_(Dinar Recaps Note: This post is for informational purposes only. It is not legal, tax or investment advice. Dinar Recaps advises that everyone should do their own due diligence and seek local Professional tax, legal and/or investment advisers.)
Dear Dinar Enthusiasts,
I hope all these juicy Legal Treats serve to assist you and ease some questions you may have.
The comments found herein are from an Attorney who is one of my Dinar Update newsletter recipients that has practiced law in the areas we all need to investigate with our IQD investments.
This Attorney has requested that I not share his name or contact details, as he is simply providing all this to be of assistance to us all out of the goodness of his heart, and without charge - He further stated that he can not take on any clients via this channel (through me) as that would go against his code of ethics.
In a Dinar Update email I set out last week I directed my readers to contact and hire a Tax Lawyer/CPA and Financial Planner to obtain advice to do with their IQD holdings, and this Attorney being a member of our group simply took it upon himself to write back to me with the following, after which I replied with my questions in another email, which you will find below with his response to everything I had asked... enjoy.
There is really no simple way to avoid the taxes. I am going to give you the basic law on this stuff.
Read More Link on Right
_A 501 C 3 is a Charitable Public Foundation, you loose absolute control over this and the monies have to be used for charitable purposes. While you can draw a salary a "reasonable salary" it is not a piggy bank and in the end the proceeds stay in the charity when you die and do not go to your family Moreover it takes a good 8 months or so to set one up. I have done several never seen one done quickly. The last one for a Public Foundation for a U.S. Navy Ship that I was asked to do. Usually a foundation is set up to raise money for the christening and to afterwards raise money for the ship for various things. Anyway that was an ordeal even thought it was for a U.S. Naval Ship.
There is no kind of family trust that gets rid of income tax. There are Charitable Trusts called Charitable Remainder Unitrusts and Charitable Remainder Annuity Trusts. If a person puts all their currency into the trust the Trust then can make the exchange tax free and does not pay tax. However it has beneficiaries. Again these are very complicated to set up. There are a whole lot tables used to calculate values and how much one can receive as a beneficiary and the beneficiary can only take so much as you cannot jeopardize the principal in the trust and the beneficiary has to pay income taxes on the monies received. If the beneficiaries could possibly live too long then it makes it more complicated. Again after the beneficiaries die and they must be from the same generation which means your kids and grand kids are left out, the monies must go to a 501 C 3. I assure you the IRS is very strict about this and the office that handles all of these things is in Baltimore. These are complicated trusts they are not a magic bullet. The Trustee is scrutinized yearly and has to make reports keep minutes and there is a whole lot of book-keeping etc.
These are things you have to really think about because once you let go the money it can never come back to you meaning change ownership again.
A revocable living trust that is the only thing I know that goes by the name Family trust. And a Family trust is "you" it has your tax id number your social security number the taxes pass straight to you again this is an estate planning device not a tax planning device. If you get a separate tax number then you risk it being taxed as a trust at the highest rate. All RLTs are good for is for Estate Planning Purposes. I think they are great tools and I highly recommend them but not for something like this.
Anyway just wanted you all to know the facts. I used to do these every month.
I am not saying they are bad things, they are good when used certain ways in a planned structure and they can help alleviate federal gift taxes, but using them to get rid of income taxes yeah you do but the monies are not yours anymore. Your public foundation has to have a Board and that board may not vote you the monies you want all the time.
I recommend folks get a CPA to calculate the income taxes. Put those monies in a A) account in a Private Bank of a huge Public Bank have that bank invest in municipal bonds the interest earned is income tax free have those monies paid over to a B) account which is where the balance of your monies are and then live off the interest. Have a money market account set up beside your two accounts so you can take quarterly draws from account B. Whenever you go to pay your taxes you will have the monies in Account A to pay the tax but in the meantime it is paying tax free interest over to Account B. Account B is invested the same way in muni-bonds. You want to know the biggest player in the DFW area who pays hardly any taxes at all and has income exceeding 100,000,000
million a year in interest from muni-bonds?
Ross Perot. This is how the big boys do it.
There is nothing wrong with taking some monies out to do whatever you want with, but the biggest thing is that most people who come into lots of money that have never had money tend to blow it inside 60 months. This is a proven fact. Hence the reason for my recommendations. Any major bank has a Private Banking Arm. Ken there in Texas, Bank of Texas has a private bank in Ft. Worth and Dallas. Chase has one, B of A, you just need to check with your bank.
