Disinheriting Your Heirs: Your Legal Options

Disinheriting an heir is something most of us hope we never have to do. It’s sad, but it happens. Sometimes you grow estranged from an heir. Other times, the heir may be on a path to self-destruction that you don't want to aid and abet.
Not all circumstances are this dire. Occasionally, an heir surpasses you financially so they won’t benefit as much from an inheritance as the family artist who is still paying off his American Studies degree.
Whatever your hilarious or tragic reason might be, removing an heir from your estate is fairly straightforward. Emotionally, this move can be devastating to your personal life and tear your family apart. But legally it’s a piece of cake. The following will outline the disinheriting process, but also present legal alternatives to disinheriting.

Why You Will Need to Legally Disinherit An Heir

Unless you specifically state otherwise in a legally binding document, the state is going to assume that you intended your spouse, and then your children to be your heirs. You know, because they assume you love your family. If you think about it, that is the appropriate default setting.
So, if you want to cut an heir out of an inheritance you’ve got to really mean it. You can't undo this move from beyond the grave.
It is important to complete an entire list of your children in the estate plan and to specify any child who will not be an heir. This will make for a wonderful and dramatic moment suitable for a movie:
The estranged youngest son shows up on the day of his father’s death. After comforting his mother and arguing with his brother, his father’s will is read aloud in father’s study. As the grieving family gathers around, the executor reads in a loud, authoritative voice: “…and to my youngest son Samuel, I leave nothing.”
The son lowers his head. His sister tries to comfort him. He dashes from the room. It’s the sweetest revenge of all: revenge from beyond the grave!
In all seriousness, I know what a tragic situation disinheriting can be. That's why I'm going to share another, less final option below.

What To Do If You Don't Want to Disinherit Your Heir: Use Stipulations in Your Will

If you want to leave something for a lost or wayward child, you can always attach a few strings to an inheritance. In this way, you take a family tragedy and turn it into a hilarious, heart-warming comedy.
Now, you cannot just attach any stipulation you can think of to an inheritance. Everything has its limits. For instance, you cannot ask an heir to commit a crime. You cannot subject them to anything torturous, no matter how personally entertaining you might find those posibilities. If you want to make your heir miserable, you’ll have to double up on the emotional torture while you’re still alive. Disinheriting isn't the best option for haunting beyond the grave. Not that we recommend a life spent in resentment for anyone.
You also cannot ask an heir to divorce their partner. This topic is kind of a "fan-favorite," and comes up all the time. Most of us tolerate our children, but you may not relish the prospect of sharing your money with your money-grubbing in-laws. Nonetheless, most courts view such a request as a violation of public policy because it promotes divorce.
We'e previously covered how to use wills and trusts instead of disinheriting your heirs. I recommend you read that as well if you're considering this process.

Why You Need a Lawyer's Help With Estate Planning for Your Heirs

You should talk to a lawyer about what kinds of stipulations you can place on an inheritance. You might demand that your heirs do something with their lives, from maintaining stable employment to educating themselves, before they can access what you leave behind. This will teach them to fish for themselves before you give them all of your catch.
If you need help disinheriting, adding stipulations to your will, or otherwise planning your estate, contact us today. At Royal Legal Solutions, our experts can help with all phases of the estate planning process.

How to Protect Your Reputation in the Digital Economy

Bad reviews hurt a business. If you own the business that they hurt your soul. Nonetheless, Platforms like Yelp are the gatekeepers to quality now You have to accept that not everyone is going to like what you are doing.The good news is that you can protect your business against untruthful, inflammatory remarks. There is a point at which negative reviews become defamation.
There have actually been hundreds of lawsuits over negative reviews posted in online forums, but few people take action.
The first amendment only protects the truth. No one has the right to tell lies about you or your business. If a negative review in any public platform is negative AND untruthful, you can sue for damages. That is the definition of libel.
Now, you are going to have to prove that a negative comment was untrue if you are going to silence it. If a customer says that they were served a cold bowl of soup, you’re going to have a hard time proving the remark untrue. I suppose maybe the customer’s bowl of soup could have spilled on someone else who is suing you because the soup was too hot. If they have burn scars, you might be able to disprove that the soup was cold.
This is an insane example, but it demonstrates a case where a business is actually damaged by a negative review that you be proven untrue. This is grounds for a Defamation Lawsuit.
There are two types of defamation. We mentioned libel. Libel is the act of defaming someone by telling nlies about him or her, in the written form. This includes online reviews.
The second type of defamation is slander, which is spoken defamation.
You see a lot of slander during political campaigns.
The reason the top brass isn’t busy suing one another is because defamation is tricky business.
In order to win a defamation lawsuit you must prove the following:
a) That a statement was made.
b) That it was published for others to see (comments, reviews, etc).
c) That the statement caused you injury (emotional distress, loss of business, etc).
d) That the statement was false.
Awards in a defamation lawsuits generally require the offending party to remove false statements. Damages might be awarded for lost profits or injury.
You really need to pick your battles carefully though. You can spend a lot of money silencing negative reviews that may not actually be costing you anything. It’s also difficult to prove that the offending party is lying.
My personal advice to business owners who are on the receiving end of negative or untruthful reviews is that you respond to it once and only once. It’s enough to show that you are a business owner who cares. It allows anyone who reads the review to hear your side. Reach out to the customer directly if it’s possible and figure out if you can resolve their issue. Maybe you can get a negative review taken down just by showing a potential client that you want to do better by them. That’s how you win over people whom you disappointed, and we all have off days.
Now, if you’ve taken these steps and you are unable to resolve a negative and untrue comment or review that is causing your business injury, you can file a lawsuit against the perpetrator.
Just remember that lawsuits are a long and costly process. Don’t drag yourself into a fight if there aren’t sticks or stones involved. If the injury is real and the comment is false, take legal action. Just be sure you’re in a fight over something that matters, because that’s what matters at Money Matters.

Real Estate Contingencies: A Beginner's Guide

The paperwork piles up fast in real estate. Like a nasty rodent problem, you need to stay ahead of it.

Real estate contingencies are an important part of your real estate contract. They provide protection like a suit of armor. Here’s how to use them.

What Are Real Estate Contingencies?

A contingency clause says that your purchase is contingent on a number of conditions specified.

So, if the buyer insists on having a complete roof repair and rodent inspection, they are going to write those contingencies into the contract. If they buy the property and find mice playing in the halls and the shingles falling from the eaves, the contingencies haven't been honored.

These are a few of the contingencies you might want to consider in a purchase agreement.

#1 Appraisal Contingency

Simple enough. Your purchase is contingent on an appraisal that evaluates the property at or above the purchase value.

#2 Financing Contingency

The purchase in contingent on the buyer obtaining financing terms acceptable to a the buyer. Make sure your purchase agreement specifies that you must obtain acceptable financing. If your contingency simply says you will purchase upon obtaining financing, you could find yourself in trouble if the financing offers unfavorable terms. For example, if all you can afford is 7% on your financing, put 7% into your contingency as your acceptable financing rate for purchase.

This may sound confusing, but it’s actually pretty simple. If you can’t afford the financing, don’t buy. Make sure your contracts say as much.

#3 Inspection Contingency

Get your property inspected and make sure that you approve of its condition before purchase. If you’re buying a fixer-upper, make sure that you aren’t putting more into repairs and than you can afford. Don’t buy a money pit. Buy a money-maker. You can ask the owner to make repairs or lower his price as contingencies.

More About Contingency Clauses

#1 Earnest Money

Make sure your contract states clearly that you get your contract money back if the owner fails to address any of your contingencies. If you don’t do this, you are going to risk losing a lot of cash.

#2 Don’t Miss Deadlines

These clauses almost always have a deadline so give yourself enough time to meet them.

You need time to obtain financing. You need time to properly inspect the property. You time to review the seller’s disclosure documents. Two-week deadlines are the norm, but this is often ridiculous for anybody who actually plans to exercise any due diligence.

If deadlines are approaching and you need more time, ask the seller for an extension. If the seller refuses, haul out your contingency and drop it on the table like a hot mic.

#3 Get it in Writing

Make sure that you are communicating via whatever format is required by the contract and its contingencies. You need a hard copy, not a digital one. The pen is mightier than the sword, and in this case, the printer is mightier than the screen.

Telephone calls and emails will not invoke contingencies unless a contract permits emails as notice. Make sure everything is in writing and sent to the seller on a date that can be tracked.

Contingencies are sometimes the difference between buying a sound investment or a money pit. If you don’t have contingencies, you may be forced to buy a property at a loss or lose your earnest money.

Real Estate Contingencies Protect Your Ass

Don’t get caught with your pants down. Contingencies are like a pair of suspenders that will keep you from exposing your bare ass to the world.

Real estate buyers should always use contingency clauses. Your purchase contracts are only as good as the contingencies you’ve written into them, as they dictate the terms of your purchase. If you don’t have them, you may find yourself spending a lot of time and money before your investment pays off.

When a friend purchased his fishing business, the wharf on the property had to be completely replaced. My friend wrote in a contingency that made the owner finish the task so that he could be on the open water on day one, generating a return on his investment right away.

If you handle your contingencies right, you should be able to open for business the day your receive the deed to the property.

Keep your pants up when you purchase real estate. Start with our investor quiz and we'll help with contingencies or any of your other investing needs.

Real Estate Contingencies: A Guide For Buyers

The paperwork piles up fast in real estate. Like a nasty rodent problem, you need to stay out ahead of it.
Contingency clauses are very important to your real estate contract because provide they protection. Think of them as a suit of armor. Or a glue trap, if you prefer.

Here’s how to use real estate contingencies to your advantage.

A Beginner's Guide to Real Estate Contingencies

When Randy purchased his fishing business, the wharf on the property had to be completely replaced. Randy wrote in a contingency that made the owner finish the task so that he could be on the open water on day one, generating a return on his investment right away.

If you handle your real estate contingencies right, you should be able to open for business the day your receive the deed to the property.

