Ownership is something to be proud of, because simply put, you own it:

· A new car including the pink slip in your hand.
· A new homepaid for.
· A new suit or dress not an employee.
· Being a business owner not an employee.

Does all that sound good? Well it can all be your of you have the mind- set to get it done. Too many Americans have no vision to do anything for themselves. All they see is themselves working for someone else until they are 65 years old, wearing a gold watch. This is what we call Loanership.

Loanership is not something to be proud of. There is no end in sight.

· Charge cards are taking your payments and applying more to the interest instead of the principle.
· By the time you pay off a car in five years, it is time to go get renewed in debt another 5 years. Some Americans just love to be told what to do; When to sit, when to stand up, what time to work, what time to take lunch and when to go home. They get mad at you for taking vacations or sick days and are happy when you are back at work to take their abuse. They do not care about your personal problems, saying hello or how long you were stuck in traffic the other morning you were late!
· This is Loanership. But there are a small percentage of people who do care. The 5% of Americans that are movers and shakers, the builders and creators that are separated from negative thinking people. They are not afraid to do what most will not do.

Banks take your money and go invest in the stock markets pay you about 2% or 3% and make 15%-18%. So do credit Unions and Insurance Companies. Many are afraid to cut out the middle-man and invest directly into the American economy (stocks, mutual funds, and annuities).

In the early years, life would begin at 18- 20 years old for some young adults:

· Children are young
· Maybe some high debt
· Mortgage
· Doctor Bills

These types of families would need a lot of protection in case of an untimely death. They also may not have many investments or none at all.

But in the later years of life (about 62- 64 years old)

· Their children are grown and may be gone on with their lives.
· Bills are much lower or none at all.
· The home is now paid for

Retirement is now a major issue. They need to survive. Too old to work and his or her employer is waiting to show them the door for the last time. This is how life works.

First you need to know that not everyone owns one of these accounts. Many Americans do not take the time to find out about IRA’s until retirement becomes and issue and by then it may be too expensive to own.

Here are some facts:

· The employee Retirement Income Security Act, better known as ERISA, gave birth to IRA's in 1974.
· Two funds came out of this: Individual Retirement Accounts and Individual Retirement Annuities.
· An IRA is a plan in which an individual can set a certain amount of money aside.
· IRA's may be funded with cash contributions, stock investments, mutual funds, variable annuities, money market instruments such as Certificates of Deposit (CD's) offered by banks, or just about any other investment vehicle, except: Life insurance and collectibles i.e. gold coins or works of art. Z
· To be eligible for IRA's you must have earned income and be less than age 70.
· Ira contributions are limited to $2,000 or 100% of the individual's earned income per tax year.
· Spousal IRA's may be established for a non-working spouse. Contributions to a spousal IRA are limited to $250 per tax year.
· Note: No more than $2,000 may be contributed to a single IRA except for rollovers.

What is a Rollover? A Rollover is a transfer of qualified funds from a qualified plan to allow another qualified plan such as an IRA.

The funds being rolled over must be placed in the IRA within 60 days of the distribution. A rollover may occur only once in 12 months.

A Simplified Employee Pension is basically an IRA, owned by an employee which will accept employer contributions on behalf of the employee.

To be eligible for a SEP:

· You must be 21 years of age
· Have owned an IRA
· Must have worked for the employer in the current year and for at least three months earned $300. (indexed for inflation)
· Must have worked for the employer in 3 of the last 5 years
· $2,000 is the limit for contributing to the SEP for the working year.
· SEP's are related to IRA's in that one of the eligibility requirements is that the participant must have an IRA to receive employer contributions.

The benefits and Advantages of the 401k plan are:

· 401k's providing for employee salary reductions plus some matching employer contribution.
· A reduction in taxable income and tax deferred growth of these deferrals.
· The establishment of retirement benefits.
· A flexible method of meeting individual objectives and needs.

