO LOOK FOR IN HIRING AN ESTATE ATTORNEY
What should you be looking for when hiring an attorney for your estate?
Securing a great attorney to craft wills and trusts, and to help with your estate planning is very important and necessary. However, who you choose can make a significant difference in how well your intentions and interests are protected and executed on. So, what do you look for?
Law is a lucrative industry, so it’s no wonder all types of people want to be in it. Always first make sure your short-list of lawyers is legally able to provide the services they are promoting. The American Bar Association and New York State Bar Association are two resources for helping with that.
Look for a specialist in what you need help with. There are all types of attorneys. Criminal defense attorneys, injury law attorneys, real estate attorneys, tax lawyers, corporate law firms, and more. There are some which try to cover broad menus of services to get the most clients. Others specialize in certain areas like family law, asset protection, etc. Get an expert.
3. Trusted & Proficient
It’s so easy to throw up a website and get a business phone number or fancy mailing address these days. So, look for referrals and online reviews, or complaints when evaluating your options.
Some law firms are clearly much stronger than others. You want one which will be around to keep helping your family when you need it most. While some lawyers cost more than others, you might be surprised at what just dropping their name, or a letter head with their name on it can do compared to cheap options. Get the best legal assistance you can afford.
You want options. Like accountants on taxes and various corporate entity selections, bankers on mortgages, and even doctors on medical treatment; lawyers can have their favorite strategies and tools too. But, you should be presented all your options.
6. Shared Values
Some clients may only care about securing the most effective legal representation. That’s understandable. However, you’ll find everything flows better if you find an attorney who shares your values as well.
7. Who You Will Actually Deal With
One of the frustrating quirks of today’s legal industry is that you often don’t end up working with the face on the billboard. Too often clients are signed up and shuffled over to a brand new recruit. You want to know exactly who will be helping you and working on your cases.
If you are looking for an attorney in NYC check this page for some of those we recommend.
6 WAYS TO DIVERSIFY YOUR REAL ESTATE PORTFOLIO
We all know real estate appears to be one of the best investment sectors right now. We all know that diversifying our portfolios is important. So, what options are available for enjoying the safety and performance benefits of diversification within the real estate asset class?
In this previous post we discussed ways to hold real estate for heirs with less risk and hassle. We also covered some of the types of properties you may want in your real estate portfolio for building a legacy here. However, there are a variety of ways to invest in property, and having a balance certainly offers some protections and advantages. This is especially true when it comes to thinking about estate and legacy planning. Let’s take a look at six of them…
Publicly traded REITs have been popular for those wanting the ease of stock market investing. They became more popular as some big funds swooped down on the US property market to gobble up large amounts of distressed homes to be converted into rentals. In spite of rising interest rates which can hamper REITs, there may be some value to be found here. Just be keenly aware that these types of REITs do not offer diversification from your stock portfolio and the high volatility they can be subject to.
Real Estate Businesses
Buying more real estate related public stock ought to be approached extremely cautiously right now. This is especially true given the giant Wells Fargo scandal, and its broad acceptance as the status quo. However, the recent PATH Act brought in more tax breaks and protections for those that invest in certain small company stocks. These can be highly risky, but may offer the most growth potential.
Prime income producing properties are probably the most common type of investment held by families looking to grow their estates and pass on a strong legacy. Everyone can benefit from having a portfolio of these income producing assets. This may include single family homes or condos, commercial properties, or mixed use properties.
Private lending has been growing in popularity and is likely to continue to gain traction for some years. This is an alternative to direct investment in bricks and mortar. It means providing your capital to other investors who do most of the heavy lifting in exchange for an attractive return, and often steady passive income stream. With Trump hoping to undo some tight restrictions around this sector more opportunities may emerge for private investors in the months ahead.
Note investing is essentially another form of private lending. However, instead of financing new loans sophisticated investors purchase existing real estate notes and mortgages, often at a sizable discount.
One common theme we have seen throughout American history and its most loved wealthy families and personalities is the investment in developing and constructing new buildings. For some it has been lavish hotels or condominium buildings. For others it has been libraries and parks. What will you build and add to the landscape as a legacy project?
ESSENTIAL MOVES FOR PROTECTING YOUR ESTATE
Essential Moves for Protecting Your Estate
Building up a business, portfolio, and estate to pass on is only part of the deal. Ask any experienced investor or executive and they’ll tell you that it is far easier to make a million, than to keep a million. What can and should you and your family be doing to preserve your wealth, assets, and gains?
Attorneys often get a bad rap, but you don’t want to be caught without a good one in your corner. Whether it is battling over a real estate deal, getting a partner to perform, of fending off a malicious lawsuit, you want the best defense you can afford. Rather than waiting until there is an issue to go hunt for help, it pays to have a strong law firm on retainer in advance. In America’s highly litigious environment it is not a matter of if you’ll need one, but when. Often just having a well-respected and feared attorney on call can deflect and deter many attempts to come after a share of your finances.