A contingency clause says that your purchase is contingent on a number of conditions specified. So, if like my friend Randy, you insist on having a wharf replaced (or, more likely, a complete roof repair or rodent inspection), you are going to write those contingencies into your contract.

If you buy property and find that Ratatouille is cooking pasta in a kitchen full with water up to your ankles, then you haven’t been careful about your contingencies.

These are a few of the contingencies you might want to consider in a purchase agreement:

Appraisal Contingency

Simple enough. Your purchase is contingent on an appraisal that evaluates the property at or above the purchase value.

Financing Contingency

The purchase is contingent on the buyer obtaining financing terms acceptable to the buyer. Make sure your purchase agreement specifies that you must obtain acceptable financing. If your contingency simply says you will purchase upon obtaining financing, you could find yourself in trouble if the financing offers unfavorable terms. For example, if all you can afford is 7% on your financing, put 7% into your contingency as your acceptable financing rate for purchase.

This may sound confusing, but it’s actually pretty simple. If you can’t afford the financing, don’t buy. Make sure your contracts say as much.

Inspection Contingency

Interested in learning more? Check out our articles, How To Assign A Real Estate Contract and Real Estate Contingency Clause Examples: How Buyers Avoid Getting Burned.

Other Things to Remember About Contingencies

1. Earnest Money: Make sure your contract states clearly that you get your contract money back if the owner fails to address any of your contingencies. If you don’t do this, you are going to risk losing a lot of cash.

2. Don’t Miss Deadlines: These clauses almost always have a deadline so give yourself enough time to meet them.

If deadlines are approaching and you need more time, ask the seller for an extension. If the seller refuses. Haul out your contingency and drop it on the table like a hot mic.

3. Get it in Writing: You need a hard copy, not a digital one. The pen is mightier than the sword, and in this case, the computer is as well.

Telephone calls and emails will not invoke contingencies unless a contract permits emails as notice. Make sure that you are communicating via whatever channel is required by the contract and its contingencies.

Make sure everything is in writing and sent to the seller on a date that can be tracked.

The Takeaway

Don’t get caught with your pants down. Real estate contingencies are like a pair of suspenders that will keep you from exposing your bare ass to the world. Real estate buyers should always use contingency clauses.

Your purchase contracts are only as good as the contingencies you’ve written into them, as they dictate the terms of your purchase. If you don’t have them, you may find yourself spending a lot of time and money before your investment pays off.

Keep your pants up when you purchase real estate. Contact Royal Legal solutions for help with contingencies, or any of your other investing needs. Set up your personalized real estate consultation in minutes with our online tool.

College Savings: Coverdell Education Savings Account Vs. 529 Plan

So, your little angel has graduated. The dream has come true.

They are finally getting the hell out of your house.

Let’s be real, though. They aren’t going to last a second out there among the piranhas. You’ll sleep a little easier if you can give them a little leg up. To that end,you may want to start a college savings account.

Planning for college is tricky. Especially where your taxes are concerned. Here’s what you need to know.

There are two types of accounts that you can open to help your child graduate without a crippling amount of debt.

Coverdell Education Savings Account
529 Plan Account

You can reduce your decision between these account options to two accounts to one question: Do you want control over your investment options or tax-free contributions?

Coverdell Education Savings Account

A Coverdell Education Savings Account is set up to cover a child’s secondary education. The growth on your contribution is tax-deferred until the funds are spent. If they are spent on education, they are tax-free.

There is no tax deduction for the amount you contribute to a Coverdell, but you have some fantastic investment options and you can opt to self-direct. The rules are similar to those that cover an IRA.

Coverdell has the following rules and benefits:

Coverdell Rules

There are zero federal or state income tax deductions on Coverdell accounts.
Parents (or grandparents) can contribute without limitations to a Coverdell until a beneficiary reaches age 18 if the contributor has income of $190k (married joint) or $95,000 (single).
Your child can always contribute to their own account with gifted funds (no need to have earned income).
Funds can be used for tuition, fees, books, and equipment for college as well as certain K-12 expenses.
$2,000 annual contribution limit per beneficiary (e.g. child or grandchild).
Contributions grow tax-free and can be withdrawn for education until your beneficiary reaches 30 years old.
Unused surplus can be transferred to another family member.

Coverdell Benefits

Accounts can be invested into stocks, mutual funds, and can even be self-directed. Similar to an IRA.
Contributions grow tax-free and can be withdrawn for education expenses until the account beneficiary reaches age 30. Unused amounts can be transferred to another family member beneficiary.

529 Plan Account

The 529 Plan is invested in a state-managed fund and may be eligible for a state income tax deduction (contributions are tax deductible in 35 states). Money contributed to your 529 Plan account is invested into a state managed fund. A 529 has the following rules and benefits:

529 Rules

Money can be withdrawn for tuition, fees, books, supplies, equipment, special needs, room and board.
There are no federal tax deductions or credits for contributions.
Up to $300,000 can be invested per beneficiary by any person.
Money is invested into a state run program.

529 Benefits

Many states (hopefully yours) offer tax deductions for contributions to 529 Plan accounts. Thirty-five states offer some type of state income tax deduction for 529 Plan contributions. However, there are some states, like California, who offer no tax deduction for contributions to 529 Plan accounts.
Your money must be invested solely into state run programs. There are no other investment options.

College Savings Account Recap

Planning financially for college can be tricky, especially when it comes to taxes. As you can see, the main difference between the two accounts is that Coverdell accounts have the benefit of allowing you to decide how your contributions will be invested, but the money is not tax deductible.

On the other hand, contributions to a 529 Plan account must go to a state run fund, but that money is usually eligible for tax deductions.

Choose Royal Legal Solutions For Your 401k

Lots of companies claim to be 401k experts. You know what the difference is between us and them?
We’re actual tax attorneys. That’s right. Instead of having your finances planned by some guy with a printed certificate from an online university, you’ll get a real tax lawyer, as in an educated and trained tax professional. Some other Solo 401k providers will offer you Employee Retirement Income Security Act guidance that they are not qualified to give.
We also work with sharp, detail-oriented CPAs to ensure your compliance Additionally, we offer lots of free educational information on your part in keeping your 401k compliant.

Why You Don't Want To Skimp on Retirement Planning

Other companies will tell you that you don’t need a tax attorney or specialized professional to establish a 401k plan. They’re right. You technically don't. But if you want to save money and stay off the IRS naughty list, you want to get your 401k done and managed right. That's what Royal Legal Solutions can help you do.
The problem with trying to save money initially is that you'll end up paying to repair the damage in the long run. If you're unfortunate enough to hire a less-than-stellar outfit to create and manage your 401k, you'll end up needing an attorney to clean up the mess eventually. We’re just trying to save you that first costly step. Pass on the amateurs. Go with the pros at Royal Legal. Unless you enjoy extra attention from Uncle Sam.

401ks Work Best For You With Qualified Professional Assistance

The Solo 401k plan is based on the rules of the Internal Revenue Code. This is a complicated document that tax professionals are paid to understand. Royal Legal’s experts know the code inside and out. They make it work to your best financial advantage every time.
Royal Legal will help you retire earlier and wealthier. Other providers forget about you once your retirement plan has begun. You’ll be able to consult with our expert navigators when you get lost in some of the murkier waters of investment and retirement planning.

How Royal Legal Solutions Helps You Retire Wealthier

We take care of your annual maintenance so that you’re investment plan maximizes growth and always remains in compliance with IRS regulations.
We’ve helped thousands of people across North America achieve great success with their Solo 401ks. Call Royal Legal Solutions today for your personal retirement planning consultation. Let us help you achieve your financial goals.

How to Get Out of Annuities

Annuities promise some pretty amazing things including a lifetime of income for you and your partner. They also carry some very sizable fees. There are some benefits, such as no maximums on annual contributions and tax deferral, but they aren’t right for a lot of investors.

What is an Annuity and How Do I Get Out of One?

An annuity is a contractual agreement with an insurance company. You invest money with the company and they agree to pay you a specific amount of money over your life. Like most investments, you give up some money now and the insurance company will pay you later.
Most people who own an annuity with an IRA are seeking a new investment plan for those retirement dollars. Dumping annuities is harder to do than selling mutual funds or stocks. Which is a problem for those people who are realizing that their annuity isn’t working for them they want had hoped.

Cancelling Annuities: Beware the Surrender Penalty

You can cancel your annuity, but will be subject to a surrender penalty. There is no way around it. You get penalized if you take out your investment early, so short of taking a hefty financial hit, you have to wait for the time to elapse. During this surrender period they penalty usually will go down. It can as high as 10% at ten years, but the penalty will decrease by 1% a year until it reaches 0. Like so many things retirement related, you may have to practice some patience again unless you think an alternative investment is really worth taking the loss.
If you do bite the bullet and cancel, your funds need to stay within your IRA to avoid taxes and penalties with the IRS. You could get smacked with a double whammy here so keep that money where it’s going to grow.
A lot of people have found themselves stuck with annuities that aren’t working for them. It’s not an easy choice to make, but if you think it’s worth it, you can get out. Follow these tips to mitigate the loss if you want to increase the return on your investment.

Bottom Line: Know What You're Investing In

In the future, make sure you understand an investment before you make it.
If you're unsure of an investment, there are a number of questions to ask about potential investments. Doing your homework can save you a lot of money and grief. When in doubt, get an opinion from a qualified expert now so you won't regret your investment later.

Protect Yourself from Swimming Pool Liabilities

For those that don't remember, we're going to start with a real case that was all over the news. You may have even heard about it at the time.

We're doing this to make some general points about the risks all pool owners face. Being rich and famous won't save you from an improperly maintained or managed pool. It sure didn't help Demi Moore.

Swimming Pool Lawsuit Case Study: What Happened to Demi Moore

Demi Moore’s assistant had a pool party in 2015 at Demi Moore’s California home where alcohol was served. Somebody drowned. It was an unfortunate accident and Demi Moore, who wasn’t even at the party, was quickly swimming in litigation.