Eligibility requirements would be:

· 21 years of age
· Must have completed one year of service.
· The employer may contribute 25% up to a maximum of $30,000. The employee/ employer may combine up to a maximum of $30,000.

Here are some examples:

· Non-government operated hospitals, medical and dental schools.
· Churches and religious institutions
· Public, private and parochial schools and colleges.
· Social agencies such as the community chest,
· Museums and symphony orchestras.

Here are some examples of non-profit organizations that are tax exempt, but do NOT qualify for TSA's:

· Civic leagues
· Labor and agricultural organizations
· Chambers of Commerce and boards of trade.
· Fraternal Societies
· Credit Unions
· Benevolent Life Insurance Associates

When it comes to contributions, the employer must make them. Employers may contribute 25% of the employee's pension or $30,000. Salary reduction deferrals may be $9,500 per year. However, there is a penalty for early distributions prior to the age of 59 1/2, which is 10% excise tax.

· Congressman Keogh was the sponsor of the Keogh Act, which amended the Internal Revenue Code to allow the self employed to establish qualified plans. They are also referred to HR- !0 plans.
· The Keogh plan came into existence in 1962 by the Self-Employed Individuals Tax Retirement Act.
· The difference between a Keogh plan and a corporate plan is simply that the Keogh plan is for a non-incorporated form of business and of course the corporate plans are not.
· Keogh plans permit the owner to participate in the plan as an employee.
· A sole proprietor or a partner in a non- incorporated business is treated as employees of the business as long as they have earned income or personal service income.
· Plan Contributions:

If the Keogh plan is a defined contribution plan, the maximum plan contribution is the lesser of 25% if the compensation or $30,000.

If the plan is a defined benefit plan, the contributions are limited to an amount necessary to provide the lesser of a $90,000 benefit, as indexed, or 100% of the participant's average compensation for the individual's highest 3 consecutive years.

If the Keogh plan is a profit- sharing plan, the contribution limitation is 15% of compensation up to a maximum of $30,000 per participant.

Lump Sum Distributions:

A distribution will be considered a lump sum distribution if it occurs after the business owner or any employees have attained age 59 or died.

The owner- employee may also receive a lump sum distribution due to a total disability. The owner's employees may also be eligible for a lump sum distribution (and its favorable tax treatment due to termination of employment.

· Keogh plans also accept rollover distributions from other qualified plans.
· Premature distributions prior to age 59 1/2 are also treated like similar distribution from other qualified plans. However, an individual will be subject to a 10% penalty tax on the amount of the premature distribution.
· There is a 15% penalty tax on excess distributions over $150,000 or $112,500 as indexed.

Here are a few facts that you need to know about living trusts:

· They do not go through probate.
· Prevents the courts from controlling your assets at incapacity.
· Will give you (not the courts) control over the assets you leave to your minor children and grand children.

Question: Why do living Trusts avoid probate?

Answer: Because you have transferred ownership of you titled assets (home, other real estate, bank accounts and investments) from your individual name to the name of your living trust- which you control.

Question: Will I lose control of my assets I put in my Living Trust?

Answer: No- you keep full control at all times. You continue to do everything you could do before, including buying or selling assets. Your trust is a revocable trust, so you can make changes at any time you wish.

Question: Are Living Trusts new?

Answer: Not hardly. They have been used successfully for hundred of years. This concept was used by the knights and others who received land in exchange for providing services to the King. To keep the land the knight had to keep fighting. After so many years of fighting, and with the barter system in place, the knights started paying king's a fee instead. The king then turned to hiring mercenaries in the knight's place.

Soon the knights got smart and figured out how they could transfer their title of land to clergymen and laymen of the church (who were exempt from paying fees to the king). However the knights retained the use of their land for their lifetimes or for several generations to come.

This became known as a Trust, because the knight trusted the clergyman to allow him to continue using the land. So the knight kept use of his land, the clergyman got the title to it and the king lost his fees. Because of all this, the Living Trust was born.