Legal Entities & Paperwork
While it may sound ironic; a piece of paper is often your best protection for your physical assets, real estate investments, and finances. Aside from the will, there are LLCs, trusts, and other entities and legal structures which can provide privacy and a shelter. Get them, use them well, and make sure you make no accounting blunders which could allow predatory law firms to ‘pierce the corporate veil’.
Unfortunately, one of the biggest threats that business owners, real estate investors, NYC landlords and wealthy families is frivolous and opportunistic lawsuits. It’s the American way. Thousands and thousands of suits are filed just to take advantage of others. We can’t change that mindset overnight. We can regularly use out right to vote and change the law. We can change the loop holes, make sure it isn’t too easy to victimize the innocent, and make it less attractive for law firms to hop from one trend to the next and seduce the masses into being so fast to sue. Use your right to vote at every level to protect yourself and your heirs.
Watch Your Taxes
If you aren’t careful taxes will eat it all up. There are estate taxes, capital gains taxes, taxes on investment income, property taxes, self-employment taxes, sales taxes, and more. Voting smart can help here too. So, can good accounting and selecting a great CPA who won’t leave you exposed to audits or the wrong type of attention from the IRS. Don’t forget to leverage legal tax shelters either. This includes vehicles such as self-directed retirement accounts and 1031 exchanges.
TYPES OF REAL ESTATE INVESTMENT FOR BUILDING A LEGACY
Which types of real estate investment may be best for building a legacy estate?
Real estate investment can be one of the best tools for preserving, growing, and optimizing an estate, and creating a legacy that will go on giving during your lifetime and beyond.
The exact mix of investments, and structures which are best for your individual portfolio are certainly a personal decision. They will depend on what you are starting with, your anticipated timeline, and your age and health, and that of your heirs. However, the following are some staple selections which can be a great fit for many estate plans.
The Family Home
The most common type of property in most estates is the family home. The associated tax breaks and legal shelters this asset offers is one of the reasons that sophisticated individuals often invest so heavily in their primary residences. The one caveat here is considering what heirs will really want to do with that property after you pass, and perhaps your long term housing needs. Should it be kept, or will it become a burden? When is the optimal time to resize your residence?
Second Homes & Vacation Homes
These types of properties can often offer a hybrid combination of the benefits of pure investment real estate and personal residences. They can also offer geographic diversification for your portfolio, and often an equity building head start on a retirement home. This may also provide an advantage in shifting residency to a safer and lower tax environment later.
Higher education is only getting more expensive, and so is student housing. If your children are still planning on attending college it may be beneficial to secure them housing near to education. Any additional income or equity produced by the property could offset education expenses as well.
The recent and current real estate and finance environment has left a significant void in lending and benefits of leaving money deposited in the bank. This has created a new trend and more advantages in parents financing their children’s starter homes. It reduces the burden and credit hit for children, while helping to get the most out of capital for parents. Explore different options for gifting down payments or providing private mortgage loans, and the tax breaks.
Commercial Income Properties
With so much of the above invested in the residential market it can be wise to diversify into commercial properties for income and wealth preservation. Retail, office, multifamily, and mixed use properties can all offer diversification as well as passive income for principals and heirs for the long term.
Future Development Sites
Land, infill lots, and prime buildings which are ripe for future development can balance other assets by providing potential for bigger wealth leaps and cash gains. These investments can be staggered to deliver at different life milestones while minimizing holding costs and management now. You don’t have to be the one to develop or build either. You could sell the opportunity on, or partner with someone else.
All of the above may be great choices for your estate and portfolio. Leveraging 1031 exchanges, trusts, and self-directed retirement accounts for limiting liability and taxes can make these options even better too.
4 WAYS TO HOLD REAL ESTATE FOR HEIRS, WITHOUT THE RISK OR HASSLE
Real estate can be one of the best multigenerational wealth building and preservation tools, but how do you hold it, and give it, without the risk or headaches?
1. Turnkey Property Management
The options and best strategy for holding and passing on real estate assets really depends on what type of property it is. For those owners of newer NYC condos or co-ops the easy answer may be simply to enroll a turnkey property management company who can go on taking care of it. This can provide a seamless transition and management across generations without worrying about how heirs will manage it.
2. Long Term Leasehold
A classic Sol Goldman strategy; offering a long term leasehold means eliminating the costs and management associated with holding a property, while retaining ownership, long term value gains, and income. On just one NYC office building the Goldman estate collects $2.7M per year.
3. Sell or Gift, with Life Estate
In some cases it is actually personal use of the property or providing a home for heirs which is the top priority. In this case consider selling or gifting the property to charity now, while retaining a life estate you, your partner, or children.
4. Lease or Sell Off Use Rights
There are many parts to a NYC property. This can include air rights, access rights, development rights, oil and mineral rights, and more. Those are often effortless to hold onto as assets. Or they can be leased or sold to cover property taxes and other holding costs on the property improvements. Consider holding the retained assets in a trust or foundation.