It sounds so ridiculous it could be the plot of one of Demi’s erotica thrillers.

There are carefully outlined state safety regulations that you have to comply with if you don’t want to end up on the witness stand with Tom Cruise screaming at you. In most states you are responsible for keeping your pool reasonably safe.

It doesn’t matter that it was Demi’s assistant who held the party. Demi owns the pool. Demi is responsible.

Understanding How Swimming Pool Lawsuits Happen

There are two ways you can be considered too lazy, cheap or careless to own a pool under the law:

#1 You violate a local pool safety law

In this case, you’re strictly liable, like Demi Moore.

The solution here is simple. Bring your death trap up to code. Find out what the law is and comply. Build a fence and put on a pool cover. These are the basics.

# 2. Your pool is deemed “unsafe”

This is trickier, from a liability standpoint. Broken fences, rusty nails, lack of depth markings, and more can make a pool unsafe. Once again, this varies, but I’m sure through the use of the computer you are using to watch this video, you can figure out your local regulations. Better yet, contact an asset protection attorney to help you understand them.

Here’s another issue, and this one is key. If you party by your pool and your friends enjoy drinking cocktails, you may want to consider hiring a lifeguard for the afternoon. Preferably a sober lifeguard.

It’s a small expense that may keep somebody alive. If the conditions at the party are deemed unsafe (SEE: Rooftop cannonball championships) you might be on the hook.

Remember, like Demi, you might be liable even if you are not at the party so be sure that there are safety measures in play. It’s the summer time, so party hard. Just don’t end up paying for it.

In short, if you own the pool, you are responsible for its compliance with safety regulations. Landlords must keep this in mind when considering tenants. But you also have to make sure that everything you own is up to those same safety standards. Sorry fellas, but it’s not all collecting rent checks. Even trespassers can hold you liable if they get hurt in your unsafe pool.

How to Prevent Swimming Pool Lawsuits

Here’s a short summary of what you need to do if you want to avoid fishing dead bodies out of your pool and the costly lawsuits that come with it.

1. Comply with all safety requirements for your city and state. If you can’t afford them, you can’t afford a pool. But you’re a good little saver. Maybe next year.
2. Include a clause or separate pool disclosure and waiver. This is a tip for landlords or investors with rental property. Taking a few minutes to do this could save your ass in court. That way if some fool wants to work on his swan dive after his tenth martini, he’s already assumed the liability at least in part.

Your waiver should include the following:

Tenants use the pool at their own risk.
Children and tenants who cannot swim must be supervised.
This should be a no-brainer for parents of small children, but lets not forget that Darwin’s theories make provisions for the unfit. Unfortunately you still have to pay for the mistakes of the less evolved if they end up floating in your pool.
Tenant is responsible for the safety and maintenance of the pool equipment. Make it clear that they are required to inform you of any safety or repair issues the moment they arise.
If the tenant is having guests, make them responsible for supervising the pool at all times. Demi Moore can afford a lifeguard, but just a sober person will do.Some other actions you can take to protect yourself are:
Insure the pool. Tell your insurance agent about it. If they won’t grant you insurance, close the pool and get it up to their standards. Yes, it sucks paying for insurance. It sucks more losing your investment.
Own your property under an LLC.
Develop a comprehensive asset protection strategy that includes the property with a pool. Ask your attorney what actions you can take to ensure compliance with local law.

Asset Protection with Royal Legal Solutions Can Keep You Above Water

Losing your investment, as noted above, is terrible. Losing your house is much worse. When it comes to owning a pool, be PROACTIVE with your liability before you have to be REACTIVE to a lawsuit.

Yes, there is work, responsibility and expense here, but you need to own a pair of big boy trunks before you go swimming in liability. Royal Legal Solutions can help you address legal matters relating to your pool and construct an asset protection plan that keeps you out of court. If you would like advice on how to navigate this issue or begin protecting your assets like the pros, send us a message take our quick investor quiz for landlords and investors.

A Series Of Landmark Prohibited Transaction Cases, Part Three: The Kellermans

This article is part 3 of a series with the goal of educating you, the Self-Directed IRA LLC investor, on how to successfully invest and avoid triggering prohibited transactions.

If you've read parts 1 and 2, get ready for something completely different. The case we're going to go over today is about bankruptcy, something I hope you never go through!

Oddly enough, with Self-Directed IRA LLCs, you have a bit of an advantage as far as protection from creditors is concerned. But as you will find out by the end of this article, once you go in too deep, there's no way out.

The Beginning: The Kellermans File For Bankruptcy

The Kellermans, for whatever reason, decided to file for voluntary Chapter 11 bankruptcy. Prior to filing for bankruptcy, Barry Kellerman created an IRA, which as of October 27, 2008, had a reported value of $252,112.67.

The named administrator of the IRA is Entrust Mid South LLC. The IRA is Self-Directed by Barry Kellerman, who made all of the decisions related to the issues raised in the objections.
At the start of their case, the Kellermans valued their IRA at $180,000.00 and claimed the entire fund as exempt under the Bankruptcy Act.

The trustee in the bankruptcy case against the Kellermans objected to the Kellermans’ claimed exemption in the IRA on the basis that it was no longer exempt from taxation as of the commencement of the case and is not eligible for exemption.

The trustee alleged that the IRA lost its exempt status in 2007 because Barry Kellerman directed the IRA to engage in prohibited transactions involving disqualified persons.

The Kellermans' LLC and Its Alleged Prohibited Transactions

The alleged prohibited transactions involved the 2007 purchase of four acres of real property located near Maumelle, Arkansas. Panther Mountain Land Development LLC helped setup the purchase.

Barry Kellerman and his wife each own a 50 percent interest in Panther Mountain. To effect the acquisition and development of the four-acre property, the IRA and Panther Mountain formed a partnership whereby the IRA contributed property and Panther Mountain contributed property and cash.

The purchase took place to assist in the development of two nearby tracts of approximately 80 and 120 acres owned by Panther Mountain. Controlling the 4 acre tract assisted in the development of the other Panther Mountain properties.

The Plot Thickens

Interestingly enough, Panther Mountain filed its own Chapter 11 bankruptcy on September 20, 2009 after the Kellermans filed for bankruptcy on June 3, 2009.

Even more interesting is that the Kellermans admitted that they are “disqualified persons". Specifically, Barry Kellerman is the beneficiary of the IRA and a fiduciary because he exercises “discretionary authority” and “discretionary control” over the IRA as the owner.

Dana Kellerman qualifies as a “member of the family” as the wife of Barry Kellerman. Panther Mountain is a “disqualified person” according to 4975(e)(2)(G) because Barry Kellerman asserts a 50 percent membership interest. Likewise, the Entrust Partnership is also a disqualified person according to subsection 4975(e)(2)(G).

Remember: in this case it is already clear that a prohibited transaction occurred. The debtors are only seeking bankruptcy protection.

The Court Rules Against The Kellermans

Based on the Kellermans' admittance and the court's findings on disqualified persons, all that remained was a determination of whether a prohibited transaction occurred that terminated the tax exempt status of the IRA.

The court concluded that in 2007, Barry Kellerman engaged his IRA in transactions including the purchase of the real property with IRA funds and the cash contribution of $40,523.93 made by the IRA to the Entrust Partnership.

Both collectively and individually, both the non-cash contribution and the cash contribution are prohibited transactions with disqualified persons according to IRC Sections 4975(c)(1)(B), (D), and (E), which rendered their IRA non-exempt.

Hidden Details

What was not stated above is that, during Panther Mountain's own bankruptcy filings, (which were happening around the same time) they made it seem as if they were using the Kellerman IRA as a lending source for the purchase and development of property.

So then, the real purpose of these transactions was to directly benefit Panther Mountain and the Kellermans in developing both the four acres and the properties owned by Panther Mountain.
Here's a shocker. The Kellermans each owned a 50 percent interest in Panther Mountain and stood to benefit substantially if the four acre tract and the adjoining land were developed into a residential subdivision.

Case Outcome & Summary

The Kellerman case involved a construction company's owners, the Kellermans, who were also LLC co-owners. They were denied a claim for bankruptcy estate exemption for Mr. Kellerman’s Self-Directed IRA.
The court found that Mr. Kellerman who, along with his wife, were disqualified persons who had engaged in prohibited transactions by:

By directing their IRA to deliver property as a non-cash contribution to an IRA and LLC.
By making cash contribution to partnerships to develop property.

You can view the full case here.

What Real Estate Investors Can Learn From The Kellermans

This case is a clear example that using retirement and personal funds together in the same transaction can trigger a prohibited transaction.

The Kellermans entered into a transaction with their IRA funds, which involved a disqualified person, in this case Panther Mountain. Because they did that, they then had the burden of proving the transaction didn't violate any of the self dealing or conflict of interest prohibited transaction rules under IRC Section 4975.

A burden that, as this case shows, can be difficult to prove.

So here's the lesson we've all learned from the Kellermans: Using retirement funds and personal assets in the same transaction can potentially trigger the prohibited transaction rules.

Don't end up like the Kellermans! If you're interested in learning more about Self-Directed IRA LLCs, we have many free resources for you to read about investing with these entities. If you're going to set up your own, get the job done right: contact Royal Legal Solutions now.

Forget Wall Street: 6 Reasons To Form a Self Directed IRA LLC

You're living in the 21st century now, which means you don't have to put all your eggs in one basket when it comes to investing.

With a Self-Directed IRA LLC (Limited Liability Company) you can take back control of your retirement and receive higher returns from your investment dollars.

Here's 6 reasons why you should forget about Wall Street and form a Self Directed IRA LLC:

1. To Purchase Non-Traditional Assets

It's might be hard for you to forget about Wall Street, when for nearly a hundred years people have been told that they could only invest their money there. But with a Self Directed IRA you can move beyond Wall Street and invest in a whole new world of opportunity.

