First, I am not an accountant or an attorney. My thoughts are the conclusion of a discussion with my tax attorney.
I asked "why do I need a trust?" His answer was (in my case) that it would be a waste of $$ and lead to significant additional taxes. He pointed out to me that most trusts benefit the attorney setting them up and not the trustee. He stated that the current MAX long-term rate was 15%. So if I lived in a tax-free state I should deposit my Dinar money directly into my savings account and be done with it. If I decide to put some money onto a trust or LLC I will face an income tax from MY OWN MONEY as i withdrew it from the trust or LLC! His advice to me was to forget about LLC's and Trusts (other than a charitable remainder trust) and use my savings to buy land and hard assets. (Stay in the Dollar until RE and Gold bottoms, then jump into both)
I'd appreciate comments from those who feel trusts are necessary. To me, paying 15% off the top and NOTHING MORE - EVER is the way to go. If you want to leave $$ to children on a metered basis then a trust might make sense. For me, I will cash in as much as I can as the Dinars become long term (to me) and simply deposit the cash. Our taxes have never been more favorable towards capital gains as they are today. Next year, who knows???
Also, DO NOT GIVE CASH TO SIBLINGS. Rather, give them the Dinars to cash out on their own. Otherwise, you will pay the cash-out tax, then the gift tax, and then they will pay the taxes all over again as they cash out. By the time you give each child $1 million the government will have 55% or more of it. I have given Dinars to my children along with a dated bill of sale. This way none of us will pay double taxes. If 10% is good enuf for Jesus then 15% should be plenty for Uncle Sam.
GO RV by Thursday
Hi Eagle,
My name is Mark. I am an attorney (estate planning attorney) and though I am not a CPA, I was at least once qualified to sit the exam and I work with taxation issues fairly regularly. (Please see my profile for an abbreviated professional disclaimer.) I am not telling you my qualifications for any other reason than to say that what I know about trusts, LLCs, and taxation might be worth thinking about.
I don't know your situation and would not tell you that your attorney is incorrect in regards to your situation, however, I'd strongly disagree with the statement, "most trusts benefit the attorney setting them up and not the trustee." (Trustee actually should be "beneficiary" in that sentence.) When I first started practice, I was told that I should find every little old lady I could and give her a free will. Why would I do that? Because then when the lady dies and my name is on the copy of the will, the children come to me to get the original and I get the probate case. I know of attorneys who regularly charge $50 to $80 for a will and then charge 7% on the probate case. If your house is worth $100,000, you are already at a $7,000 bill. Probate money is easy and plentiful. Attorneys who do trust work usually take a higher road. We help people stay out of probate. I also can not think of ANY typical scenario where haveing a trust would cause you to pay more in taxes. Typically if they effect taxes they are used to make the tax burden lighter.
As far as LLCs are concerned, either you misunderstood your attorney or he was just way off base. While what Adam says above is generally true (that LLCs and trusts will not save money on dinar investment income), they certainly should not cost you more in taxes either. Typically an LLC is taxed as though it was an interest bearing bank account. When you earn income in your bank account you pay taxes on it. No one cares if you take it out or not and now one will tax you differently based on whether or not you take the money out. You simply pay a tax on all the income. That is typically how an LLC is set up to be taxed as well. The only way to change that is to go to the IRS and ask to be taxed differently. The reasons for doing that are few and far between.
Your attorney said that 15% is the maximum you would have to pay. I said that too until I researched it to prove another attorney wrong. I had to eat humble pie. Any attorney or CPA is trained to see appreciated assets as a capital gains item. Only those who understand that currency exchanges work under different rules will challenge that notion. Most attorneys and CPAs who have studied this area that I have communicated with agree that you should expect to pay 35% ordinary income instead.
You said
I'd appreciate comments from those who feel trusts are necessary
While I believe that any good estate plan starts with a Revocable Living Trust, Pour-over will, and powers of attorney, I don't think that any type of trust by itself is tthe best planning tool for a dinar investor. I think it would be good to set up two LLCs in Nevada or Wyoming and have a portion of each LLC owned by a Nevada Domestic Asset Protection Trust. I won't go into the structure now. Anyway, there are lots of different kinds of trusts and each is infinitely customizable to support certain goals. Beyond your basic estate planning with a revocable living trust (which I think anyone who can affort id should have) there are many uses for trusts. Whether or not you should have one or more depens on you, what you are doing, and waht you wish to accomplish.
you had another statement:
you will pay the cash-out tax, then the gift tax, and then they will pay the taxes all over again as they cash out
This statement is off base. There are many ways to avoid the gift taxes and only one person will be charged income taxes and nay given income from a foreign currency exchange. I won't take the time to go into how it all works now, but I'd be happy to answer questions about it if anyone has any.
I hope that this has been helpful for someone. I'm sure it bring up some questions for some of you out there. I'd be happy to answer those questions as time permits.
Best of Blessings,
Mark
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