Anyway those are my thoughts. I have kept silent as I am working for other clients but I hate to see people get hurt. I hope this helps you some and I hope with all my heart that this comes to fruition for everyone involved.
Thank you so very much for stepping up to the plate to help with your experience and knowledge!
Ken again, I have been out here biting my tongue and swallowing blood. I have a vested interest in this happening and I was engaged by some very kind and thoughtful folks. For years all I did as a part of my regular practice was what I called “Structural Planning” which took in (Estate & Business Planning) and I later drifted in a big way into International Planning. So I am not short of experience did it all for over 15 years. Too many clients told me I was too nice to be an Attorney, as I do not have those bassmaster qualities of most. I think it is an attorney’s job to educate the general public and from a Christian standpoint we all have stewardship responsibilities, which is as far as I am concerned most paramount.
I will not get preachy but at least you will understand my perspective.
Our Tax Attorney/CPA originally said that the Trust was something we should consider because we talked with him about our 3 grandkids, but he seemed more concerned about protecting the monies from law suits... from anyone that would try to come at us down the road knowing we had monies they could potentially come after.
Again Charitable Trusts are wonderful planning vehicles and I did not go too deep into it when I last wrote you. They can shield an income source from lawsuits but the flip side is you loose ownership of the assets and the assets must produce income. Ken they are nice tools and I had fun doing the work. I also had a staff to help me. We had software to generate the logithrums that looked at the life expectancy of single and dual owners and sometimes I had wealthy clients who had kids they could not trust and I would set up a 3 or 4 life Unitrust. If the kids were young it would cause all sorts of issues because the Trust themselves base everything on a set of tables distributed by the IRS and longevity tables in the calculations. I hardly ever set up a Charitable Annuity Trust because they only work in certain situations. There are times when putting both a CRUT and a CRAT in an effective Revocable Living Trust that can almost kill all Federal Estate Tax. One of them will kill almost 47% and then you bring the other one to the table and it wipes the slate clean. Again those these are basically used as Estate Planning devices. I have used a CRUT before in helping a family transfer a family owned business with a low basis to a younger generation very complicated and very expensive. One caveat here. CPA’s do not give you privilege between yourself and the IRS. They will say otherwise but they do not have privilege. A tax attorney though the privilege is solid. They cannot make an attorney divulge information about your or conversations you have had with them. I would go through a tax attorney that is my advice.
When we explained that there were no such reasons for any suits being filed against us, at least not anything legitimate that we would loose to, he backed off the Trust end of things and went in the direction to simply help us with the accounting and our tax filings and investment strategies after that.
I am finding it a struggle to ask you for anything further about all of this as you have already provided so much, but being who I am... nothing ventured nothing gained... could you share a little about any value to putting IQD into an LLC or Corp?
This is what I told my clients. The reality Ken is that it does not make that big a difference. The U.S. Government knows who owns IQD. The taxes are not going to change. The taxes are based upon the domicile of the Members of the LLC. Remember an LLC “Limited Liability Company” is simply a pass through vehicle as far as the IRS is concerned. The main purpose of an LLC is to provide Liability protection for its members incase the enterprise that it is conducting should bring forth a lawsuit. Then each Member is protected if they have maintained faithfully the mechanisms within the structure and followed all protocol. Then courts are reluctant to pierce the corporate veil and go after the Members individually. It is somewhat analogous to a S-Corporation where the owners are called Shareholders. Same principles apply, accept that S-Corporations have certain limits on who a shareholder can be, they can only make a certain amount of money a year before they can be switched back to a regular
C-Corp. Let me just say this there are a lot of rules with S-Corporations whereas with Limited Liability Companies if you can create it you can do just about anything. However they cannot kill any taxes. Even if a person had a Nevada LLC or a Wyoming LLC, two very good jurisdictions. The LLC is a pass-thru and the Members are taxed where they are domiciled. If you are fortunate to live in a state where there are no income taxes then you are blessed. You cannot kill the state income tax by simply forming an LLC and running the exchange through the LLC. It is where you live that is what determines the state tax status.
