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Archive for Haik Chilingaryan

What To Expect From A Revocable Living Trust

Revocable Living Trusts

Living trusts, otherwise known as inter vivos trusts, are created during the lifetime of the person who created the trust, who is otherwise known as the grantor, trustor, or settlor (hereinafter, “Grantor”).  A Revocable Living Trust (“RLT”) can be established for a specified period of time, upon the occurrence (or nonoccurrence) of a specified event, or until the death of the Grantor.  The three essential parties to an RLT are the Grantor, Trustee, and Beneficiary.

The Trustee manages the trust assets for the benefit of the Beneficiary.  The Grantor of an RLT retains the absolute right, during his lifetime, to alter the terms of the trust, amend the trust in whole or in part, and revoke the trust in its entirety.  A revocable trust morphs into an irrevocable trust when the Grantor dies, or when the Grantor surrenders title to the property held in the trust during his lifetime and relinquishes the right to alter, amend, revoke, or terminate the trust.

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Sell Your Property And Pay Taxes Later – What Are Like-Kind Exchanges?

Haik Chilingaryan - Like-Kind Exchange

In the event that an investor should be involved with a sale or exchange of real estate, it is critical to understand the benefits and scope of “Like-Kind Exchanges.” Generally, the sale and exchange of property is a taxable event. However, under Section 1031 of the Internal Revenue Code, an investor may qualify for the taxable gain from the exchange to be deferred indefinitely.

Prior to the passage of the “Tax Cuts and Jobs Act of 2017” (otherwise known as the GOP Tax Plan or the Tax Reform Bill), both personal property and real property exchanges were granted the tax-deferred treatment. The new law now limits the deferral treatment for exchanges involving only real estate transactions.

The scope of permissible tax-deferred exchanges is very broad, including the exchange of an apartment building for a vacant lot. However, like-kind exchanges generally do not apply to primary residences and vacation homes. They only apply to exchanges of real property held for the purpose of investment or for productivity use or used in a trade or business. In addition, the property received in the exchange must also be held for the same or similar purpose. Our firm can help an investor decide whether a like-kind exchange is suitable to his or her circumstances.

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5 Fundamentals Of LLCs

Haik Chilingaryan - 5 Fundamentals Of LLCs

A Limited Liability Company (“LLC”) is a hybrid business entity which contains elements of a partnership and a corporation. LLCs consist of members and managers. An LLC may provide tremendous benefits for its members, which include asset protection, inter-generational transfers, tax saving strategies, wealth preservation, flexible management structures, and clarity on the roles of all essential parties involved in the company as set out in the Operating Agreement.

The following five concepts are fundamental for establishing an LLC: Asset Protection, Inter-generational Transfers, Tax Saving Strategies, Management, and Funding.

Asset Protection

Generally, the more assets a person owns in one’s name, the more likely it is that he or she will be a target mark for creditors. This is why it’s good practice to own as little as possible in your own name. In order to accomplish this goal, it’s important to evaluate the types of asset protections tools that are available to you. An LLC is one such tool that is effective for asset protection purposes.

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5 Fundamentals Of Limited Liability Corporations

Haik Chilingaryan LLCs

A Limited Liability Company (“LLC”) is a hybrid business entity which contains elements of a partnership and a corporation. LLCs consist of members and managers. An LLC may provide tremendous benefits for its members, which include asset protection, intergenerational transfers, tax saving strategies, wealth preservation, flexible management structures, and clarity on the roles of all essential parties involved in the company as set out in the Operating Agreement.

The following five concepts are fundamental for establishing an LLC: Asset Protection, Intergenerational Transfers, Tax Saving Strategies, Management, and Funding.

Asset Protection

Generally, the more assets a person owns in one’s name, the more likely it is that he or she will be a target mark for creditors. This is why it’s good practice to own as little as possible in your own name. In order to accomplish this goal, it’s important to evaluate the types of asset protections tools that are available to you. An LLC is one such tool that is effective for asset protection purposes.