A Self Directed IRA LLC will allow you to use your IRA funds to make self directed investments in “non-traditional” assets of your choice. Most Wall Street IRA custodians only allow you to invest in stocks, bonds, mutual funds, annuities, CDs and other traditional investments.

The problem is, while traditional investments are numerous, they only make up a fraction of the profitable assets you can purchase and hold for investment.

2. Checkbook Control

With an IRA, you can be the manager of your own IRA LLC, but you can't be compensated for services or use your funds to pay any of the IRA LLC’s expenses. Doing so would make your friends at the IRS angry and cost you big time.

3. Asset Protection

In most states the owner of an LLC isn't liable for the debts or obligations of their LLC.

For example, in Arizona the law is that the members (owners) of an Arizona LLC are not liable for the debts or obligations of the LLC. This is an especially important factor when the IRA LLC has members who are not IRAs.

However, there are rare instances where a member's personal assets can be pursued by creditors, such as if they act as a guarantor for a loan to fund the LLC and fail to pay it back.

4. To Pool Assets with Other Investors

Banks have recently tightened up on their lending regulations, which means it's become harder for real estate investors to secure capital to acquire property. This has become a major obstacle for many real estate investors.

When the cost to acquire an asset exceeds the funds available to you, combining your money with other investors may be the only way you can purchase an asset. A great way for investors to pool assets is through an IRA LLC.

Your IRA and other investors contribute money to the IRA LLC and then use the LLC funds to purchase the asset. An IRA LLC can have multiple members including more than one IRA, people and entities as long as the prohibited transaction rules are not violated. (I will go over the rules towards the end of the article.)
Not only do you get the benefit of having your money combined under legal and contractual guidelines, but you also get the protection an LLC offers, such as protection from creditors and lawsuits.

5. To Create A Legal & Organized Structure When There Are Multiple Members

It can be hard to decide what to do with an asset when several people own it. An IRA LLC provides a legal governing structure, rules and policies to how the joint owners will operate the company and deal with its assets.

You shouldn't rely on oral statements or agreements. An Operating Agreement signed by all of the members of your LLC will provide the firm foundation from which you all can make decisions together.

For example, an Operating Agreement will prevent members from being "lone wolves" and doing something that the majority of the members disagree with, such as entering into an unprofitable contract.

6. To Make Day-To-Day Property Management Easier

If you purchased a complex asset, you will want a Self Directed IRA LLC to be the owner of that asset. For example, if you want to purchase a thirty unit apartment complex, you should form an IRA LLC to own and operate the apartments. Why?

Because you and your IRA custodian don't have time to be involved in the day to day operations of a thirty unit apartment complex, such as paying utilities, depositing rent checks, or evicting tenants.

And then think of the liability involved. Anyone of those tenants could sue you for a variety of reasons. An LLC will protect you from an "unhappy camper".

What Can't You Purchase With An IRA?

An IRA LLC may not purchase any of the following three types of assets:

Life insurance.
Stock in an entity taxed under subchapter S of the Internal Revenue Code. (This includes membership interests in an LLC taxed as a S corporation.)
Items classified as a collectible such as cars, furniture, stamps and antiques.

What Are The Most Popular Self Directed IRA Investments?

Real estate is the most popular investment people make with self directed IRA funds.
IRA funds can be used to purchase homes, condos, duplexes, penthouses, raw land, office buildings, shopping centers, factories, mobile home parks and all other types of commercial and residential real estate.

What Are The Consequences if an IRA LLC Engages in a Prohibited Transaction?

Okay so I mentioned the prohibited transactions earlier. If your IRA purchased a prohibited asset (such as life insurance) or engaged in a prohibited transaction, your friends at the IRS would get extremely angry. They could dismantle your IRA, tax you until you bleed and make you pay fees on top of the taxes.

What are the Prohibited Transaction Rules?

All the prohibited transactions rules can be found in IRC Section 4975. The quickest way to sum those up is that a “prohibited transaction” includes any direct or indirect:

Lending of money or other extension of credit between a plan and a disqualified person.
Transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan.
Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.
Furnishing of goods, services, or facilities between a plan and a disqualified person.
Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interest or for his own account.
Sale, exchange, or leasing of any property between a plan and a disqualified person.

Who are Disqualified Persons?

IRC 4975(e)(2) states “the term ‘disqualified person‘ means a person who is:

Your children and your parents.
A fiduciary.
An owner, direct or indirect, of 50 percent or more of.
An employee organization whose members are covered by the plan.
An employer whose employees are covered by the plan.
A person providing services to the plan.

The Bottom Line

If you're looking for more control over your retirement savings, you have multiple options to consider, including traditional self-directed IRAs and self-directed IRA LLCs with Checkbook Control.

There's also the IRS regulations, which if not followed to the letter could cost you thousands of dollars and waste all the time you spent securing a good investment return.

Depending on your level of investment experience & IRS knowledge, it can be hard for you to figure out all these financial and legal definitions. If you want help taking back control of your retirement, contact Royal legal Solutions today.

Are You Eligible For a Solo 401k? What About Your Employees?

Chances are if you're reading this you've probably heard of a solo 401k, which our friends at the IRS call a "one participant 401k." But what about solo 401k eligibility? Before you waste 5 minutes of your life reading my masterpiece, I'd like to let you know: if you're not self employed you aren't eligible for a solo 401k.

I know, some people just got their hearts broken. It'll be okay, trust me. You've got options. And you can read about the Roth IRA and conventional IRAs/401ks from our previous posts on the subjects. Anyway, for those of you who are self employed and interested in learning more about solo 401ks, read on.

Solo 401k Basics

The solo 401k was born out of the Economic Growth and Tax Relief Reconciliation Act of 2001, or EGTRRA. The idea is to give kick-ass entrepreneurs who'd rather work for themselves than "the man" an opportunity for tax-deferred retirement savings.

With that introduction out of the way, you should know there are some limitations to solo 401k eligibility.

What Are The Limitations Of a Solo 401k?

A solo 401k is limited to companies with one employee (you as the owner) although if you have a spouse then he or she can also contribute to the plan. Partners or shareholders can be included in the plan as well.

Your company can have part-time employees who are excluded from the plan, as long as they work less than 1,000 hours a year, or belong to a union or are non resident aliens.

But if your company takes on full time employees who aren't married to you (the boss), then your solo 401k will unfortunately have to be converted to an old-school 401k plan.

The solo 401k plan is available to anyone who is already a business owner or who will be establishing a sole proprietorship and does not have, or plan to have, full time employees.

The solo 401k is great for consultants, freelancers, home businesses, and independent contractors. So now I bet you want to know about the contribution rules huh. As a good host, I must oblige my audience.

Solo 401k Contribution Rules

If you're under the age of 50, you can make a max contribution in the amount of $18,000. This amount can be made before or after tax.

On the profit sharing side, your business can also make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to $36,000. That comes out to a combined max of $54,000.

Note: If you're over the age of 50, the contributions are the same, except you can contribute $6,000 extra.

The 2 Kinds Of Solo 401k Contributions

The solo 401k plan accepts two types of contributions: salary deferrals and a profit sharing contribution. Both are tax deductible and grow tax-deferred until withdrawals.

You can withdraw money from your solo 401k penalty free after you turn 59 1/2. Withdrawals after age 59 1/2 are taxed as ordinary income. Withdrawals must begin at the age of 70 1/2--but this rule doesn't apply if you go Roth style.

To fund a solo 401k, you can rollover funds from your previous retirement plans, IRAs etc, by setting up a Trust account for the solo 401k and directly transferring your funds from the old custodian to the trust bank account.

A Trustee needs to be designated to hold the assets of your solo 401k, preferably you. However, if you do serve as Trustee, you cannot legally benefit directly from the trust, enter into a transaction with the trust, or use the trust as your personal fund.

Since a solo 401k is an IRS qualified retirement plan, it has to have a written 401k plan document that establishes the provisions of the plan. It's a lengthy document which will explain how the plan works and operates.

For example, the plan document will explain how you are able to borrow up to 50% or $50,000 (whichever is greater) from your solo 401k tax free, and literally for free. You pay interest, but the interest is paid into your account, so you're really paying yourself.

What Are The Technical Requirements For a Solo 401k Plan?

Great question! To be eligible for a solo 401k plan you must meet two eligibility requirements:

The "presence" of self employment activity. (You must be self employed.)
The "absence" of full time employees. (It's gotta be all you, baby!)

Allow me to explain these two lines in detail.

The Presence of Self Employment Activity

This basically means you should be the owner/operator of one of the following: sole proprietorship, LLC, C Corporation, S Corporation, or Limited Partnership where the business intends to generate revenue for profit and make contributions to the solo 401k plan.

There's no set amount of revenue for profit you should be generating. In most cases the IRS will consider you eligible if your business is legitimate and run with the intention of generating profits. You can be self employed either part time or full time, and even have another job somewhere else.

You can also participate in an employer’s 401k plan alongside your solo 401k. But if you choose to do this, your contribution limits will not be raised. (So a few thousand dollars contributed to your employer 401k will mean a few thousand dollars less you can contribute to your solo 401k.)

The Absence of Full-Time Employees

As you already know, a solo 401k is available to self employed individuals or small business owners who have no other full time employees.

The following types of employees are excluded from solo 401k coverage:

Employees under 21 years of age.
Employees who work less than 1000 hours a year.
Union employees.
Non-resident alien employees.

If you have full-time employees age 21 or older (other than your spouse) or part-time employees who work more than 1,000 hours a year, you will have to include them in any plan you set up. You can get around this by employing independent contractors.

Once you have a solo 401k, you'll be able to invest in anything from real estate to cryptocurrency and more!

IRA & Real Estate Investments: What You Need To Know

If you don't have a self-directed IRA LLC, you've probably at least heard about them. Especially if you're a regular reader of this blog. Once you start looking for ways to invest your retirement funds outside of Wall Street, you'll realize there is no better way to do it than with an IRA-owned LLC.