The Grantor:

That's you! You become this in legal terms. Also called the Creator, Settler or Trustor. If you are married you and your wife can be the Grantors. Only you can make all the changes necessary.

The Trustee:

You can name anyone to be the manager of you assets in you trust. You can even name yourself as the trustee, and most people do. You will keep on handling your affairs as long as you can.

The Successor Trustee:

You need to name someone the Successor Trustee just in case the person dies or no longer wants to manage your trust. Even if the Successor Trustee becomes incapacitated, business will go on as usual.

The Beneficiaries:

These are the people who will receive your possessions when you die. However, you can name a church, a foundation or a fraternal organization as a beneficiary in your trust.

Children's Trust:

If you have minor children, you will want a children's trust set up within you living trust. If you become incapacitated, your assets will be used to care for your children without the courts interfering.

Guardian:

This person you named to care for your children if you (and your spouse) become incapacitated or pass away.

Children's Trustee:

Manages the assets in your children's trust until the children reach the age you specify they will inherit.

· Avoids probate when you die. (Saves money, takes less time, maximum privacy, minimizes emotional stress)
· Prevents court control of assets at Incapacity
· Prevents court control of minor's inheritance
· You control when your beneficiaries inherit
· More equitable fair distributions
· More difficult to contest
· Effective pre-nuptial protection.
· No special government forms required.
· Flexible- can be changed or cancelled at any time
· Easier for you family
· Professional asset management
· Reduces or eliminates state taxes
· Gives you maximum control
· Peace of Mind

· A living trust is more expensive than a will. This is true! However, you will have more provisions in a living trust than a will could offer. A living trust deals with the issues while you are living as well as after you die. A will has other charges, such as probate, conservatorship, if you become incapacitated and guardianship.
· Within a living trust you have to pay management fees: Only trustees are entitled to receive fees for their services. However, if you are your own trustee or a family member, then you don’t pay management fees.
· Some living trusts have a corporate trustee or successor trustee; they will charge a fee for a service.
· Probate is not expensive, so why pay for a living trust? The next time someone wants to tell you what is expensive and what isn't (concerning the law) tell them to bring you a price list of lawyers. All we are saying is, attorney fees can be very expensive. Especially if you life affair is not in order.
· It is better to have the probate courts supervision.
· Many people who set up a living trust have a successor trustee, but some of them do not know their responsibilities, and as a result of this they don't know what they are supposed to do when the grantor dies. Just like anything else, getting your education and knowing responsibilities keeps all the trouble away from the court's involvement.
· A living trust is a waste of time and money because people end up going through probate.

1. Your trust is not fully funded. Some people procrastinate when it comes to taking care of business. Not changing tittles, beneficiaries and forgetting to add assets to their funds could be costly.

2. Your trust is not properly written. Out of state lawyers not familiar with your state laws and not experienced with your state laws, using PC software or prep hits and not involving an attorney.

3. Your trust is not a revocable living trust.

Some attorneys make bad mistakes when clients asked for a revocable living trust and they get a testamentary trust instead. Some lawyers don't want to admit that they are not experienced with revocable living trusts and assets written in the trust are written to go through probate.

People even think that Congress will probably eliminate living trusts, but that is not likely to happen. This plan has been here for hundreds of years.

It may take time to change titles and beneficiary designations. Yes, it does take a little time. However, don't procrastinate. You might lose everything to the probate courts to decide for you.

· Refinancing real estate may be difficult
· ATM withdrawals can be inconvenient
· Why? Because most banks don't issue ATM cards in the name of a trust.
· You can lose bankruptcy protection on you home.

In some states, a portion or all of a home is automatically protected from creditors when filing for bankruptcy. This is known as having a homestead on the home.

