This document summarizes different options for protecting a house, including doing nothing, giving the house to children, selling the house to children, contributing the house to a family limited partnership, using a Qualified Personal Residence Trust, Grantor Retained Annuity Trust, or Private Retirement Trust. It outlines the setup requirements, tax implications, ability of creditors to access the house, rental options, ability to deduct debt, and ability to access equity for each option.
20 07-23 building blocks to eliminate the estate taxBruce Givner
In 1977 Professor Cooper of Columbia Law School wrote an article that suggested the estate tax is voluntary. In 43 years, nothing has changed. Those who fail to plan, plan to fail. The elements of estate tax elimination include the discounts provided by a family limited partnership, such as lack of marketability and lack of control; thoughtful use of the lifetime estate and gift tax exclusion; private annuities, including how to meet the exhaustion test; generational split dollar; tiered entity discounts; GRATs (grantor retained annuity trusts); and SCIN-GRATs.
14 07-09 orange county bar association - int'l estate planningBruce Givner
U.S. persons with real estate in multiple countries; U.S. persons with relatives in other countries; U.S. citizens abroad; non-U.S. persons with real estate in the U.S.; residency for income tax purposes; residency for transfer tax purposes; expatriation;
Planning to Avoid the New Medicare Tax & Other 2013 Tax IncreasesBruce Givner
Information on all of the new tax increases for 2013, including the new Medicare tax, and how it will affect you!
For more information, please visit us at www.givnerkaye.com
Crossing Borders: Primer On International Taxation For Individuals - June, 2013 Bruce Givner
Basic income and estate and gift tax rules for resident and non-resident aliens. Withholding. Returns to be filed. Pre-immigration planning. Residency for tax purposes. Expatriation - IRC Section 877A. How to hold real estate (inbound planning). Effectively connected income so as to be taxed at graduated rates. What does it mean to be engaged in a trade or business. Impact of treaties. Making the election to be taxed on a net income basis. Owning real estate through a foreign corporation, and handling the branch level taxes. IRS Forms 1120-F and 1040NR. FDAP: fixed,determinable and periodical income at 30%. Partnership might be required to withhold on foreign partner's share of gain on sale of real property under Section 1445 (USRPIs) and Section 1446 (partnerships). U.S. dividends paid to foreign subject to 30% under Sections 1441 and 1442. Treaties typically reduce the rate to 5% - 15%. Use W*-BEN. FIRPTA: the Foreign Investment in Real Property Tax Act treats gain from the sale of USRPI (United States real property interest) as if trade or business and gain as ECI (effectively connected income. Does not affect the character of the gain.
For more information, please visit us at www.givnerkaye.com
15 02-19 "C" Corporation Asset Sale - Martin Ice Cream and Bross: Personal Go...Bruce Givner
The Problem of Sale of "C" Corporation - it is usually a sale of the assets. What is Personal Goodwill? What are the benefits? What are the characteristics? What happened in Martin Ice Cream to make personal goodwill so attractive? It was affirmed in Norwalk, but the taxpayer lost in Solomon and Howard. The 2014 Bross Trucking case affirmed that there is a pro-taxpayer approach as did the estate tax case of Adell. How do you do the planning for this? First, you must do it years in advance of a sale. You need to value the personal goodwill and document it.
Investing Retirement Plan Assets: What Are The Limits?Bruce Givner
The Internal Revenue Code and the Title I of ERISA (administered by the U.S. Department of Labor) have restrictions on how retirement plan assets can be invested. For example, certain investments will cause UBTI (unrelated business taxable income) to what is otherwise a tax-exempt trust. Certain investments may cause prohibited transactions with the resulting excise tax under IRC Section 4975. There are also the general fiduciary rules governing trustees generally, e.g., the duty to diversify. This handout is designed to advise the trustee and the plan sponsor on how to avoid the pitfalls.