The cost to establish a self-directed IRA LLC varies on where you go, but it usually will cost between a few hundred to about a thousand. Once you establish an LLC, a bank will serve as your custodian, which means you pay less fees and gain the ability to quickly invest your retirement money in anything except collectibles and life insurance.

We're talking about using the IRA for real estate investments, but the following are some other kinds of investments that can be made with your self-directed IRA LLC:

Lending (both hard and soft).
Hedge Funds
Mortgage pools.
Deeds/Notes.
Private Equity Funds
Foreclosure property.
Private loans.
Tax liens.
Private businesses.
Limited liability companies & partnerships.
Private placements.
Land.
Precious metals & coins.
Mutual funds, stocks & bonds.
Foreign currency.
Mortgages
Cryptocurrency (bitcoins, etc.)

As you can see above, using a self-directed IRA LLC to make investments allows you to make traditional as well as non-traditional investments, such as real estate or cryptocurrency, in a tax efficient manner.If you'll direct your attention below, you can read about the most popular reasons to purchase non-traditional assets with your self-directed IRA LLC.

The Ability To Invest In What You Understand

One of the oldest pieces of advice in the world of investing is "invest in what you know". The chances are you've probably never met the person managing that mutual fund, or the CEO of that company doing an IPO next week.
Compare them to Real estate. You grew up around real estate. Remember when you bought your first home? Real estate is the one form of investing the average American knows about more than any other.
Real estate is just like any other form of investing, it's not without risk, but many retirement investors feel more comfortable buying and selling real estate than they do stocks.

Diversification

This is a no-brainer. You're always going to hear people talking about the importance of diversity. But the truth is there isn't much diversity on Wall Street. When you get a self-directed IRA LLC you won't just be thinking outside the box, you'll also be investing outside of it too!

Cryptocurrency

Cryptocurrency is one of the fastest growing investments. As of if this writing, the value of Bitcoin continues to skyrocket. For years it has been speculated that the price would crash, but so far it hasn't. With a self-directed IRA LLC, you can jump on the band wagon and cash in on the profits.

Loans & Notes

If you used a self-directed IRA LLC to loan money to a friend, all interest received would flow back into your IRA tax free. Whereas, if you lent your friend money from personal funds (non-retirement funds), you would pay taxes on the interest received.

Inflation Protection

Inflation can have a drastic impact on your retirement portfolio because it means a dollar today may not be worth a dollar tomorrow. Inflation increases the cost of things, so not only is your money worth less, everything also cost more.
Investing in real estate can provide natural protection against inflation, as rents tend to increase when prices do, acting as a hedge against inflation. People will always need homes to live in.

Just remember, being protected against inflation can mean the difference between retiring and working the rest of your life.

Hard Assets

Hard assets are things we can see and touch, like real estate and gold. They're considered non-traditional investments as well. Do you know what it feels like to drive by a building or property you own with your family, point to it, and say "We own that?" Once you invest in hard assets, you will!

Tax Deferral

Tax deferral literally means that you are putting off paying tax. Tax deferral means that all income, gains, and earnings, such as interest, dividends, rental income, royalties or capital gains, will grow tax free until you withdrawal (or distribute) the funds.

This means you can grow the money in your retirement account at a much faster pace and retire many years earlier. And, when you withdraw your IRA funds in the form of a distribution after you retire, you will likely be in a lower tax bracket and be able to keep more of what you saved.

Real Estate & Raw Land

Okay so I know I already mentioned real estate, but there's more you should know about using a self-directed IRA LLC.

Real estate is the most popular investment made with a Self-Directed IRA. Let's look at an example to see why.
Let's say you purchased a piece of property with your Self-Directed IRA for $200,000 and later sold the property for $150,000, the $50,000 gain would be tax-free. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income taxes and, depending what state the property is in, state taxes.

Private Companies

With a self-directed IRA LLC you are permitted to purchase an interest in a privately held business, unless it's held by an S corporation.

Note: Remember to avoid the triggering a prohibited transaction!

Stocks, Bonds & Mutual Funds

By now you know that you can invest in just about anything. The advantage of using a self-directed IRA LLC is that you are not limited to investing only in traditional Wall Street investments.

Clash Of The Titans: IRA Vs 401K

You've probably heard a lot about 401ks and IRAs. But do you know how they compare to each other? More importantly, how do you know which is better for you?

401ks are usually employer-sponsored retirement accounts. Unfortunately, not everyone has access to those. Meanwhile, anyone can open a Roth IRA or Traditional IRA. To get the most benefits possible, you should max out contributions to both accounts if you're able to.

But maxing out both may not be an option for you. So the real question here is, should you contribute to your IRA or 401k first?

I'll give you two answers, one will be a short "quick version" while the other will be a detailed comparison and contrast analysis via chart below (as in, the actual "Clash of the Titans" you came here for.)

Let's start with the quick and dirty version.

The Quick Answer: IRA Vs. 401k

The account you should contribute to first depends heavily on whether your employer offers a 401k with a company match. Scroll to the option that applies to you.

If your employer offers a 401k with a company match.

Contribute to your 401k only to the point where your employer will no longer continue matching your contributions. This way, you can get as much free money as possible. Then consider an IRA.

If your employer doesn’t offer a company match.

Start with an IRA first. Opening one is free. After contributing up to the limit, contribute to your 401k for the pre tax benefit it offers.

A Detailed Comparison of The 401k, Traditional IRA, and Roth IRA: Clash Of The Titans

	401k	Traditional IRA	Roth IRA
contribution limit	$18,500 for those under age 50. $24,500 for those age 50+.	$5,500 as a combined IRA limit. $6,500 for those age 50+.
Pros	Employer contribution match. (If offered.) Higher annual contribution limit. Contributions lower taxable income in the year they are made. Eligibility is not limited by income. Able to borrow up to $50,00 or 50% of your 401k's value, whichever is greater.	Large investment selection. If deductible, contributions lower taxable income in the year they are made.		Large investment selection. Qualified withdrawals in retirement are tax free. Contributions can be withdrawn at any time. No required minimum distributions when you retire.
Cons	No control over plan and investment costs. Limited investment selection. Distributions in retirement are taxed as ordinary income, unless a Roth 401k. Required minimum distributions start at age 70 1/2.	Contribution limits are lower than a 401k. Deduction phased out at higher incomes if you or your spouse are covered by a workplace retirement account. Distributions in retirement are taxed as ordinary income. Required minimum distributions begin at age 70 1/2.		Contribution limits are lower than a 401k. No immediate tax benefit for contributing. Ability to contribute is phased out a higher incomes.
Bottom line	Fund a 401k first if your company is willing to match your contributions.	Fund an IRA first if your 401k doesn't offer a match or if you can't get a 401k. If you max out your IRA, start funding your 401k. Are you not sure which IRA is best for you? If you plan on being in a higher tax bracket when you retire, choose a Roth. (Yea. I know that isn't the easiest thing in the world to predict.)

Keep reading to read more useful information about IRAs and 401ks, along with the conclusion to this article. Spoiler alert: we are going to discuss a nontraditional option that you might consider--especially if you're a real estate investor.

	401k	Traditional IRA		Roth IRA
Tax treatment of contributions	Contributions made with pretax dollars, which reduces your taxable income on a dollar for dollar basis. Some employers offer a Roth 401k option, funded with after tax dollars. Investments in the account grow tax deferred. If Roth 401k, investments grow tax free.	Contributions are deductible. Higher income and participation in a workplace retirement account (for you or your spouse, if married filing jointly) may reduce or eliminate deduction. Investments in the account grow tax deferred.		Contributions are not deductible. Investments in the account grow tax free.
Investment options	Limited choice of investments. Some plans have a brokerage option with access to investments outside of the plan.	Any investment available through your account provider (stocks, bonds, mutual funds, etc.).
Taxes on withdrawals after age 59 ½.	Distributions are taxed as ordinary income. If Roth 401k, distributions are tax free.	Distributions are taxed as ordinary income.		Distributions are tax free as long as the account has been open for at least five years.
Early withdrawal rules before age 59 ½.	Unless you meet an exception, early withdrawals of contributions and earnings are taxed and subject to a 10% penalty.		Unless you meet an exception, early withdrawals of contributions and earnings are taxed and subject to a 10% penalty.	Contributions can be withdrawn at any time without taxes or penalties. Unless you meet an exception, early withdrawals of earnings may be subject to a 10% penalty and income taxes.

Best Practices For Traditional 401ks and IRAs

If you've got enough money, max out both. Otherwise, fund your 401k to the point where you max out your employer contributions for the year, then max out your IRA. And if you have a lot of money to invest, consider establishing a Self Directed IRA LLC.

Note: You may also want to check out our related articles:

What Is a Self-Directed IRA LLC & Should I Get One?

A Self Directed IRA LLC offers the same benefits as a Traditional or Roth IRA, but with even more investment opportunities available for you to choose from, such as real estate, along with asset and liability protection up to one million dollars.

Fair warning though, a Self Directed IRA LLC requires more involvement on your part and is not intended for passive investors. I'll tell you this though. If you're already investing in real estate with your personal funds, there's no reason for you not to get a Self Directed IRA. If you're considering this option, you may find our previous article on investing in real estate with your Self-Directed IRA LLC helpful.

If you still have questions about IRAs, 401ks, or lesser-known retirement options, feel free to ask them below or contact us.

Top 10 Things You Need To Know About Distributions From Your Retirement Account

To whoever is reading this: Congratulations! You've probably either lived long enough to retire or you're almost there. But before you "cash out" and get your money via distributions, you may want to check out this article first.
And whether you're getting ready to retire or you have a long way to go until you can, the information below can benefit everyone. Let's start with distributions from traditional IRAs and 401ks. The first five questions will relate to these traditional accounts. If you have either a Roth account (IRA or 401k), you can skip to number 6 on the list below.

