Are trusts
the better option for wealthy individuals, or
does income level matter?
If you have more assets you probably need more
control over those assets.Once you start getting
into more complex real estate investment planning,
then, yes, it has more to do with assets. But
at a smaller level, I would say trusts are still
important. Say from the Standpoint of probate
you want to keep your assets private. Probate
is a public forum and anything that goes to
probate is publicly disclosed. But, if you are
a private person, may be you don’t want
your assets disclosed to the public. By using
a trust you avoid that.
The other aspect of investment trust is control,
the ability to control those assets once they
are passed on.From a taxing perspective, when
trying to mitigate the amount of taxes the government
can take when you die and your aspects are passed
on. What are some of the benefits of? Trusts?No,
but if you have over $1.5 million and give all
your money to your spouse you avoid taxes there,
but when she passes that to our kids, the kids
are taxed on the amount that’s over $1.5
million.
By using trusts, though, you can create what's
called a family trust .Say I put $1.5 million
into a family trust and $1.5 million into a
marital trust, then my wife gets complete control
over her $1.5 million and she has access to
the $1.5 million in the family trust.When she
dies, the $1.5 million she already Had goes
down to the kids and kids have access to the
other $1.5 million, in the family trust so all
$3million passes through. There’s no tax.
This is basically estate planning, but I have
reiterate that you need to speak to your attorney.
So that a way to avoid Tax. It’s tax Avoidance,
not tax evasion. It’s a full legal and
normal process of working with estate tax.
Setting a date for canceling
PMI
It is one of the key trade-offs for anyone
who wants to buy a house but doesn't have much
for a down payment: The lender will OK your
mortgage application, but only if you agree
to pay private mortgage insurance (PMI) premiums
every month.
But those premiums-currently paid by an estimated
5 million American home owners-can add $50 to
$150 a month to your mortgage bills and continue
for close to a decade. Now one player in the
mortgage insurance industry has begun giving
buyers the opinion to nail down a precise date
in advance for canceling premium payments. Philadhelphia-based
radian guaranty inkwell automatically terminate
certain homeowners monthly payments After 60
months five years of coverage No property appraisals
and no formal borrowers requests to the lender
are necessary. The main requirements are that
the Homeowners maintain a solid history of on-time
payments during the first years, have a FIVO
credit score no lower than 660,and agree to
pay slightly higher monthly premiums.
For a30 year, 6 percent, $180,000 first mortgage
with a 10 percent down payment on a $200,000
home purchase, the higher premiums would range
between $7 and $8 More a month through a year
five, compared to standard Radian PMI premiums
for the identical loans.Radian's new "Free
After Five" plan, launched Sept. 8,is part
of an industry wide effort to deal with consumer’s
critiques of PMI coverage. Other efforts under
way include a congressional campaign to amend
the tax code to make mortgage insurance Premiums
deductible against federal taxes, and the introduction
of discount-priced "lender-paid" insurance
that automatically makes premiums tax-deductible
by including them in the mortgage interest rate.
The Radian program aims at consumer unhappiness
about the uncertainties surrounding termination
of mortgage insurance premium payments. The
federal Homeowners Protection Act of 1998 mandated
automatic cancellation of PMI whenever a borrower's
loan balance is paid down to 78 percent of the
home's value at the time of purchase. To qualify,
borrowers must have on-time loan payment histories
for the year before termination and no other
mortgage liens against the property.
But that automatic Florida real estate investment
returns termination can take a longer time to
happen seven to nine years, depending on the
loan, amortization schedule. That is too long
a wait for many consumers. As an alternative,
the 1998 law also established procedures whereby
borrowers with mortgage originated on or after
July 29,1999,can request termination of insurance
payments whenever their mortgage balance hits
80 percent of the original value of their homes;
in other words, when their equity position hits
20 percent. Typically, such homeowners must
pay for a full appraisal conducted by an appraiser
selected by their lender or loan service. That
apprisal, in turn, makes come up with a value
lower than the borrower anticipated, leaving
the insurance coverage and premium payments
in place.
The borrower requested PMI cancellation route
much in demand in high appreciation real estate
markets also comes with its own complexities.
For example, if investors Fannies Mae
or Freddie Mac own the insured mortgage, their
rules govern whether a homeowner’s request
for cancellation is approved. As general policy,
neither company will agree to PMI cancellation
within first two years of the mortgage even
in hyperinflationary markets where property
values are gaining at double-digit annual rates.
Both Fannies Mae or Freddie also insist on
a higher borrower equity standard-a 25 percent
stake rather than 20 percent for cancellation
requests between two and five years of a mortgage
origination. Neither will agree to borrower
initiated PMI cancellation request if the homeowners
have made a payment 30 days late in the 12 month
preceding the request, or a 60 day late payment
during the preceding 24 month.
Radians plan -Virtually guaranteed to be matched
by competing mortgage insurers in the months
ahead seeks to bypass the uncertainties and
hassles of the standard cancellation procedures.
It also includes a carrot for lenders who offer
it to homebuyers: though the borrower insurance
payment responsibilities will stop at month
60,Radians coverage of the lender against financial
loss caused by borrower delinquencies continues
in force until the automatic termination date.It's
a win-win concept for the lender and the consumer,
say Radian executives. But of course, the date
certain cancellation feature is inherently a
trade-off itself: It costs the borrower extra
every month, but costs the lender or services
nothing at all.