20 07-23 building blocks to eliminate the estate taxBruce Givner
In 1977 Professor Cooper of Columbia Law School wrote an article that suggested the estate tax is voluntary. In 43 years, nothing has changed. Those who fail to plan, plan to fail. The elements of estate tax elimination include the discounts provided by a family limited partnership, such as lack of marketability and lack of control; thoughtful use of the lifetime estate and gift tax exclusion; private annuities, including how to meet the exhaustion test; generational split dollar; tiered entity discounts; GRATs (grantor retained annuity trusts); and SCIN-GRATs.
14 07-09 orange county bar association - int'l estate planningBruce Givner
U.S. persons with real estate in multiple countries; U.S. persons with relatives in other countries; U.S. citizens abroad; non-U.S. persons with real estate in the U.S.; residency for income tax purposes; residency for transfer tax purposes; expatriation;
Planning to Avoid the New Medicare Tax & Other 2013 Tax IncreasesBruce Givner
Information on all of the new tax increases for 2013, including the new Medicare tax, and how it will affect you!
For more information, please visit us at www.givnerkaye.com
Crossing Borders: Primer On International Taxation For Individuals - June, 2013 Bruce Givner
Basic income and estate and gift tax rules for resident and non-resident aliens. Withholding. Returns to be filed. Pre-immigration planning. Residency for tax purposes. Expatriation - IRC Section 877A. How to hold real estate (inbound planning). Effectively connected income so as to be taxed at graduated rates. What does it mean to be engaged in a trade or business. Impact of treaties. Making the election to be taxed on a net income basis. Owning real estate through a foreign corporation, and handling the branch level taxes. IRS Forms 1120-F and 1040NR. FDAP: fixed,determinable and periodical income at 30%. Partnership might be required to withhold on foreign partner's share of gain on sale of real property under Section 1445 (USRPIs) and Section 1446 (partnerships). U.S. dividends paid to foreign subject to 30% under Sections 1441 and 1442. Treaties typically reduce the rate to 5% - 15%. Use W*-BEN. FIRPTA: the Foreign Investment in Real Property Tax Act treats gain from the sale of USRPI (United States real property interest) as if trade or business and gain as ECI (effectively connected income. Does not affect the character of the gain.
For more information, please visit us at www.givnerkaye.com
15 02-19 "C" Corporation Asset Sale - Martin Ice Cream and Bross: Personal Go...Bruce Givner
The Problem of Sale of "C" Corporation - it is usually a sale of the assets. What is Personal Goodwill? What are the benefits? What are the characteristics? What happened in Martin Ice Cream to make personal goodwill so attractive? It was affirmed in Norwalk, but the taxpayer lost in Solomon and Howard. The 2014 Bross Trucking case affirmed that there is a pro-taxpayer approach as did the estate tax case of Adell. How do you do the planning for this? First, you must do it years in advance of a sale. You need to value the personal goodwill and document it.
Investing Retirement Plan Assets: What Are The Limits?Bruce Givner
The Internal Revenue Code and the Title I of ERISA (administered by the U.S. Department of Labor) have restrictions on how retirement plan assets can be invested. For example, certain investments will cause UBTI (unrelated business taxable income) to what is otherwise a tax-exempt trust. Certain investments may cause prohibited transactions with the resulting excise tax under IRC Section 4975. There are also the general fiduciary rules governing trustees generally, e.g., the duty to diversify. This handout is designed to advise the trustee and the plan sponsor on how to avoid the pitfalls.
Everything You Always Wanted To Know About Grantor (And Other Irrevocable) Tr...Bruce Givner
What is an irrevocable trust? How can it be flexible? How can the parents maintain a level of control? What makes an irrevocable trust a "grantor" trust and, therefore, disregarded for income tax purposes? What are the advantages of a grantor trust for asset protection planning and estate tax planning purposes? What are the disadvantages? How can you eliminate the disadvantages through the use of a "toggle" (or flip) switch? What are the tax return and EIN requirements for a grantor trust? What happens when the owner dies? When there is an outstanding installment note, does the owner's death trigger gain? Can a trust be treated as owned by someone other than the grantor? Do grantor trusts still make sense now that the estate tax rates are 40% and the income tax rates, in states like California, are even higher? Are grantor trusts here to stay?