Traditional IRA and 401k Accounts

1. Early Withdrawal Penalty.

A distribution from your traditional IRA or 401k before you reach the age of 59 1/2 will cause a 10% early withdrawal penalty on the money distributed. And yes, you're paying taxes too, so you're losing a big chunk of money if you withdrawal early.
Let's say you take a $5,000 distribution from your traditional IRA at age 50. You will be subject to a $500 penalty and you will also receive a 1099-R from your IRA custodian. You will then need to report $5000 of income on your tax returns.
Long story short: Don't withdraw early unless you really need the money.

2. Required Minimum Distributions (RMD).

But whether you need the money or not, at age 70 1/2, your friends at the IRS will force you to begin taking distributions from your retirement account. Unless you're still employed.
Your distributions will be subject to tax and you will also receive a 1099-R of the amount of money distributed which will be included on your tax return. The amount of your distribution is based on your age and your account’s value.
For example, if you have a $150k IRA & you've just hit the age of 70 1/2, your first RMD would be $5,685 (3.79% of $150k).

3. Don't Take Large Distributions In One Year.

Unfortunately, money from your traditional retirement account is subject to tax at the time of distribution. With this in mind, it would be wise of you to be careful about how much money you take out in one year. Why? Because a large distribution can push your distribution income and your other income into a higher tax bracket.
Let's say you have employment or rental/investment income of $100,000 yearly. That would mean you're in a joint income tax bracket of 15% on additional income.
However, if you take $100,000 as a lump sum that year this will push your annual income to $150K and you will be in a 28% income tax bracket.
If you chose to instead break up that $100K over two years, then you could stay in the 15% to 25% tax bracket. This way, you reduce your overall tax liability.
Long story short: When it comes time for you to start enjoying retirement, don't take out too much money or the IRS will be enjoying it instead.

4. Distribution Withholding.

Most distributions from an employer 401k or pension plan will be subject to a 20% withholding, unless you're at the age of 59 1/2. This withholding will be sent to your friends at the IRS in anticipation of tax and penalty that will be owed.
In the case of an early distribution from your IRA, a 10% withholding for the penalty amount can be made.

5. If You Ever Have Tax Losses Consider Converting to a Roth IRA.

Roth IRAs are popular for a reason. When you have tax losses on your tax return, you may want to consider using those losses to offset income that would arise when you convert a traditional IRA or 401k to a Roth account.
Whene you convert a traditional account to a Roth account, you pay tax on the amount of the conversion. This is usually worth it, because you’ll have a Roth account that grows entirely tax free which you won't pay taxes on when you distribute the money.
Interesting fact: Some tax savvy people use tax losses so that they end up paying less in taxes later on.

Tips For Roth IRAs and Roth 401ks

6. Roth IRAs Are Exempt from RMD.

It's amazing right? While traditional IRA owners must take required minimum distributions (RMD) when they reach the age of 70 1/2, Roth IRAs are exempt from RMD rules. This allows you to keep your money invested for as long as you wish.

7. "Designated" Roth 401ks Must Take RMD.

Yea, tax code can be confusing. "Designated" Roth 401k accounts are subject to RMD. These kinds of Roth accounts are part of a 401k/employer plan, which is where the word "designated" comes from.
Anyway, so how do you avoid this you may ask? By rolling your Roth 401k funds over to a Roth IRA when you reach the age of 70 1/2.

8. Distributions of Contributions Are Always Tax Free (Unless The Government Changes That)

Unless the government makes major changes, distributions of contributions to a Roth IRA are always tax-free. No matter your age, you can always take a distribution of your Roth IRA contributions without penalty or tax.

9. Tax Free Distributions of Roth IRA Earnings.

However, in order to take a tax free distribution from your Roth IRA, you must be age 59 1/2 or older and you must have had your Roth IRA for five years or longer.
As long as those two criteria are met, all amounts (contributions and earnings) may be distributed from your Roth IRA tax free.
Note: If your funds in the Roth IRA are from a conversion, then you must have converted the funds at least 5 years ago and must be 59 1/2 or older in order to take a tax-free distribution.

10. Delay Your Roth Distributions.

Don't be so quick to use the funds in your Roth account. It's usually better to distribute and use other funds and assets that are at your disposal. Why? Because those funds aren’t as tax efficient while invested.
Long story short: Roth retirement accounts are the most tax efficient way to earn income in the U.S if you use them right. Learn even more from our other article on the lesser-known benefits of Roth accounts.
That's all folks. As always, if you have any questions, please don't hesitate to ask in the comments below.

Estate Planning 101: Who Will Carry On Your Legacy?

Estate planning 101 starts with understanding that a trust is more than an opportunity to guarantee that your assets are distributed the way you see fit upon your death. A trust is also a great way to pass your legacy on to the next generation, whether they be your family, friends or someone else deserving of the privilege.

Your trustee will have an immense responsibility thrust upon their shoulders following your death. But finding a trustee is easier said than done. How do you know how someone will act once you're not around anymore? If you appoint the wrong person as trustee, they might just end up making you "roll over" in your grave.

The Purpose of a Trust in Estate Planning

When establishing a trust you will be outlining your assets and who will receive those assets upon your death. You will also outline certain conditions that may be placed on your assets.

For example, you may state that your children will receive an equal share of your estate upon your death. But you can also add that your children shall not receive a distribution if they have a drug or alcohol addiction or if they have a creditor who would seize the funds. The trust may also set up distributions to minor children so that they don’t receive a large inheritance when they turn 18.

How Do I Pick My Trustee?

As stated earlier, appointing a trustee to your trust is an important part of estate planning. In most situations, you will be the trustee during your lifetime and if you have a spouse your spouse will be trustee if they survive you.

However, you will need to select a successor Trustee of your Trust who will manage your estate following your death. (Even if you have a spouse, you may not want them to be the trustee). This successor Trustee may be a family member, friend, company, etc.

Factors To Consider When Picking Your Trustee

What Will My Trustee Do?

Your Trustee will make funeral and burial arrangements along with family members.
Inform your family members and heirs of the estate plans of the deceased. (This is the part you see in movies).
Your Trustee will pay off creditors and hire professional as needed to assist with the estate. (Lawyers, real estate agents, etc.).
Your Trustee will determine what exactly your assets are to make sure they are distributed to the heirs/beneficiaries of your Trust.
Your Trustee will organize your assets for distribution. This may include listing and selling property, transferring ownership of businesses, jewelry, art, bank accounts, etc.

How Large is Your Estate?

If your trust is only worth a couple million dollars or less, listing a family member as the trustee is probably your best option. However, if your estate is worth over $4 million you may want to consider listing a lawyer as the successor trustee of your estate.

And if you've been fortunate enough to accumulate an estate worth over $10 million you may want to consider listing a trust company or bank as the trustee of your estate. "Absolute power corrupts." Need I say more?

Note: If you appoint a trust company to manage your trust it will cost tens of thousands of dollars, so this option is only viable for large estates.

When Should You Appoint a Non-Relative Trustee?

If you have heirs who are likely to disagree and cause problems, you may want to list a non-family member or a friend as the Trustee so that a third party can make decisions. This way you can avoid potential contention and litigation over your estate.

Does Your Trustee Have Good Financial Skills?

If you are selecting a family member, choose one who has shown good financial skills over their life. If you’re selecting a child over another, consider their financial skills, work background, and family dynamics.

Note: Choose someone who is well organized and who can get things done. You want a responsible person to be your trustee.

What Are The Dynamics of Your Family?

Every family is different, some have gold diggers or feuds, others have delinquents. Maybe your children are too young to be trustees, or you don't have a spouse. In any case, just think long and hard on this one!

Will You Compensate Your Trustee For Managing Your Estate?

You may compensate them or give them something extra from the estate for taking on the responsibility but generally family members are appointed to serve without compensation. Those with large estates may want to hire a professional instead. At any rate, you can do your trustee a favor and supply them with our article on the duties of a trustee.

Can Your Heir/Beneficiary Be a Trustee?

Yes, you may have your beneficiary/heir serve as Trustee. Most people who have adult children will list a child as the successor Trustee and this person will typically be a beneficiary/heir.
Note: While there is some conflict of interest in this arrangement, the Trustee is bound to the terms of the Trust and can’t abuse that discretion for their own personal benefit.

Should You Appoint Co-Trustees?

Some people will consider listing co-beneficiaries as successor Trustees. This can be a way to involve more than one family member in the distribution of the estate so that one person doesn’t feel left out.
While there can be some benefits to involving another person as Trustee it can cause tension and confusion as to who is doing what. Make sure you're specific about their authority and responsibility if you are listing multiple trustees.

Who is Most Commonly Listed as Trustee?

Most persons with adult children will list one of their children as successor Trustee. Most persons with younger children will list a sibling or close friend as their successor Trustee.

11 Crucial Questions You Should Be Asking Before Investing

You probably already know that investing can be a risky business. Some people make it big. Others lose everything. There's always going to be those wanna-be Bernie Madoffs to watch out for.

So before you invest your hard-earned savings or your self-directed IRA into someone's business or real estate, you need to ask questions either to yourself or the person/business receiving your money.

We're here to encourage you to have a healthy level of skepticism. Anyone asking for your money should be comfortable answering questions. Let's go over 11 tips & questions to help you avoid legal trouble and bad investments.

Law in Every Day Life: Pet Law Fundamentals

Do you have a pet, or are you thinking of adding one to the family? If so, have you ever wondered what would happen to your pet if you got divorced or if you died? I have, so I figured you might have too.
I know this isn't something I usually write about, but we all encounter these everyday legal issues and I thought it would be fun. (Yes, reading about law can indeed be fun.)
There are four common situations where familiarity with pet law can save you a lot of time, and potentially, heartache.

Four Fundamentals of Pet Law

1. Buying a Pet.

According to the American Veterinary Medicine Association, 21 states have so called “pet lemon laws” that allow a buyer of a pet to return the pet to the seller for a full refund in the event that the pet has an illness or disease.
In most states, you will have between 15 to 60 days to return the poor little guy. It depends.

