What you need to know to make structured sales of real estate work for you in 2019

Structured sales of real estate, or as I prefer to call them, guaranteed and secured installment sales, have been seeing a surge of interest as baby boomers begin a massive conversion of real estate assets into financial assets as they approach retirement. 

What do you need to know in 2019 under the new tax rules and rates to make this safe, secured installment sale work for you by spreading out capital gains taxes and putting 100% of your sale proceeds to work for you?

Let me give you the THREE key points for you to consider if you are selling real estate, business property, a closely held corporation of any other capital asset this year.


1. THERE IS A NEW MAJOR PLAYER GETTING READY TO ENTER THE STRUCTURED INSTALLMENT SALE MARKET. 

While I won't steal the thunder of the life insurance company that has announced they are going to enter the structured sale market in early 2019, suffice it to say it is a major brand name and represents a dramatic upgrade in the options for investors large and small. If you have a property you are selling in 2019 make sure you call or email my office ( my contact number is on the screen and will be on the end of this video as well) so that I can inform you when this company is commencing new business operations in structured sales. 


2. THE NUMBER OF DEDUCTIONS AND WRITE OFF'S FOR HIGH INCOME TAX PAYERS HAS BEEN REDUCED SO DEFERRAL OF A BIG TAX HIT IS STRATEGICALLY SMART. 

A lot of people in the US are having the uncomfortable realization that tax reform, for high net worth or high income earners, has radically reduced the number of deductions, exemptions and write offs. The net result is more of your income is exposed to the highest rates of taxation. Taking a big hit on the taxes due after the sale of property, then trying to "catch up" with earnings to get back to that net sale figure before you paid taxes, well, it's almost impossible if you do the math. Spreading out your tax due over years or decades, with 100% of your funds invested makes a great deal of sense now and you need to see if this option works in your particular case. 


3. MORE PEOPLE THAN EVER REALIZE THAT THEY CAN NOT AFFORD STOCK AND BOND MARKET RISK WITH THEIR SALES PROCEEDS AND ARE REALIZING THE VALUE OF GUARANTEED CASH FLOW THEY CAN REINVEST. 

While everyone likes to talk about their ability to tolerate market risk and volatility, the fact is if you have a big chunk of cash for a property sale, have it in the market and we see a 15% to 20% market decline, you are going to be pretty miserable about that loss. 

As people move to retirement they need GUARANTEED cash flow that shows up every month, on time, in the account and is not subject to market volatility or risk. Remember, you can always reinvest your monthly proceeds into the market if you choose, on a dollar cost average basis, and not expose your entire proceeds to bad luck and bad timing if a market decline occurs. 

IN SUMMARY:

We have new major markets coming into play to guarantee payments and simplify the process of a guaranteed installment sale, which coupled with the reality that most people want to avoid higher taxes and lock in guaranteed income, makes this structured sale option more attractive than ever. 


If you are considering this technique, I encourage you to call and speak to us and see if this makes sense for you. It's no pressure, the call and consult is free and it is our firms pleasure to assist you in this important decision. For more assistance and information go to: http://wahlstromandassociates.com.


Posted on February 8, 2019 .

How to Avoid Misunderstandings When an SNT Is Part of the Personal Injury Settlement

Too often families have unrealistic expectations with regard to personal injury settlements that incorporate a special needs trust (SNT). In such cases, it’s advisable to involve a special needs attorney as early as possible so that all parties understand what is permitted by public benefits regulations.

A special needs trust (SNT) is a legal agreement through which someone places money or property into the hands of a trustee, who will hold and manage those assets for the benefit of a beneficiary with disabilities.  SNTs primarily serve two purposes. If the beneficiary is unable to effectively handle assets on their own, an SNT enables the assets to be managed on their behalf by a trustee. In addition, if the SNT is properly drafted and administered, the assets that it holds will not affect the beneficiary’s eligibility for means-tested programs such as Medicaid and SSI (Supplemental Security Income).

The trustee controls the SNT and is responsible for all investment decisions and distributions, although he/she may seek advice about the beneficiary’s needs from the individual’s family or a professional care manager. The trustee’s role requires a thorough understanding of the rules governing public benefits in order to spend trust money in a manner that protects the beneficiary’s eligibility.  This includes the requirement that funds are to be used for the sole benefit of the beneficiary, not other family members.

Since most SNTs must provide accountings to the state Medicaid agency or the court to ensure that distributions are in order, the trustee must maintain good records of all receipts and payments. Sometimes the trustee must get approval from the court or a review committee for disbursements above a certain dollar limit.  

Trustees do not give funds directly to the beneficiary, since that would be considered income by Medicaid and SSI and could affect eligibility for those programs.  And rather than making distributions to other family members, the trustee usually pays vendors directly on behalf of the beneficiary.

When families understand how an SNT must be administered in order to protect the beneficiary’s eligibility for important government benefits it can avoid both disappointment and conflict.


Posted on February 8, 2019 .

What Can You Do While Waiting for a Personal Injury Settlement? Attorney Janet Lowder Explains

I’ve seen personal injury cases take up to five years to get settled if they go to trial, and the best personal injury attorneys help their clients prepare for the financial hardships that may arise in the interim. Immediate medical expenses may include hospitalization, as well as long-term rehabilitation in a nursing home. Once the individual returns home, there may be costs for attendant care and renovations for accessibility. If their injuries resulted from an auto accident, they may need to repair or replace the vehicle.

Attorney Janet Lowder

Attorney Janet Lowder

Beyond such immediate financial hits, there’s often a huge drop in household income. Social Security Disability payments don’t begin for five months following the incident. So if the claimant was the family breadwinner and doesn’t have short-term disability insurance, there could be a period when no funds are coming in. Even if the primary breadwinner isn’t the injured party, one parent may stop working in order to act as caregiver.

To deal with this shortfall, families need to evaluate all the options available to pay for medical expenses. They may be eligible for public benefits to help defray healthcare costs. If an auto accident was involved, medical bills may be directed to the insurance company, which will then be repaid through the settlement. If none of the costs are covered by insurance, and the family is getting calls from collection agencies, their attorney can issue a “letter of protection” to advise health providers that they will be reimbursed once the case is resolved. That stops the collection agencies, which often takes some pressure off the families.

Many people use credit cards or loans from family members to make it through this period, repaying those debts once the case is settled. While lawsuit loans are available, we don’t recommend them except in extreme cases, because their rates are extremely high.

Until the case is settled, families should keep detailed records of all expenses, including transportation costs. And any loans should be documented in writing.

By Attorney Janet Lowder, Hickman & Lowder Co., L.P.A.

Posted on September 12, 2018 .