BMS wrote:
- quote -

and a better rate when mkt is up. However, I am concerned that the
death benefit is includable in annuitant's taxable estate. And if I
outlive the FMR period and receive back the entire fair market value of
the properties originally transferred (to PAT) there would be no estate
tax
savings. Help me out: if I am short-lived, or if I spend down the
annual distribution then there would be no rebuilding of the estate? I
figure it would avoid this problem if I use life insurance as the
investment vehicle instead.

- quote -

I don't understand this reasoning. If by "creditors," we are talking about
lenders it seems to me that a person with a large amount of real estate
equity is probably pretty good at managing his finances. In other words,
it's not likely this person would get in over his head in terms of debt.

If by "creditors" we are talking about judgment debtors, I think the risk
of "lawsuits by greedy lawyers" is overstated. The possibility of tort
suits can be easily managed by purchasing insurance in amounts appropriate
for the person's net worth. In the area of personal lines, a high-limit
homeowners policy, auto policy are mandatory. And once you do that most
insurers will sell you umbrella coverage of a million or more for a very
reasonable premium. Is it possible to hypothesize some catastrophic
scenario that results in a gargantuan judgment exceeding the insurance
coverage? Sure. But for most normal people, who exercise good judgment on
a daily basis and avoid high-risk activities (like driving drunk or
starting a meth lab in the kitchen) the risk of a massive judgment in a
tort suit is vanishingly small.

That leaves suits in contract, which are not going to be a problem for
most people. I suppose if the original poster is in some kind of business
where he enters into contracts that make his personally liable in the
event of default, that might be an issue. But the average person who makes
his living working for a salary doesn't need to worry about this risk.

The notion that most people are targets for rapacious shysters is an urban
legend if you ask me. (And I'm a torts lawyer when I'm not posting here.
So I know from rapacious.)

There isn't a 501(c)3 that would not love to be the beneficiary of a CRT.
Pick your favorite, many large ones have experience and can help you with
the set up

Did you consider using a variable annuity with principal protection instead
of the EI/UL?



- quote -

I am thinking about putting all elevated RE assets in a private annuity
trust. Convert half and invest in indexed UL.. The other half would
stay in PAT till the expiration of the private annunity. My aim is
to ward off potential creditors. My son would be the trustee and he
would do same with his son. Control of the assets is not a big issue
for me. IRR for UL at 7 or 8% is ok with me. Don't know if this
plan is viable, but the basic idea is to put appreciated RE in PAT,
sell them thru the trust, invest proceeds in indexed equity UL.
Upon distribution you pay capital gain with future dollars. No
ordinary income tax on interest income cause you borrow it out instead
of direct withdrawl.
Scott, the idea that idle equity should be stashed away and not remain
as a potential fat target for lawyers is something I quite agree with.
It takes discipline.
Anybody know if a private foundation can be the beneficiary of a
charitable remainder trust? Can the donnor-trustee draw an annual
interest income from the corpus and leave the remainder interest to the
private foundation which the donnor-trustee found? Sounds like double
dipping. My suspicion is that PF can be the bene of a CLT where the
stream of income is paid to the charity. But it would be great if you
can do a CRT, draw annual interest from the corpus, then leave the
remainder to "your own" private foundation where your progeny can learn
some charity, investment, and management skills.

Missed Fortune 101 is a book extracted from the author's original work,
"Missed Fortune".

I would agree with the other poster to say that there is no way to
determine if UL is an appropriate approach without knowing alot more
then you have disclosed.

The first part of the equation (seperating one's equity from your
property) is covered and defended soundly in the writings. Despite
popular opinion, the equity in one's home is a "sleeping" asset and
only takes on a value once you either cash it out or sell it out.

At the risk of sounding self serving, I have implemented the very
strategies outlined in these books in my life, my mortgage practice and
on behalf of my clients, and I confirmed believer of "most of the
advice" (I have different ideas on what to do with the proceeds).

In the end, your decision must give weight to your current tax status,
tax deductability opportunities, networth and current retirement
planning. Spend some money and sit down with a CPA and financial
planner to create the best case for you.

Regards,

Scott

datetree <wrongliver2[at]ambitlink.net> wrote:

- quote -

That's an awfully risky strategy. It will probably provide better
returns than a non-leveraged strategy, but whether it's a good idea
depends on your whole portfolio, goals and risk tolerance.

The other question is about universal life. That's an insurance policy.
Yes, it has an investment component, but it's primarily designed to
combine an investment pool with an insurance policy. Are you (or
should you be) looking for life insurance? Who will be hurt financially
if you die early and what it needed to provide for them? Is the life
policy associated with the vehicle mentioned appropriate coverage for
this need or is it too little or too much? If you have no need for life
coverage, then investing in a life insurance policy is *very* unlikely
to be a great idea. The insurance will usually cost you much more than
the tax advantages gain.

What other tax-advantaged investment options do you have available?

This isn't a question that can be analyzed in a vacuum on a newsgroup
like this. Unless you're willing to open up a lot of financial details
in public, you're much better off seeking out an actual planner.

Gut feel says not to trust the advice of the folks you've talked to
without a second unbiased opinion. They are trying to sell you
something which pays them a lot of commissions, and it's something that
often makes little sense for the investor/consumer, but *always* makes
sense for the salesperson.


Michael

if you have a lot of equity in real estate what would you do to
maximize it? The above group proposed to refi then invest the proceeds
in indexed equity universal life. Thanks very much in advance.
Really appreciate the thoughtful advices you guys give.