14 05-17 the most common flaws in estate planningBruce Givner
The most common flaws in estate planning including the failure to get started, the failure to maintain fresh documents, the failures in many documents, failures in asset transfers, failure to consider family issues, and failures through overplanning and underplanning.
How Parents Keep Control Both During Their Lifetimes And After They Are DeadBruce Givner
Irrevocable trusts are required if you want to engage in estate tax planning, asset protection planning (creditor planning) and even in a great deal of income tax (including capital gains tax) planning. However, parents are not thrilled at the idea of having to give away assets to a trust that they cannot revoke!! Do you mean that they can't change it? What if they change their minds about their children? About the trustee? Happily, there are many ways to make the parents comfortable that even though the trust itself is unable to be revoked, it is flexible. The parents, of course, pick as the initial trustee the person they trust to do whatever he or she is told without question but simply out of loyalty. More importantly, the parents can - at any time, without a reason - remove the trustee and name a new one (as long as the new one is not "related or subordinate" as defined in IRC Section 672(c)). The parents can advise the trustee to drop the assets down into a single member LLC and appoint the parents as the non-managing members. The trust can have a protector who can be given the power to remove the trustee; to change the allocation among the children; to add grandchildren and spouses of heirs and charities as beneficiaries; to change the manner of distribution to the heirs. Under California law if all of the beneficiaries and the grantors agree, they can amend an irrevocable trust without having to go to court. There are also other ways to change an irrevocable trust, e.g., decanting to a new trust with better provisions. The trust can start off as a grantor (disregarded) trust for income tax purposes and it can "flip" or "toggle" to a complex trust and, perhaps, flip back again. So, the goal of this presentation is to make people aware that there are ways to make parents comfortable with irrevocable trusts, without which planning would be difficult, if not impossible.
15 07-24 Puerto Rico Income Tax IncentivesBruce Givner
Instead of expatriating, it is better to consider retaining your U.S. citizenship and becoming a resident of Puerto Rico. You sign a 20 year contract with the government. As a result, as an individual, you can pay zero federal and state tax on local interest, dividends and capital gains. The incentives for business are also phenomenal: a 4% rate with profits paid to owners tax free. A business must have 3 employees of which husband and wife can count as two.
Everything You Always Wanted To Know About Family Trusts But Were Afraid To AskBruce Givner
Family Trusts. Living Trusts. Inter Vivos Trusts. Revocable Trusts. Synonyms for trusts that are "Will substitutes." They help avoid probate and the need for a conservatorship. They help reduce the fees, including trustee and attorney fees, and delays of probate. Most of the documents are boilerplate, but why? What's wrong with using LegalZoom and other document preparation software? Must you file an IRS Form 1041 for a family trust? Must the living trust get its own EIN? What is a subtrust? What is an administrative trust? What is a grantor? A protector? A complex trust? How is competence determined? Are "no contest" clauses enforceable? Are illegitimate children "heirs"? Must a living trust be notarized? Must it be recorded? What is a "pourover" Will? What is a codicil? What is a holographic will? What is a personal property memorandum? What makes a power of attorney "durable"? What is a health care directive?
What is a "springing" power of attorney? What is a "pot" trust? What is a "specific" bequest? When should I use a corporate trustee? What's the difference between a fiduciary bond and fiduciary insurance? What is a trust certificate? What is a "blanket" assignment of assets? What is "per stirpes"? What is the rule against perpetuities?
