Pursuant to the new SECURE act recently passed by the senate and signed into law by the president, any IRA, whether Traditional or Roth, must be depleted within 10 years from the original owners date of date.
This is a simplification and limitation from the prior rules which allowed tax-deferred withdrawals depending on the age of the of the beneficiary pursuant to an IRS life expectancy table.
The new 10 year limit would apply to anyone except an exempted group, such as a surviving spouse.
For more details you can visit Investopedia on Stretch IRAs.
AB 1482, California’s statewide rent control (limiting annual rent increases and imposing just cause eviction restrictions) has several property owner category exemptions, for most of pertinent are:
1. Single-family owner-occupied residences, including a residence in which the owner-occupant rents or leases no more than two units or bedrooms, including, but not limited to, an accessory dwelling unit or a junior accessory dwelling unit.
2. A duplex in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy.
3) Housing that has been issued a certificate of occupancy within the previous 15 years.
4. Residential real property that is alienable separate from the title to any other dwelling unit, provided that both of the following apply:
owner is not any of the following:
real estate investment trust, as defined in Section 856 of the Internal Revenue
limited liability company in which at least one member is a corporation.
The most common exemption are residential homes and condominiums under category 4 (assuming the property does not otherwise qualify for municipal and city specific rent control.)
One type of real property that may not be exempt are “quasi-condo” structures under tenancy in common arrangements.
LLCs are also exempt, as long as no corporation has a membership interest.
Whenever a business entity seeks to acquire a busines asset it is strongly advised to structure part of the transaction as installment payments or include a withholding amount (to be disbursed subject to cash flow and liability representations being accurate).
The offset provision is usually contained within the indemnity povision of the purchase and sale agreement, or there may be a separate provision for withholding and required conditions for satisfaction.
The practical reality is there are many reasons a seller may want to offload a business asset. The seller almost invariably will paint the busines asset with overly optimistic exaggerations and potential.
A well crafted indemnity and offset provision will shift the burden on the seller to disprove the purchaser’s offset claims are improper.
Under California Proposition 58, the Parent to Child Exclusion for transfer of the pre-exisiting Proposition 13 tax base is unlimited for one residential property, plus one million ($1,000,000.00) per parent spouse for non-residential property (maximum two million [$2,000,000.00] if two parents).
For an owner of an investment property or properties exceeding two million, tax planning for purposes of preserving the pre-exisiting Proposition 13 tax base can be accomplished through the use of a business entity, e.g. LLC or L.P.
The tax re-assessment rules for a business entity holding real property differs in that it depends on 1) a change of control of more than 50%; or 2) more than 50% of the original co-owners change.
Importantly, any Business Entity planning and structuring regarding the investment property is only possibly before the owner dies.
As time goes on there will be more LLCs created as more real properties will be worth one million or more and more tax assessment will catch up to that threshold.
For a consultation regarding this topic please contact the Law Offices of Hanlen J. Chang.
The Certification of Trust (“Certificate”) serves multiple purposes.
First, it is a synopsis of the main terms of the Trust. Once a Trust is established, it must be “funded”. Assets that typically get transferred into the ownership of the Trust are Real Property, Bank Accounts, and Regular Brokerages.
The Settlor (Individual establishing the Trust) then presents the Certificate to the Financial Institution. Likely he or she will be asked for the Certificate.
Usually it is a good idea to bring the “original wet ink” signed and notarized Certificate due to chain of custody concerns. If you bring a homemade Copy, the Financial Institution may reject it, and ask for an “Attorney Certified Copy of the Certificate”.
The Financial Institution wants the Certificate because it wants the “Synopsis”, or main terms and summary v. the forty page Revocable Trust document for which it lacks legal resources.
A second purpose involves Real Property. If Real Property is transferred into the ownership of the Trust, the Certificate will indicate the same. The Certificate can be recorded with the County Recorder. If not recorded, it will need to be presented to the Title Company upon sale of the Real Property.
The Law Offices of Hanlen J. Chang provides a Certification of Trust with each Revocable Trust package.