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Old 09-10-2016, 09:07 PM   #21
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BTW, the trust is not necessary for stepped-up basis on the real estate assets. That's available to any heir. The trust is just the container to maintain access to privileged assets if our heirs aren't accredited.
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Old 09-10-2016, 09:09 PM   #22
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Originally Posted by Bruceski44 View Post
This may be slightly off-topic, but follows on nicely from my previous message.

My wife and I have a revocable family trust which holds title to all our investments. Since we are accredited the trust is accredited and will remain so after our death. The trust assets will pass to our heirs with a stepped up basis. All of the deferred capital gains and depreciation recapture disappears; our heirs will owe no tax, except for gains or depreciation which occurs after the transfer. It's my intention that the assets remain in the trust, rolling over on a tax-deferred basis, paying monthly cash flow for our heirs. This is the type of legacy that can make a change for generations to come.
Yes and no. The clock basically resets at your death. There are different ways to set a trust up in terms of passing it to the kids. Generally speaking a general power of appointment would cause it to be included in your kids estates for estate tax purposes but then they would get a step up in basis at their death. Well, your grandkids would get that step up benefit. Or if a limited or special power of appointment it is not included for estate tax purposes which is good for wealthier people but would not get a step up at the kid's deaths. Also, consider rules against perpetuities. Some states trusts end after about 100 years. Some go longer. Nevada, which has a lot of favorable laws, goes 365 years. Oh ya and don't micromanage and control from the grave. Give your trustee discretion.
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Old 09-10-2016, 09:11 PM   #23
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BTW, the trust is not necessary for stepped-up basis on the real estate assets. That's available to any heir. The trust is just the container to maintain access to privileged assets if our heirs aren't accredited.
Oh ya, I forgot to address that question. I am not sure. I tend to doubt the trust would be considered an accredited investor beyond one year after death since generally trusts are written to kick the income out via K1's and thus the income is attributed to each beneficiary. I do not know though. Have never considered the question.
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Old 09-10-2016, 09:15 PM   #24
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Oh ya, I forgot to address that question. I am not sure. I tend to doubt the trust would be considered an accredited investor beyond one year after death since generally trusts are written to kick the income out via K1's and thus the income is attributed to each beneficiary. I do not know though. Have never considered the question.
Thanks for those two posts, Kid. The lawyer doing my trust advised me it would continue, but didn't share any of the detail you just did. So I guess I need to verify that somehow. Ideas?
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Old 09-10-2016, 09:18 PM   #25
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My last general tidbit-- If you are not accredited, you should catch up on Reg A+ and Title III (of the JOBS Act) to see how they've been implemented and what types of investments they make available to you. These are recent developments and I don't follow them closely.

I know they restrict how much you can invest each year based on your income or net worth. Kind of a shame that we can't be trusted with our own money...
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Old 09-10-2016, 09:20 PM   #26
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Thanks for those two posts, Kid. The lawyer doing my trust advised me it would continue, but didn't share any of the detail you just did. So I guess I need to verify that somehow. Ideas?
I would be specific with your questions to your lawyer regarding the issue of the accredited investor status continuing after death and, if so, how long? Plus, if it does continue is he writing the trust to accumulate income or flow it out?

Also, depending on the size of your estate and anticipated size of your kid's estates whether the power of appointment for them should be "general" or "limited."

Good luck.
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Old 09-12-2016, 09:17 AM   #27
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Getting back on topic, I just saw this:
Passive Real Estate Investment Opportunities for Non-Accredited Investors | A Student of the Real Estate Game

There are also other posts on that blog about CF and RE in general.
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Old 12-10-2016, 12:59 PM   #28
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I started investing in these. So far no issues but I do hear there are defaults.
The defaults typically are working out well in they foreclose on the properties and with fees and penalties usually get everyone's principal back and sometimes even more.

My policy is as follows:

- I look for a LTV of 70% or lower. This gives room if property forecloses to make money even with fees and closing costs.
- I look for properties where the borrower is putting money in as well. If you have million dollar home with a $700K loan then he has $300K in it. He is less likely to default.
- I avoid the high yield ones and ones that are more than a year.
- I look at the properties on google maps, zillow, trulia, etc. I like to see what it has sold for in the past, what the neighboring properties are doing, etc.

I have only invested $50K across a bunch of different properties so far and I track them. So far no complaints and I may expand as time goes on.

There was one not far from where i live that came up. I would of done the whole damn loan because he wanted $300K at 10% for a property that i know is worth $500K. He was doing a flip and putting another $50K into it. He bought for $350K at foreclosure. So you look at those numbers and the risk seems low!
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