If you are a biz owner, you should be able to do more pretax than $58K. That should help. I believe you can do $58K + 50% of profits, but check with 401k specialist/tax attorney

Setup a trust. It's fairly painless. Just did mine, young 40s and kids are 9 and 11.

QBCade said:

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If you are a biz owner, you should be able to do more pretax than $58K. That should help. I believe you can do $58K + 50% of profits, but check with 401k specialist/tax attorney

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No, that's the cap and it's 25%.

Quote:

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Profit sharing also known as Employer Contribution. This amount cannot exceed $57,000 for 2020. For 2021, this amount cannot exceed $58,000. If your business type is a Corporation, the maximum profit sharing contribution is 25% of the employees W-2 gross income and still subject to the above profit sharing amounts.

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Thanks for the replies. Yes, I will look for some professional help in the next 1-2 yrs but wanted to do my own research and get educated before hiring someone.

My net worth has increased substantially due to property value increases the past 2 yrs. Same with my income tripling in the past 2 yrs. So with the wave of good fortune, it is time for me to think about the next phase of my life.

Get some help. This would be one of the few cases I might recommend a big whole life policy to a client to help with the estate tax issue, but there are several other factors involved. Trust also should have been set up for you yesterday.

I wouldn't wait on any of it either. If something happened to you tomorrow it would leave an absolute mess for your family.

I will echo others and just say do not wait to get professionals on this. Start generating a list of firms tomorrow and narrowing down on someone. Too much at stake.

I'll be the first to ask a question rather than give advice…

Syndication vs Rental ownership

What's your experience been?

If in Houston I know a good wealth planner that has everything you need in house.

I would love recommendations for someone from Austin. I think I will contact a professional before end of the year, trusts sounds good if I can put 90K for the kids a year. Doubt I will pay for their college education and leave potentially 1M+ given appreciation for their kids just to have them live it up in some Liberal private college partying and smoking pot all day.

Work is medical but like any business there are alot of risks, time involved to get it going. Once you get it going, there is great satisfaction and if you want to sacrifice some $$$ then hire a good team to take most of the work off your plate. Last 3 wks, I have went to the office for 2 dys. Check email at home daily about 30 min a dy to make sure everyone knows I am watching. Truthfully, its been kind of boring but I am not the type of person to show up just to show up unless I have something that needs to be done.

Syndication - 2 yrs investment, 5 projects. Return as predicated at 8% monthly distribution. Covid threw in some uncertainty but all 5 did well. 1 project did a refi so 20% special dividend. Another just did a special 5% dividend.

Pros - just about as passive as you can get while getting 8% distribution with higher gains when project closes/sell.
Cons - no control over project, no way to pull money out, no easy way to sell, got to trust the active managers

Rentals. 7 yrs since 1st purchase, mix of STR/LTR. Active project, have property managers for all places.

Pros - Complete control. Able to sell when I want. Able to refi when I want. Upgrade property when I want. With low interest rate, high appreciation cash out refi allows a good amount of liquidity albeit alittle slow.
Cons - As I have property managers, I do very little work with any of the properties other than one of my STRs that I go to often. So when I go, I have some to do lists but enjoyable. Still work involved that some people hate. The upside is higher but the downside is much higher too such as the 60K I put into a property due to aging/bad tenants.

Good to have both in order to diverse. Some people are more fit for syndication and some for rentals. I prefer rentals b/c satisfaction much greater with more flexibility.

I'll take that rec Ragoo if you don't mind.

I sent you a private message with the information.

Appreciate it!

I'm in Georgetown. Would be happy to sit down and have a conversation when you're ready. My cell is two five four-five four one-one two five zero. Shoot me a text or call me and I'll get you my office info.

ThrowAwayAccount1973 said:

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I am at a point in my life where I should think about wealth preservation. I am not looking for a professional yet but probably in the next 2 yrs but would like to do some research on what is best given my situation especially if Biden decreased the estate tax limit..

Background
1. 48 Yrs old, 3 kids 9-13, Wife stays at home. Solid marriage without any concerns for divorce
2. 1M stock/IRA retirement, 300K apartment syndication, 4M real estate equity including homestead(3M rental properties), 500K cash likely 800K by end of year, Business equity 1.5M on low end so net worth about 7M.
3. Kids college funded, 3M term life in place
4. Only debt is real estate properties appx 2M mortgages including homestead with no difficulties servicing
5. Income 1.5M/yr with 150K net/yr from real estate holdings, rest from business. So I should hit the 12M estate limit in 3-5yrs.
6. Currently work 6 dys/month low stress environment (business runs itself for most part), love my job, so plan on working 15+ more years but likely 25+ if physically able.