Let me give you an example of how I would use an LLC. Let me say one of my clients wanted to invest monies in one of your investments you are encouraging. I would then suggest they place their investment dollars through an LLC to the investment. That would give them limited liability as to the venture. I would even suggest they confect a note from themselves to that LLC, as it would give them more options later down the road in regards to that LLC. If a person who gains wealth from the exchange wants to start a business, a coffee shop, open a UPS Store anything then loaning money to an LLC that then does the business is a good thing. It protects you from lawsuits. Taxes though all profits flow through, however the LLC has the power to take deductions and other things an individual cannot take so operating a business through an LLC is highly advisable. Look at how most law firms and physician offices are structured. They are in LLCs.
The answer to your question, is that no one really gains an advantage at this point by putting their IQD through an LLC
This would only delay the taxes due is how I understand it... and a Corporation would not be advisable at all, although I do not know why...
The reason why is that Corporations are double taxed. There are only two ways monies flow out of a regular corporation. One is through dividends and the other is through salaries. The corporation is taxed on both.
So we should just do what we have planned on... exchange the IQD in our personal noninterest-bearing checking account, and deal with the taxes from that point forward?
Ken I am not sure on the non-interest bearing checking account. Not sure why that has been advised. I would go back to the source on that information and ask them.
Noninterest-bearing accounts are FDIC insured on the entire balance in the account, up until December 31, 2012 that is. All other accounts that do bear interest on balances are only FDIC insured up to $250,000.00 - That’s the reason for utilizing a noninterest-bearing checking account... many will have a balance well past $250K if the IQD revalues at the levels we’re all expecting to see.
And of course this 'muni-bonds' you are speaking of sounds like what everyone should look into doing - I've never heard of this... is this something we would setup through someone the likes of yourself, a CPA, or through a financial planner? Are these muni-bonds something you would need to be hired to setup for Folks?
Ken, I do not sell Municipal Bonds. The concept behind Municipal bonds is important to know. Municipal Bonds are a creature of the state/government. The U.S. government despite the idiots in Washington which is known as the Common Sense Free Zone wants to encourage the private financing of government projects. It is a good thing. Often you will see what are called Bond Issues by local school boards, counties, cities and states to do a project. These Bonds are Municipal Bonds or Munis. To encourage investors to invest the Federal and State governments exempt the interest on these bonds from income taxes. Amazing they understand this concept here but cannot apply to other things. Suffice to say the important thing is to select a good Financial Planner that has access or a good brokerage firm (Merrill Lynch, AG Edwards) or a good solid bank like Bank of Texas, or other large bank or you can go to a national bank like a Chase, Citi or Wells Fargo or US Bank All these types of banks have Private Banking offices somewhere in large metropolitan areas. These are usually found on another floor or in separate buildings all together. You have to have money to get in so don’t rush out and make an appointment yet. However you need an appointment it is not the same as walking up to a teller. The Private Banking Divisions have brokers, accounts and investment advisors and they want solid banking customers because they want to develop a relationship with the customer. They want to know your name and do your bidding. However you have to be here, “As wise as a serpent and as harmless as a dove”
I like Private Banking because I am the boss when I walk in the door. Secondly, you have to be wise. You do not want to get in a brokerage situation where they are churning your account to simply generate fees so you have to pay attention to what they are doing. Thirdly, today unfortunately there are some high-risk bonds you do not want your advisor, banker purchasing in my opinion. I would request them to avoid those governmental bodies that are not the highest. For instance the state of California, New York, Illinois, the Cities of Detroit, Cleveland, Chicago these in my humble opinion are all bad risks because it is a foregone conclusion they are going to end up going bankrupt. And if they have issued any bonds there is a high risk they may default on those bonds. So it is my opinion you need to go in with a good understanding and tell whomever I only want high grade municipal bonds. No risky bonds.
The interest rate is not high on municipal bonds. However you are going for safety and every dime you make in interest is non-taxable.
Again you are there in Texas. Look at Ross Perot and many others. They pay NO income tax because all their income is from municipal bonds. When you first make money before you invest sure you have to pay the tax, but after that then balance your approach and make sure you put enough away in municipals so that you have a growing nest egg. There is nothing wrong with using some of it to put in everyday ventures, just know though that the profits from those ventures is taxable. It is all up to the individual.