· Creditors have less time in probate to submit claims.
· Due to changes a new law was passed that a living trust has the same time limit for creditor’s claims as in probate.
· A trustee has more personal liability that an executor.
· The Successor trustee is not personally liable for any debts you owe when you die. Also, their personal assets cannot and will not be taken to pay your debts. Trustees have certain responsibilities and they take their work seriously.
· A trustee is liable for clean up of contaminated property.
· This is true: Due to a bill that was passed in 1980 called: CERCLA- the Comprehension Environmental Response Compensation and Liability Act which makes parties responsible like past and current owners and operators of contaminated property.

NOTE! A Will does not avoid probate! A Living Trust does avoid probate!

Question: What assets go through probate?

Answer: Not everything one owns, because the surviving spouse jointly owns some assets.

Question: What happens in probate?

Answer: Probate doesn't automatically happen. Either a relative or an executor of the Will petitions to the court for probate to take place.

Example: Checks need to be written, bills need to be paid, transfer of assets to new owners.

Questions: Why d owe have to go through probate?

Answer: If your name is on the title of an asset and you die, probate is the only legal way to take your name off the title of an asset and put the new owner's name on.

A corporate trustee is a bank trust department or a trust company that specializes in managing trusts.

What Do They Do?

· Maintain accurate records
· They can buy and sell assets
· Handle required paperwork
· Distribute income and assets as your trust directs.

Why would you use a Corporate Trustee?

· Family and friends are not always a good choice in handling your business… some are not too good in handling their own business.

Do you lose control?

· No. No matter whom you name as your corporate trustee, you still keep control.

When would you use a Corporate Trustee?

· When there is no one else you can trust
· When you want help managing your investments
· When you plan to keep assets in trust for your beneficiaries
· When you family may need help after you die (setting you estate)

The Benefits of Having a Corporate Trustee

· Experience:

o Managing trusts is their business. They specialize in knowing all kinds of trusts, tax and estate planning strategies and the legal responsibilities of a trustee.

· Professional asset management:

o These managers know their resources better than is and can achieve better results than us. They know the "language" well.

· Regulation:

o Both state and federal agencies regulate them.

Reliability:

o They will serve you well without any distractions that other family individuals might… sickness, death or vacations.

· Objectivity:

o They will follow your trust instructions objectively and unemotionally

Questions:

· If you become incapacitated, whom do you want to take care of you?
· Who do you want to handle you affairs
· Do you have special medical needs?
· Do you wish to reside in a care facility?
· Who do you want to receive your assets when you die?
· What about certain sentimental values?
· Who so you want to have them?
· Do you want to leave something to your church or specific charity?
· If you have minor children, who do you want to raise them if you and you spouse become incapacitated?
· When do you want your beneficiaries to receive their inheritance?
· Do you have a child, spouse or relative that will need special care?
· If you have stepchildren, how do you want them to receive benefits (if at all)?
· Is there anyone that you wish to disinherit?
· If your entire family dies before you, who will receive your assets then?
· If you own a business, what do you want to happen to it?
· 16. Don't forget about your pets! Not everyone likes owning a pet. Who do you want to have care for your pet?

Other Questions

· Who will be your Trustee?
· Who will be your Successor Trustee?
· Should you consider a Corporate Trustee?

Note! Your living trust can only control the assets you put into it. Most attorneys have pre-written letter to assist you with all of your investments. It is not difficult at all to fund your living trust. You need to begin making a list of all your largest assets first:

· Home
· Boat
· Cars
· RV's
· Property (in/out of state)
· Business
· Certificate of Deposits
· Bank Accounts
· Credit Unions
· Stock/ Mutual Funds
· Life Insurance
· Copyrights, patents and royalties

Smaller assets, such as:

· Furniture
· Collectibles
· Clothing
· Pets
· Tools

Should also be included in your living trust. In doing this, it will give you peace of mind knowing that whatever happens to you and/or your family, all of your worries is no more considered worries. Everything is now in place and organized.