Goals
1. What should I look into to avoid the estate tax which will hit in less than 5 yrs. I plan on hiring a professional but like to research options before hiring someone. Is a family trust the way to go? I want to avoid any life insurance vehicles (been burned once).
2. What can I do to decrease my taxes? My CPA tells me I am maxing my deductions which essentially just business expenses. Have a partner who uses a CPA that creates a complicated structure that seems a little gray. Will talk to him a little more in detail soon but unless I am saving alot on taxes, I really do not want a complicated tax structure.

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Thanks for the shoutout MEEN! And yes, we are the title sponsors for this forum.

Throwaway, you have lot a of really good problems. Luckily you don't have to go down the same road as your buddy. It has been our experience that CPA's and estate attorneys often have limited knowledge when it comes satisfying the goals of the client and leave A TON of money falling out the backdoor. This is because a CPA does not have in depth knowledge on estate planning, and an attorney does not have in depth knowledge in tax strategy. Many focus on doing things the "correct way", instead of the "best way" based on their limited professional perspective.

We specialize in using tax strategy combined with proactive estate planning to create some really special outcomes for our clients.

Our focus is the defensive side of the ball.

A lot of what was said here today is true. The ultra wealthy are prepared for the transitions in life: investment income, major windfalls, business and life transitions.

From what you have mapped out and explained so far, you have significant tax exposure because you are not structured to control your taxes now, and when you experience these transitions.

We can do the following:

-Control All Taxes from Passive Income (K1, 1099, Investment, Property, Portfolio, & Royalties) basically everything besides W2
-Reduce all Capital Gains from Investments
-All Savings can be Reinvested without a Tax Consequences
-Fund All Expenses for Children with Pretax Dollars, Boosting Your Personal Cash Flow
-Keep 90% of the Proceeds When your Business is Sold
-Keep you Protected from ANY changes that come from our pal Joe Biden

If you are experiencing ANY significant tax exposure for this year ($50K+) we need to speak immediately. The window is closing for 2021 and all of the solutions highlighted take time to create and implement in accordance with IRS Tax Code compliance.

Email: court.bradley@american-wealth.com

Put your assets in a Malta Pension Plan. Similar to Roth IRA but unlimited contributions and can make distributions after you turn 50

redsox34 said:

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Put your assets in a Malta Pension Plan. Similar to Roth IRA but unlimited contributions and can make distributions after you turn 50

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Amazing what all is out there. Never heard of this. Just read up on it. There is definitely some risk and uncertainty to it though. Especially when you have an administration looking to lock down loopholes on the wealthy.

Curious about this too. And from what I can gather, AWS' plan is to set up some kind of secret sauce trust that they're a part of. I'm all for saving money but would like to know more about it/them without getting on a mailing/call list and getting contActed with repeated sales pitches.

Fiduciary

We in no way are saying other professionals don't know what they are doing. We have helped many Aggies save millions using the legal strategies that professionals in these fields do not have the knowledge of. It doesn't make them deficient in their skill, but it does highlight a lack of knowledge. We routinely work with other attorneys and CPA firms.

Think of it as a general surgeon or your PCP. I'm sure he/she does a fantastic job. But if you have a specific problem or ailment I would hope you would pursue a specialist in that particular field of medicine. We are the same when is comes to high level tax strategies.

All of our professionals are licensed and practice in compliance with their governing bodies. Insinuating otherwise is short sighted and inflammatory.

Our process is completely transparent. We have an introductory conversation to understand your position and objectives through a tax lens. From that point our professionals (IRS Enrolled Agents, CPA's, Tax Resolutions Specialists, and Bookkeepers) spend 20+ hours analyzing your position and make any recommendations. We then look at the consequences of your current positions vs. a tax optimized position on a quantitative basis.

Again the focus is creating a protection strategy that works in alignment with your revenue strategy and expected life transitions.
Creating as much "never taxed" income from "always taxed." What tax you do pay, we want it to be the "seed" not the "harvest."

Hope that gives you a better understanding of our process.
We are passionate about helping business owners, investors, and their families. And damn proud to work with fellow Ags.

I would invite you to have conversation with us and explore what possibilities are available.

Otherwise you can keep stroking large checks to Joe Biden.

That is completely up to.

Is there a private letter ruling on this strategy? Does it involve life insurance?

AWS - I'm interested in hearing how you can promise 90% of the proceeds from a business sale? I have a business that receives offers and a there will be a sale at some point in the future. My exit could be within 1-10 years.

NTXAg10 said:

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I can't put my finger on it but something about your pitch makes me extremely suspicious.

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A lot of clients felt the exact same way before they had a chance to understand the information and make an informed decision.

I would encourage you to evaluate your position and see where you may have excessive tax exposure. Our government is rapidly becoming more aggressive about its plans for your money. If you don't have a comprehensive plan in place I assure you they will have one for you.

Fiduciary said:

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Is there a private letter ruling on this strategy? Does it involve life insurance?

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Yes we have the appropriate PLR's. We will be happy to walk you though it assuming you have a need.

Let's have a conversation and discuss what you want to accomplish.

And then you can nerd out over the technicals with our staff.