When I told you in my previous email that most people who come into money who have never had money usually blow it in 60 months. That is true – usually these people have won a lawsuit, won a lottery or gained an inheritance. Because they have never developed the discipline most wealthy older people have they end up blowing it all. I guess Ken at my ripe old age, I sort of look at it like this. Sure I am a risk taker, but the closer I get to eternity and more my love increases for my children and loved ones, the more I want to be a better steward of what God has given me. So I think it is important for folks to study successful people, learn things they know, emulate their success, copy them. Change your way of thinking, become critical thinkers. Ask hard questions and if you are in the driver’s seat with the money you have a right to know so be hard, be tough, press your advantage. Be as wise as a serpent and as harmless as a dove. When it is in your power to help someone help them but do not allow that person to take advantage of you. And when you give and I mean outright give then give with no strings attached. Anyway those are my ideas.
Angel and I will be investigating this avenue today; I can at least assure you of that! I would also like to offer again if you would like or need some more clients - I can supply that for you with one (1) little email as I'm sure you are well aware.
Ken you are so thoughtful, and again I am impressed with your integrity and character. You are growing on me. However I must decline as I am working for already two clients who introduced you to me and out of courtesy to them it would be wrong to do otherwise. However as I have above I do not mind being a sounding board. I will give you the straight facts and if I do not know the answer I will tell you straight up.
If we see the r/v before 2012, do you recommend waiting to exchange notes until 2012? If I read into what you've said here correctly, it would make sense to wait until 2012 so we could have 12 to 15 months to work with all the set aside tax monies in muni-bonds...
We are so close now I do not see why not. However again the individual still can file an extension and have through August to pay his taxes if they cash in before the first. The way this going it may be the first regardless.
I well understand that all this surrounds your occupation and that you normally charge for your services and advice, and certainly hold a huge respect for you sharing what you have here already, but like I said, I can in fact send you clients with the click of a mouse... Where do we go from here?
Again you are growing on me. I guess I like a straight shooter and besides I am a big-hearted guy. I hate seeing people taken advantage of and for me it is about educating folks. I have obtained the education the hard way. Sure I have the legal education and experience in practicing to know the rules, but I have made mistakes in my own life and so I have learned that sure I like turning over rocks but I also like being able to go the grocery store. I think if everyone will realize for a moment – nothing we have really belongs to us. This past summer I learned that lesson coming close to death. I learned the most important things in life are your faith and what you believe and secondly the love of family and friends.
Everything else is worthless. So if you love your family realize God loans us assets and gives us an opportunity in life to show our good stewardship. If we are faithful he will reward us with more. Not necessarily monetary things but with more responsibility.
Lastly, I ask of you your permission to post what you've written here to our group of Dinar Enthusiasts... it is apparent and obvious that you want to help others, otherwise you would not have taken the time to write all this up for me... I sure would like to be able to share this with our people - They are all wondering what to do...
I do not mind you posting it anonymously that would be best.
WOW Attorney! My goodness...
You have helped a lot more than my words can express with all of this, and I am so very humbled to be the conduit to share your words to help others further past just myself.
- Thank you so very much once again!
I hope this helps you some and I hope with all my heart that this (IQD) comes to fruition for everyone involved.
I am and remain,
With kindest regards,
[The Odd Attorney]
Well there you have it... a wealth of legal advice and information that would normally cost you several hundred dollars to obtain.
His signature is compiled with my words...
I called him [The Odd Attorney] because I’ve never met an Attorney that would provide so much time and advice at no cost.
I’ve posted this to the OKIE Forum so that the OOM Members can express their gratitude to this professional... as it’s obvious to me that with the heart this man holds and his desire to help others... I well know your notes of thanks posted to this thread will be more payment than he could have ever received in monetary form.
Folks, although the income that can be generated is rather low in my opinion compared to the other avenues of wealth generation available through smart investment planning, you can begin to learn more about these Muni-Bonds (Municipal Bonds) via Wikipedia at
http://en.wikipedia.org/wiki/Municipal_bond if you’re so inclined.
In the end, diversity of investing and asset protection is what I have always looked to do and have advised on...
- Never stick all your eggs in one basket ;-)
(Dinar Recaps Note: This post is for informational purposes only. It is not legal, tax or investment advice. Dinar Recaps advises that everyone should do their own due diligence and seek local Professional tax, legal and/or investment advisers.)