In 1989 Alaska was the first state to allow a domestic asset protection trust. In that same year Nevada and Delaware also changed their laws to allow DAPTs (also called self-settled spendthrift trusts). The question was - for 30 years - if a person in California set up a DAPT in Nevada - could a judgment creditor in California take his judgment to Nevada and have the Nevada court enforce the judgment against the California debtor's asset protection trust. Some lawyers argued "yes," citing Art. IV, Section 1 of the U.S. Constitution, the "full faith and credit clause." Other lawyers argued "No, it would be against Nevada's public policy." Finally, in June, 2019, the South Dakota Supreme Court held that it would give "full faith and credit to the California family law court order. However, it would not give full faith and credit to the enforcement against a South Dakota trust. Will this case make it to the U.S. Supreme Court? What about the on-going divorce of Ed and Marie Borsarge? The Cameron case did not involve an asset protection trust. But certainly South Dakota, Nevada and the other states will rule the same way in a case involving an asset protection trust.
An overview of the entire state administrative process. Learn about when you can settle during the process, some great publications to read up on, how the audit wraps up, settlement, and what to do if you don't like the audit result.
For more information, please visit us at www.givnerkaye.com
15 06-18 Top 10 Tax Preparer And Other Tax Penalties - Not Going To Jail But ...Bruce Givner
What is the definition of a tax return preparer? What is the accuracy-related penalty? What are the primary other penalties? What is IRC Section 6694 (the preparer penalty)? How is it coordinated with the accuracy-related penalty? What are the easiest crimes to commit, e.g. obstruction of justice. What good can an opinion by a tax lawyer do for you?
Family Limited Partnerships Update - Diagrams and Bullet Points - February 6,...Bruce Givner
Normal FLP structure for estate tax planning; modifying it to amplify the extent to which it can help add a hurdle between valuable assets and some future (not currently in existence) creditor if properly aged (4 - 7 years before there is a problem) and if it has a business purpose; important points in the event of an estate tax audit, e.g., separate counsel for the children's trust; problem of timing of the funding of the assets to the FLP versus timing of the gift of LP interests; problem of the change of California's LLC act effective 1/1/14; use of FLPs with captive insurance companies, pensions, life insurance and as an alternative to an ILIT.
California and federal forms; does it make sense to use non-California entities?; asset protection benefits; 3 different types of asset protection; problems with LLCs; gross receipts tax; best states for LLCs; the best structure; the rollout LLC; FLPs using LLCs; limited partnerships instead of LLCs; LLCs for tax-exempt entities;
Relief from Joint & Several Liability: Innocent Spouse Reliefgppcpa
Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. In filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return even if they later divorce.Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from joint and several liability.
Everything You Always Wanted To Know About Grantor (And Other Irrevocable) Tr...Bruce Givner
What is an irrevocable trust? How can it be flexible? How can the parents maintain a level of control? What makes an irrevocable trust a "grantor" trust and, therefore, disregarded for income tax purposes? What are the advantages of a grantor trust for asset protection planning and estate tax planning purposes? What are the disadvantages? How can you eliminate the disadvantages through the use of a "toggle" (or flip) switch? What are the tax return and EIN requirements for a grantor trust? What happens when the owner dies? When there is an outstanding installment note, does the owner's death trigger gain? Can a trust be treated as owned by someone other than the grantor? Do grantor trusts still make sense now that the estate tax rates are 40% and the income tax rates, in states like California, are even higher? Are grantor trusts here to stay?
14 05-17 the most common flaws in estate planningBruce Givner
The most common flaws in estate planning including the failure to get started, the failure to maintain fresh documents, the failures in many documents, failures in asset transfers, failure to consider family issues, and failures through overplanning and underplanning.