2. Owning a Pet

There are a number of laws that outline what kind of care you should be giving your pet. They vary from state to state. In most states, you can't leave your pet outside in extreme weather conditions, such as hot, cold, or hurricane weather.
And interestingly enough, while you always see something in the news about a baby being left in a hot car, rarely are the hot car deaths of animals mentioned. It's also illegal if you leave a pet in a hot car. Not that we think YOU would do such a thing, of course.

3. Divorce of the Owners

Let’s address divorce briefly. By law, pets are personal property. Like your clothes, shoes, or jewelry. Although there is much more meaningful attachment to our pets than to personal effects, the law treats them the same.
As a result, in the event of divorce where the ownership of a pet is in dispute, the court will analyze certain factors to determine who should receive the pet. These factors are different from the factors a court will consider when determining custody of children. In those cases, custody is determined by considering the best interests of the child.
In determining ownership of a pet following divorce, the court would look to see who took care of the pet, paid for it, and spent time with it.
Note: If the pet is a family pet and if children are involved, the pet will probably go to the person who receives custody of the children.

4. Death of the Owner

We all want our pet(s) to be loved and cared for after our passing. As a result, if you have a pet, consider listing in your will or trust a provision that states who will receive your pet and how money you will leave for its care.
While you may create a "pet trust" to outline the care of your pet, there's definitely someone out there who will gladly "adopt" your pet for free. But if that's what you want to do, go ahead. You won't be the first or the last!
Fun fact: Leona Helmsley left millions of dollars to her dog. (Most of which was never spent in the interest of her dog either, might I add.)
I hope you enjoyed this post and learned something new. If you still have questions, keep the conversation going in the comments below.

Everything You Need To Know About College Savings Accounts

Is it almost time for your son or daughter to go off to college and finally stop mooching off of your hard earned money make you proud? Planning financially for college can be tricky, especially when it comes to taxes.
There are two types of accounts you can open to save for those college expenses further down the road. These two types of accounts are Coverdell Education Savings Accounts and 529 Plan accounts.

The Coverdell Education Savings Account

A Coverdell account is typically set up for the higher education expenses of a child. The funds you contribute grow in the account tax deferred and the money comes out for education expenses tax free.
There is no tax deduction for the amounts you contribute to a Coverdell. But you do have significant investment options including self-directed investment options (similar to IRA rules). A Coverdell has the following rules and benefits:

Coverdell Rules

There are zero federal or state income tax deductions on Coverdell accounts.
Parents (or grandparents) can contribute without limitations to a Coverdell until a beneficiary reaches age 18 if the contributor has income of $190k (married joint) or $95,000 (single). For all the "ballers" out there, keep in mind that your child can always contribute to their own account with gifted funds (no need to have earned income).
Funds can be used for tuition, fees, books, and equipment for college as well as certain K-12 expenses.
$2,000 annual contribution limit per beneficiary (e.g. child or grandchild).

Coverdell Benefits

Accounts can be invested into stocks, mutual funds, and can even be self-directed. Similar to an IRA.
Contributions grow tax-free and can be withdrawn for education expenses until the account beneficiary reaches age 30. Unused amounts can be transferred to another family member beneficiary.

The 529 Plan Account

Your contributions to a 529 Plan account can be eligible for a state income tax deduction (depending on your state). Money contributed to your 529 Plan account is invested into a state managed fund. A 529 has the following rules and benefits:

529 Rules

Money can be withdrawn for tuition, fees, books, supplies, equipment, special needs, room and board.
There are no federal tax deductions or credits for contributions.
Up to $300,000 can be invested per beneficiary by any person.
Money is invested into a state run program.

529 Benefits

Many states (hopefully yours) offer tax deductions for contributions to 529 Plan accounts. Thirty-five states offer some type of state income tax deduction for 529 Plan contributions. However, there are some states, like California, who offer no tax deduction for contributions to 529 Plan accounts.
Your money must be invested solely into state run programs. There are no other investment options.

College Savings Account Recap

As you can see, the main difference between the two accounts is that Coverdell accounts have the benefit of allowing you to decide how your contributions will be invested, but the money is not tax deductible.
On the other hand, contributions to a 529 Plan account must go to a state run fund, but that money is usually eligible for tax deductions.
If you still need help making decisions about how to best save for your little angel's college education, Royal Legal Solutions can help. If you have questions or want to discuss other ways to save, schedule your consultation today. Happy college planning!

Joint Venture Agreements For Real Estate Investors

If you've been in the real estate business for awhile now, the chances are extremely high that you've entered a Joint Venture Agreement at least once.
Right after the recession hit, Joint Venture Agreements became all the rage. Mainly because lenders began imposing loan-to-value ratios as high as 70%. Not many real estate investors are willing to put that much on the line, not by themselves anyway!
But maybe you don't know what a Joint Venture Agreement is? Whether you do or don't this article might can teach you something new. Let's begin.

What Is a Joint Venture Agreement?

A JV Agreement is a contract between two or more parties. It outlines who is providing what. (Money, services, credit, etc.). It also outlines what the parties responsibility and authority are, how decisions will be made, how profits/losses are to be shared, and other venture-specific terms.
A joint venture agreement is typically used by companies or individuals (like real estate investors) who are entering into a onetime project, investment, or business opportunity.
Usually the two parties will form a new company such as an LLC to conduct operations or to own the investment. This is usually the recommended path if the parties intend to cooperate over the long term.
However, if the opportunity between the parties is a one-time venture where the parties intend to cease working together once the agreement or deal is completed, a joint venture agreement may be an excellent option.

Typical Joint Venture Scenario For Investors

For example, consider a common joint venture agreement scenario used by real estate investors, and let's say you're the real estate investor. You purchase a property in your LLC or s-corporation and intend to rehab and then sell the property for a profit.
Then you, the real estate investor, finds a contractor to conduct the rehab. Your arrangement with the contractor is that the contractor will be reimbursed their expenses and costs and is then paid a share of the profits from the sale of the property following the rehab.
In this scenario, the joint venture agreement works well as both you and the contractor can outline the responsibilities and how profits/losses will be shared following the sale of the property.
It is possible to have the contractor added to your s-corporation or LLC in order to share in profits. But that could be bad for you.
If you did add the contractor to your s-corporation or LLC, that contractor would permanently be an owner of your company. Which is bad because you will likely use that company for other properties and investments where the contractor is not involved.
As a result, a JV Agreement between your company that owns the property and the contractors construction company that will complete the construction work is preferred.
A JV agreement lets each party keep control and ownership of their own company while they divide profits and responsibility on the project being completed together.

Why You Should Use a Joint Venture Specific LLC For My Assets

While a new company is not required when entering into a joint venture agreement, many joint venture Agreements benefit from having a joint venture-specific LLC that is created just for the purpose of the joint venture agreement.
This venture-specific LLC is great in situations such as:

Where the parties do not have an entity under which to conduct business and which will provide liability protection. A new company should be formed anyways for liability purposes and depending on the parties future intentions a new LLC between the parties may work well.
Where the arrangement carries significant liability, capital, or other resources. More time, money and liability involved in the venture will give you more reasons to have a separate, new LLC. This new LLC will own the new venture and isolate liability, capital, and other resources.

A $1M deal or venture could be done with a joint venture Agreement alone, however, you would be well advised to create a new entity as part of the JV Agreement. On the other hand, if the venture is only a matter of tens of thousands of dollars, the costs of a new entity may outweigh the benefits of a separate LLC for the venture.

Enter Agreements With Joint Ventures Wisely

Joint venture Agreements are great when you need cash now or can't qualify for financing. They also enable you to work with someone who can bring something to the table you can't. But in any case, always make sure you carefully consider everything before entering into one.
As always, if you have any questions about this article please do not hesitate to ask. If you're wondering whether a joint venture arrangement is right for you or have questions about setting up a venture-specific LLC, contact us today.

Who Can Help You Establish Your Solo 401k Retirement Savings Plan?

Yes, it's true. There are plenty of other legal firms and experts that can help you set up your self-directed, or solo 401(k)—or what the IRS calls a one-participant 401(k).

So what separates Royal Legal Solutions from the competition? In short, our experience as actual tax attorneys with the credentials you want from experts.

Warning Signs: Things to Watch Out For in a 401k Provider

Of course, we don't expect you to simply take our word for it. Here are some things to be wary of when you're shopping around for a solo 401k provider:

The people involved in drafting your solo 401k Plan documents & advising you are not educated or trained tax attorneys. In some cases, they may not even be any type of tax professionals.
Many times, a salesperson or representative of a solo 401k Plan provider will offer you tax or ERISA (Employee Retirement Income Security Act) guidance with respect to a 401k Plan feature or an investment, while lacking the knowledge or expertise to do so.
Some companies may even tell you that you don’t need a trained tax attorney or specialized 401k plan tax professional to help you establish the plan. Most of the time, this is just not true.

Unfortunately, many of our clients come to us after another one botches the job. Royal Legal Solutions has had to help many individuals who worked with a number of these companies. Why? Because these individuals made their "friends at the IRS" unhappy due to their improper plan contributions or with their prohibited transactions.

Royal Legal Solutions Ensures Tax Compliance

The Solo 401k Plan is based on the rules found in the Internal Revenue Code, which can be complicated to someone without a tax professional background. This is why it's strongly advisable to work with a Solo 401k Plan provider like Royal Legal Solutions.

When you come to Royal Legal Solutions, you will be working directly with a 401k Plan tax professional that has been specifically trained on the special tax aspects of the solo 401k Plan.

We can guarantee your plan will remain in full IRS compliance and that you will not be engaging in any plan activities not approved by the plan or the IRS.

**We can help you retire earlier & richer.**

Most solo 401k Plan providers have already forgot about you once your plan has been established. But not us. As you begin administering your solo 401k Plan, you'll be able to consult with our trained 401k plan tax professionals.