Finding the right Attorney:

· Get referrals
· List some attorneys you may already know
· Attend a living trust seminar
· Certified estate planning attorneys
· Prepaid legal service plans
· Local Bar Association

You also need to do this. Learn: How to evaluate an attorney

This can be done by telephone or in person. WE will give you a list of both so that you may use these things to compare:

1. Tell the attorney you want a living trust document that will avoid probate when you die and a conservatorship if you become incapacitated. Then ask them if they prepare revocable trust.
2. Ask the attorney how many years they have been doing living trusts and about how many have they done? What is their percentage of living trust business?
3. If your estate is more than $600,000 ask how many living trusts with A-B and A-B-C provisions the attorney has done and how many years?
4. Ask who will actually write your trust document?
5. Ask how many living trusts the attorney has administered?
6. Ask how much the attorney charges for living trusts?
7. Ask how long it will take and decide if that is acceptable to you.
8. Ask the attorney to send you a biography
9. Ask how much malpractice insurance the attorney has?
10. Can you come in for a free consultation?
11. Evaluate the conversation.

The personal Interview

Things to look for and ask very important. You do not want to do business with anyone who is not organized.

1. Is the attorney on time? Is the staff friendly? Is the office clean? Is the attorney well organized?
2. Show your completed organizer to the attorney.
3. Confirm the estimated price quoted.
4. What documents are included in the cost?
5. Ask if the attorney mind if you get a second opinion of their recommendations or if you have the documents reviewed by another attorney after they are done.
6. Find out how much assistance the attorney will provide you with changing beneficiaries and titles? Is there any additional charge for this?
7. Ask if the attorney will notify you of any changes in the law that might affect your living trust.
8. Ask them for clients you can call that will recommend them.
9. Ask to see a sample of the documents you will receive.
10. Evaluate the meeting.

Reasons for Intestacy:

· Reluctance to face the thoughts of death.
· Procrastination
· Unfamiliarity with Intestacy laws.

Sadly to say, there are some disadvantages of intestacy that you need to know.

1. The state will determine the heir's shares.
2. The state will determine the heir's interest
3. Special needs such as children will not be considered the sate will determine their support.
4. The state will select an administrator.
5. The settlement can be more costly.

Many people have left property behind unsettled with no one to claim. When this happens, property will escheat back to the State, which means the state will have ultimate interest in the title property within its boundaries. In the absence of any lawful heirs and intestate's property will escheat to the state.

· The estate owner determines the distribution of his or her estate assets
· The estate owner can properly and adequately plan for the future of his or her spouse and children
· Consideration can be given to those family members who have special needs.
· Consideration of individual circumstances
· Specific Requests
· Avoids disinheriting
· Choice of Executor and Guardian
· Making provisions for simultaneous deaths
· Control over the marital deduction

1. A legal declaration of a person's intentions as to how his or her property is to be disposed after death
2. Organizations, funds, foundations or charitable corporations operating exclusively for religious, scientific, literacy or educational purposes. The most common in this category would be the United Way Campaign.

The IRS publishes an annual report, publication 78, listing organizations that equal for federal tax deductible contributions.

The recognized system established by the congress and the IRS for charitable gifts:

· The contribution must be qualified
· The organization must be qualified
· There must be no return value as an acknowledgment of the gift.

Note: If your gift is more than $250 a cancelled check is not good enough. You will need a written statement obtained from the charity.

The Internal Revenue Code sections 501 and 170 define this in detail:

1. Corporations organized for the exclusive purpose of holding title to donated property, earning income and turning income over to its parent charity. This includes operating corporations acting on behalf of the American Red Cross.

2. Organizations, funds, foundations or charitable corporations operating exclusively for religious, scientific, literary or educational purposes. The most common in this category would be the United Way Campaign.

NOTE! The IRS publishes an annual report, publication 78, listing organizations that qualify for federal at deductible contributions.

The recognized system established by the congress and the IRS for charitable gifts:

§ The contribution must be qualified
§ The organization must be qualified
§ There must be no return value as an acknowledge of the gift.

NOTE! If your gift is more than $250 a cancelled check is not good enough. You will need a written statement obtained from the charity.