How Parents Keep Control Both During Their Lifetimes And After They Are DeadBruce Givner
Irrevocable trusts are required if you want to engage in estate tax planning, asset protection planning (creditor planning) and even in a great deal of income tax (including capital gains tax) planning. However, parents are not thrilled at the idea of having to give away assets to a trust that they cannot revoke!! Do you mean that they can't change it? What if they change their minds about their children? About the trustee? Happily, there are many ways to make the parents comfortable that even though the trust itself is unable to be revoked, it is flexible. The parents, of course, pick as the initial trustee the person they trust to do whatever he or she is told without question but simply out of loyalty. More importantly, the parents can - at any time, without a reason - remove the trustee and name a new one (as long as the new one is not "related or subordinate" as defined in IRC Section 672(c)). The parents can advise the trustee to drop the assets down into a single member LLC and appoint the parents as the non-managing members. The trust can have a protector who can be given the power to remove the trustee; to change the allocation among the children; to add grandchildren and spouses of heirs and charities as beneficiaries; to change the manner of distribution to the heirs. Under California law if all of the beneficiaries and the grantors agree, they can amend an irrevocable trust without having to go to court. There are also other ways to change an irrevocable trust, e.g., decanting to a new trust with better provisions. The trust can start off as a grantor (disregarded) trust for income tax purposes and it can "flip" or "toggle" to a complex trust and, perhaps, flip back again. So, the goal of this presentation is to make people aware that there are ways to make parents comfortable with irrevocable trusts, without which planning would be difficult, if not impossible.
15 07-24 Puerto Rico Income Tax IncentivesBruce Givner
Instead of expatriating, it is better to consider retaining your U.S. citizenship and becoming a resident of Puerto Rico. You sign a 20 year contract with the government. As a result, as an individual, you can pay zero federal and state tax on local interest, dividends and capital gains. The incentives for business are also phenomenal: a 4% rate with profits paid to owners tax free. A business must have 3 employees of which husband and wife can count as two.
Everything You Always Wanted To Know About Family Trusts But Were Afraid To AskBruce Givner
Family Trusts. Living Trusts. Inter Vivos Trusts. Revocable Trusts. Synonyms for trusts that are "Will substitutes." They help avoid probate and the need for a conservatorship. They help reduce the fees, including trustee and attorney fees, and delays of probate. Most of the documents are boilerplate, but why? What's wrong with using LegalZoom and other document preparation software? Must you file an IRS Form 1041 for a family trust? Must the living trust get its own EIN? What is a subtrust? What is an administrative trust? What is a grantor? A protector? A complex trust? How is competence determined? Are "no contest" clauses enforceable? Are illegitimate children "heirs"? Must a living trust be notarized? Must it be recorded? What is a "pourover" Will? What is a codicil? What is a holographic will? What is a personal property memorandum? What makes a power of attorney "durable"? What is a health care directive?
What is a "springing" power of attorney? What is a "pot" trust? What is a "specific" bequest? When should I use a corporate trustee? What's the difference between a fiduciary bond and fiduciary insurance? What is a trust certificate? What is a "blanket" assignment of assets? What is "per stirpes"? What is the rule against perpetuities?
In 1989 Alaska was the first state to allow a domestic asset protection trust. In that same year Nevada and Delaware also changed their laws to allow DAPTs (also called self-settled spendthrift trusts). The question was - for 30 years - if a person in California set up a DAPT in Nevada - could a judgment creditor in California take his judgment to Nevada and have the Nevada court enforce the judgment against the California debtor's asset protection trust. Some lawyers argued "yes," citing Art. IV, Section 1 of the U.S. Constitution, the "full faith and credit clause." Other lawyers argued "No, it would be against Nevada's public policy." Finally, in June, 2019, the South Dakota Supreme Court held that it would give "full faith and credit to the California family law court order. However, it would not give full faith and credit to the enforcement against a South Dakota trust. Will this case make it to the U.S. Supreme Court? What about the on-going divorce of Ed and Marie Borsarge? The Cameron case did not involve an asset protection trust. But certainly South Dakota, Nevada and the other states will rule the same way in a case involving an asset protection trust.
An overview of the entire state administrative process. Learn about when you can settle during the process, some great publications to read up on, how the audit wraps up, settlement, and what to do if you don't like the audit result.
For more information, please visit us at www.givnerkaye.com
15 06-18 Top 10 Tax Preparer And Other Tax Penalties - Not Going To Jail But ...Bruce Givner
What is the definition of a tax return preparer? What is the accuracy-related penalty? What are the primary other penalties? What is IRC Section 6694 (the preparer penalty)? How is it coordinated with the accuracy-related penalty? What are the easiest crimes to commit, e.g. obstruction of justice. What good can an opinion by a tax lawyer do for you?