Royal Legal Solutions can also take care of the annual maintenance of your solo 401k Plan. Proper maintenance is crucial in making sure your solo 401k Plan remains in IRS compliance. We'll also ensure that the IRS respects all your plan contributions and investment gains.

What you should know about moving yourself or your money outside of the U.S.

If you're an American citizen, it doesn't matter where you go in the world. You can't outrun, or out-fly, the Taxman.

Beware the Wrath of Uncle Sam

There are many advantages to moving overseas, especially for U.S. citizens (cha-ching!). But before you or your money leave the USA and say goodbye to Uncle Sam, there are a few tax and legal consequences you need to be aware of.

If you're a U.S Citizen, Uncle Sam wants to know about your foreign assets, investments, or bank accounts. In fact, Uncle Sam says that you have 2 legal obligations that you must adhere to, or else!

Let's go over these 2 legal obligations, shall we?

Obligation #1: Disclosure of Bank Accounts and Assets

You must disclose any foreign bank account whose value is over $10,000 (all foreign accounts are combined to reach the $10,000 threshold) and you must report any foreign asset (e.g. foreign stock, company ownership, etc.) whose value is $50,000 or greater.
The form required to be filed annually to disclose foreign bank accounts in excess of $10,000 is known as FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). The form filed annually to disclose foreign assets with a value in excess of $50,000, is IRS Form 8938, Statement of Specified Financial Assets. The first obligation U.S. citizens have to their home country is the disclosure of foreign bank accounts and foreign assets.

Obligation #2: Pay Your Federal Income Taxes

As a U.S. citizen, you are required to pay U.S. federal income tax on the foreign income you receive. The U.S. taxes its citizens on income no matter whether it was earned in the U.S. or abroad. That's one of several reasons our GNP is so high.
So, even if you make money outside the U.S., as a U.S. citizen, Uncle Sam says that you are still required to pay federal tax on that income. If you paid foreign income taxes to the country where the income was derived and if that country has a tax treaty with the U.S., then you’ll typically receive a credit in the U.S. for the foreign taxes paid, which reduces the amount of federal taxes owed in the U.S. You can look online for a current list of countries who have a tax treaty with the U.S.
Some U.S. citizens presume that if they leave the U.S. that they are no longer subject to federal income tax in the U.S. But this is not the case. Uncle Sam wants your (his) money. Failure to comply could result in a nasty tax dispute. And who has the time or energy for that?
Even if you relocate to a foreign country and no longer earn income from the U.S. you are still subject to U.S. tax your foreign income (and potential state income tax depending on your state of residence). There's one last question on this topic some rebels or activists in the crowd may be wondering about.

How Can I Avoid Paying Taxes While Living Abroad?

The only way to keep Uncle Sam out of your pockets, (AKA the tax jurisdiction of the United States), is to renounce your U.S. citizenship. However, this is a costly and expensive process with numerous tax repercussions. Not to mention, Trump probably won't be inviting you to anymore future Whitehouse dinners!
Here's a common example that demonstrates how the disclosure and income tax reporting requirements work:
Say you have a bank account in Luxembourg with a balance of $99,999. That account generates income of $10,000 this year. Let's say that the $10,000 in income resulted in taxes owed to Luxembourg of $1000 and that you reported and paid the tax to Luxembourg.
In addition to compliance with Luxembourg law, you would need to file FinCEN Form 114 (FBAR) to disclose the foreign bank account. The FBAR form filing is due by June 30^th for the prior year’s accounts. You would also need to file IRS Form 8938, since the account was at or over $50,000.
Form 8938 is due with the filing of your federal tax return. In addition to the two disclosure forms that are filed in the U.S., the $10,000 of income from your Luxembourg account must be reported as taxable income on your income tax return (form 1040).
The $1000 paid in tax to Luxembourg will be credited to you as the tax owed to Uncle Sam because Uncle Sam and Luxembourg have a tax treaty. Woo, that was a lot of information right?
These are just the basics, but every country has their own tax dilemmas. There are many special rules and numerous exceptions to the filing you read about here, please don't take this example too seriously. If you plan on leaving the U.S. or sending money outside the U.S., you should seek out experienced professionals to assist you with U.S. tax reporting obligations. Avoid the wrath of Uncle Sam. If you're living abroad or planning to move, schedule your personal tax and business consultation today.

7 Benefits Of The Self-Directed IRA

The benefits of the self-directed IRA include absolute freedom & control to decide how you invest and what you invest in. When you think about it, this is a privilege the average investor lacks.

IRA stands for Individual Retirement Account, and it's a great way to save for your retirement. A lot of people think an IRA itself is an investment - but it's just the vehicle in which you keep stocks, bonds, mutual funds and other assets. A self-directed individual retirement account (SDIRA) is a special IRA that can hold a variety of investments types normally prohibited from regular IRAs.

While there are many advantages to this powerful investment tool, we've taken the time to list some of our favorites. Below you can read about the top seven exclusive & cost effective benefits of the self-directed IRA LLC.

Benefit #1: Tax Advantages

With a self-directed IRA LLC, you have all the tax advantages of traditional IRAs, as well as tax deferral and tax free gains. All income and gains generated by your IRA investment will flow back to your IRA tax free.
What this means is that you'll experience tax free growth.

Instead of paying tax on the returns from your investments, tax is paid only at a later date when a distribution is taken, leaving your investment to grow tax free.

Benefit #2: Investment & Diversification Benefits

What about self-directed IRA real estate? Your choices include real estate & private business entities. Once again, you can do this tax free.This will also enable you to build a solid portfolio that'll generate beefy returns in both good times and bad times.

Benefit #3: Access

The benefits of the self-directed IRA LLC include having direct access to your IRA funds. This allows you to make an investment quickly and efficiently. There is no need to obtain approvals or send money to an IRA custodian.

Benefit #4: Speed

With a self-directed IRA LLC, whenever you find an investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your LLC bank account to make the investment. Other retirement accounts usually have to talk with their custodian first, which can cause a delay.

Benefit #5: Lower Fees

Another advantage to a self-directed IRA LLC account is that you can save a lot of money on custodian fees.
You will not be required to pay custodian transaction fees and account valuation fees. (Which can add up to be thousands of dollars over the years.)

Benefit #6: Limited Liability

By using a self-directed IRA LLC, your IRA will benefit from the limited liability protection afforded by using an LLC. With an LLC, all your IRA assets held outside the LLC will be "shielded" from attack.

This is especially important in the case of IRA real estate investments. This is an area where many state statutes impose an extended statute of limitation for claims arising from defects in the design or construction of improvements to real estate.

Benefit #7: Asset & Creditor Protection

By using this distinct category of retirement account, you will be protected for up to $1 million in the case of personal bankruptcy. Most states will also protect a SDIRA from creditors.

The Bottom Line: The Self-Directed IRA Makes Sense

The self-directed IRA LLC is like an IRA on steroids. If you want to take control of your finances, consider this legal entity for your real estate investments (or other assets).

Attorney-Client Privilege & You: How to Talk to Your Lawyer

"So then I says to the guy, 'leave the gun, take the Canolli."

Yes, we've all seen that movie. When it comes to going over your business plans and tax structure with your lawyer, you need to understand what is privileged and what is not. Knowing the difference will help your lawyer just as much as it will help you.
We've all "left the gun and took the Canolli" at least once in our lives, right? Or more likely, something less extreme but nonetheless unflattering. The point is, you don't want to that client who tells crucial information to his or her lawyer and then ends up wondering whether that information is “attorney client privileged” or not.

What is Attorney-Client Privilege?

Attorney client privilege is a fundamental legal protection offered to individuals, companies, and organizations who provide confidential information and who seek counsel from their lawyer or law firm.
Under law, an attorney cannot be required to provide attorney client privileged information to a plaintiff in a law suit, such as a creditor, or to a government agency (our friends at the IRS) except in certain scenarios.
Below are a couple of common situations where you may lose attorney client privileges and a few tips on how to make sure your confidential information which you provided to your lawyers doesn’t run into the exceptions.

Exceptions to the Attorney-Client Privilege Rules

Third Party Exception: Anyone But Your Lawyer Being Present Waives Privilege.

Was a third party present with your lawyer when the information you wanted to be privileged was discussed? For example, was your accountant or financial adviser present when discussing information you wanted to remain confidential and to remain privileged?
Keep in mind that if a third party is present in a meeting or on a conference call, then that third party may be required to provide information or documents from the meeting. That person can’t raise the attorney-client privileged defense for you unless they are actually your attorney.
If a third party professional does need to be hired, such as an accountant, that third party can be hired or brought into the matter by the attorney and the privilege may remain intact.
Fun fact: This is known as a “Kovel” hiring of the accountant and comes from a landmark case where a lawyer got an accountant for a client and the accountants work was covered under the lawyer’s attorney client privilege.
TIP: For sensitive matters where you want information to remain confidential and privileged, do not involve outside parties as those outside parties or non attorney advisers cannot raise the attorney client privileged defense.

Only Legal Advice Is Attorney Client Privileged.

This is especially tricky for companies who have their own “in house” legal counsel who also offers business advice.
Only the information exchanged that pertains to legal advice would be privileged. For example, was an organization chart of the companies holdings “privileged” when provided to the company lawyer also manages those assets for the business?
Also, what if that lawyer shared that organization chart to accountants, property managers, or other non lawyers? If they did, then that information is no longer attorney-client privileged.
TIP: If you have sensitive documents or information you want to keep in communication only with your lawyer, ask your attorney to identify the document as “Attorney Client Privileged” and do not provide it to non lawyers.
Not all information with your lawyer needs to be attorney client privileged. But keep these tips in mind when communicating sensitive information to your attorney.
You should always let your attorney know before you provide the confidential information that you intend it to be privileged. This way your lawyer can make sure that your information is properly "handled."
If you still have questions about attorney-client privilege, contact us directly. Or as always, you can leave them in the comments section below.