thefed
Thinks s/he gets paid by the post
- Joined
- Oct 29, 2005
- Messages
- 2,203
I had someone mention in the recent past tell me that it'd be advantageous to set-up a family trust with my minor children as beneficiaries. I don't fully understand what will happen tax-wise, and will be meeting with an accountant soon, but was wondering if anyone here has any input. I partially want to do this so I no longer qualify as self-employed when it comes to FHA underwriting guidelines (aka abig PITA)
Below is a summary of my questions off the top of my head.
I'm just trying to wrap my head around this to determine if it makes sense. I think I might be able to pay this house off in the coming year and want to set myself up (on paper) to more easily qualify for a home loan. It was a major PITA recently when I applied for a home loan because they consider you self-employed if you own more than 25% of a company.
Obviously, further shielding assets in this high-risk biz is a plus as well.
Below is a summary of my questions off the top of my head.
- If my minor kids are the beneficiaries of the trust, how do taxes work at the end of the year? Now, all profits from my s-corp (i own 100%) pass through to my personal tax return...what about when I'm not a shareholder?
- On that note, would it appear that my 4 year old has an income of $xx,xxxx?? He pays taxes on it?
- Can you explain the dynamic between my kids (the benficiaries paying taxes with the income) and me (their guardian, and the settlor?, and a trustee?) and their mother (also a legal guardian). Very importantly, I dont want her having any way to get to their shares/income...how do we assure that?
- If I were to set this up, and my kids are the beneficiaries - I wouldnt be able to show/prove any of the company's income other than what I pay myself and show on my w-2's....right?
I'm just trying to wrap my head around this to determine if it makes sense. I think I might be able to pay this house off in the coming year and want to set myself up (on paper) to more easily qualify for a home loan. It was a major PITA recently when I applied for a home loan because they consider you self-employed if you own more than 25% of a company.
Obviously, further shielding assets in this high-risk biz is a plus as well.