Family Limited Partnerships Update - Diagrams and Bullet Points - February 6,...Bruce Givner
Normal FLP structure for estate tax planning; modifying it to amplify the extent to which it can help add a hurdle between valuable assets and some future (not currently in existence) creditor if properly aged (4 - 7 years before there is a problem) and if it has a business purpose; important points in the event of an estate tax audit, e.g., separate counsel for the children's trust; problem of timing of the funding of the assets to the FLP versus timing of the gift of LP interests; problem of the change of California's LLC act effective 1/1/14; use of FLPs with captive insurance companies, pensions, life insurance and as an alternative to an ILIT.
California and federal forms; does it make sense to use non-California entities?; asset protection benefits; 3 different types of asset protection; problems with LLCs; gross receipts tax; best states for LLCs; the best structure; the rollout LLC; FLPs using LLCs; limited partnerships instead of LLCs; LLCs for tax-exempt entities;
Relief from Joint & Several Liability: Innocent Spouse Reliefgppcpa
Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. In filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return even if they later divorce.Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from joint and several liability.
Should You Rent or Buy- Take the quiz now!Mortgage Girl
Is it time to move out of your parents place? Or finally time to get a home of your own? Find out if you're ready to buy. Or maybe renting for a bit longer may be better for you. Take the quiz to find out!
Buying your first home is exciting but all the details and deadlines can be quite overwhelming.
This A and N Mortgage Services, Inc. home buying packet and helpful checklist will ensure that the
process of buying your first home is stress-free.
Our law practice is focused on business law, business planning, estate planning, and asset protection for both personal and business assets. These areas cover a broad range of planning and legal services that help alleviate some of the issues that keep individuals and business owners up at night.
Wiggin and Dana partner Steven Malech co-presented a program with John Gray, Professor of Law at Harvard University, for the Professional Education Broadcast Network. Their program provided an update on fiduciary litigation.
Topics discussed included:
• Interference with inheritance
• Circumstance and examples
• Practical implications and practice tips
In a seminar titled, “Get Your Ducks In A Row,” Fraser Trebilcock attorney Marlaine C. Teahan shared her legal experience with families on topics that included: differences between wills and trusts and how to choose between them, the best planning ideas for minor and special needs children, and more.
In a seminar titled, “Get Your Ducks In A Row,” Fraser Trebilcock attorney Marlaine C. Teahan shared her legal experience with families on topics that included: differences between wills and trusts and how to choose between them, the best planning ideas for minor and special needs children, and more.
This slide hopefully will help homeowners who are distressed with their mortgage can find useful information. Our experienced short sale team can provide valuable information to help homeowners understand their options to avoiding foreclosure.
Be generous with your family the smart way. When someone gifts money or assets to another, it is not uncommon that a third party may question that transaction and claim it wasn't intended as a gift.
Similar to Alternative Ways To Protect The Residence (20)
1. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
SUITE 445
12100 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90025
www.GivnerKaye.com
www.MajorTaxProblems.com
BRUCE GIVNER
(bruce@GivnerKaye.com)
OWEN D. KAYE
(owen@GivnerKaye.com)
KATHLEEN GIVNER
(kathy@GivnerKaye.com)
NEDA BARKHORDAR
(neda@GivnerKaye.com)
PHONE (310) 207-8008
(818) 785-7579
FAX (310) 207-8708
(818) 785-3027
October 4, 2013
Summary Of Alternate Ways To Protect A House
Do
Nothing
Give To
Kids (or
kids’
trust)
Sell to
Kids (or
kids’
trust)
Contribute
to FLP
QPRT1
(House
GRIT)
GRAT2
PRT3
Foreign
deposit
of excess
mortgage
Set Up &
Annual
n/a Prepare
deed,
PCOR,4
Prop.
58,5
7096
& trust
for kids
Prepare
deed,
PCOR,
Prop. 58,
note, TD
and trust;
escrow,
lease
Prepare
FLP7
,
corporate
GP, heirs’
trust, deed,
PCOR,
annual
10658
,
1120S9
&
state fees
QPRT, calcs,
deed, PCOR,
Prop. 58,
kids’ trust;
appraisal
IRS Form
709
GRAT,
calcs,
deed,
PCOR
Prop. 58,
kids’ trust;
appraisal;
IRS Form
709
PR Plan
and Trust
calcs,
minutes,
trust deed,
DOL10
letter
LLC &
trust; .
Pay Gift
Tax?
No If equity
exceeds
gift
exclusion
Not if
sale is for
fair
market
value
Small,
depends on
kids’ trust’s
LP %
No, unless
remainder
exceeds gift
exclusion
No, unless
remainder
exceeds
gift
exclusion
No No
Save
Estate
Tax?
No On
increase
over gift
value
On
increase
over
price
Yes due to
discounts
Yes if you
survive
QPRT term
Yes if you
survive
GRAT term
No No
Home-
stead?11
Yes Combine
(part gift,
part
home-
stead)
Combine
(part
sale,12
part
home-
stead)
No Yes Yes Yes Yes
1
Qualified personal residence trust.
2
Grantor Retained Annuity Trust Advantages over Qualified Personal Residence Trust: smaller gift, so quicker
allocation of generation skipping transfer tax exclusion; buy home back so step up in basis since it is included in
estate; parents happier since they keep title to house.
3
Private Retirement Trust. California Code of Civil Procedure §704.115.
4
Preliminary Change of Ownership Report. Form BOE-502-A.
5
Claim For Reassessment Exclusion For Transfer Between Parent and Child. Form BOE-58-AH.
6
Federal Gift Tax Return.
7
Family limited partnership.
8
Federal partnership income tax return.
9
Federal income tax return for an “S” corporation.
10
United States Department of Labor.
11
Compare California’s exemption with the much larger ones in Florida and Texas (using other states’ requires
1,215 days of residency).
12
A sale of a part interest to a children’s trust means the parent retains a tenancy in common interest, which is much
less attractive to a creditor.
2. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
Summary of Alternate Ways To Protect A House
Page 2 of 2
October 4, 2013
Do
Nothing
Give To
Kids (or
kids’
trust)
Sell to
Kids (or
kids’
trust)
Contribute
to FLP
QPRT13
(House
GRIT)
GRAT14
PRT15
Foreign
deposit
of excess
mortgage
Can
Creditor
Get
House?
Yes No No, but
can seize
the note
No, but can
get charging
order on your
LP units
BK Code
§548(e)(1)
(A): 10 years
to challenge
BK Code
§548(e)(1)
(A): 10
years to
challenge
BK Code
§548(e)(1)(
A): 10
years to
challenge
Discourag
es those
who do
asset
search
You
Rent?
No not while
kids are
minors
Yes Yes Not until
term ends
Yes No No
You
Deduct
Debt?
Yes Yes if
grantor
trust16
Yes if
grantor
trust
Your % flows
thru
Yes Yes Yes Yes
You Use
Equity?
Yes No No Indirectly,
through FLP
No, unless it
is sold
Yes Yes Yes
13
Qualified personal residence trust.
14
Grantor Retained Annuity Trust Advantages over Qualified Personal Residence Trust: smaller gift, so quicker
allocation of generation skipping transfer tax exclusion; buy home back so step up in basis since it is included in
estate; parents happier since they keep title to house.
15
Private Retirement Trust. California Code of Civil Procedure §704.115.
16
A “grantor trust” is an irrevocable trust which is disregarded for income tax purposes. In other words, the parents
– as grantors – are taxed on all of the trust’s income. However, the trust is still not included in the parents’ taxable
estates. So it is recognized for estate and gift taxes as a separate legal person but disregarded for income tax
purposes.