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Tax Reforms Impact On Individuals

Haik Chilingaryan - Tax Reforms Impact On Individuals

During this segment, we discuss how the new changes in the tax laws may have an overall positive effect on individual rates and deductions. However, a crucial component of the Tax Cuts and Jobs Act is that the rates and other provisions of the new tax code have a sunset provision, which means that on December 31, 2025, all of the rates are likely to be reinstated unless some legislation is introduced that will retain these rates or lower them even further.

Synopsis

The Tax Cuts and Jobs Act of 2017, otherwise known as GOP tax reform bill, largely went into effect on January 1, 2018. A crucial component of TCJA is that the rates and other provisions of the new tax code have a sunset provision. This means that on December 31, 2025, all of the rates are likely to be reinstated unless some legislation is introduced that will retain these rates or lower them even further.

The following are the list of major changes under the new tax code:

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What To Expect From A Revocable Living Trust

Haik Chilingaryan- Revocable Living Trust

Living trusts, otherwise known as inter vivos trusts, are created during the lifetime of the person who created the trust, who is otherwise known as the grantor, trustor, or settlor (hereinafter, “Grantor”).  A Revocable Living Trust (“RLT”) can be established for a specified period of time, upon the occurrence (or nonoccurrence) of a specified event, or until the death of the Grantor.  The three essential parties to an RLT are the Grantor, Trustee, and Beneficiary.

The Trustee manages the trust assets for the benefit of the Beneficiary.  The Grantor of an RLT retains the absolute right, during his lifetime, to alter the terms of the trust, amend the trust in whole or in part, and revoke the trust in its entirety.  A revocable trust morphs into an irrevocable trust when the Grantor dies, or when the Grantor surrenders title to the property held in the trust during his lifetime and relinquishes the right to alter, amend, revoke, or terminate the trust.

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Estate Tax Planning Under Tax Cuts And Jobs Act

Haik Chilingaryan- Estate Planning

Even though Estate Tax Planning is currently utilized by only high net worth individuals, historic trends have shown that the risk of a person’s estate being subject to the estate tax may be applicable to also those individuals with more modest estates. If the federal estate taxes are owed at a person’s death, the then dead individual (“decedent”) has considerably less money to pass to his or her heirs, given that nearly half of the taxable amount may be taxed. There are available avenues that may lessen the value of a person’s estate by the time of death and potentially escape the estate taxes altogether.

Estate taxes are determined by the Basic Exclusion Amount (“BEA”) that is in effect at the time of the person’s death. The way the IRS calculates estate taxes is it tallies up the total value of the estate, then determines whether any gifts were made in any particular year that may have exceeded the Annual Exclusion Amount (“AEA”) and arrives at the final figure of the amount of tax owed. Both the BEA and AEA are indexed with inflation.

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No Estate Plan Is The Same: Part 2 – Finances

Haik Chilingaryan - No Estate Plan Is The Same - Part 2

For all of our existence, one common misconception among the general public was that estate planning was only for rich people and “Trust Fund Babies”. However, this notion could not be further away from the truth, especially when considering the recent changes we have seen in family dynamics and financial opportunities.

The three major financial institutions of the United States consist of the banking industry, stock brokerage industry, and insurance industry. Under the Glass-Steagall Act, each major industry could not engage in activities that fell within the scope of the other two industries. In 1999, the Glass-Steagall Act was repealed and the door was left open for each major industry to conduct activities and transactions that fell within the scope of the other two industries. This in turn increased the probability for both unlimited prosperity and financial collapse.

The second part of this two-part article (View Part 1)analyzes financial planning from an estate planning standpoint. Financial planning is an essential component of estate planning. The amount of wealth you generate prior to retiring will generally determine whether you will have a comfortable retirement and have anything left over to pass on to your descendants after your death. When choosing a retirement plan, you ideally want some combination of the following tax efficient strategies: for the contributions to be tax deductible, the appreciation to be tax deferred, and the distributions to be tax-free.

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No Estate Plan Is The Same: Part 1 – Families

Haik Chilingaryan - Estate Planning- Families

For all of our existence, one common misconception among the general public was that estate planning was only for rich people and “Trust Fund Babies”. However, this notion could not be farther away from the truth, especially when considering the recent changes we have seen in family dynamics and financial opportunities.

Families have historically been composed of one male parent, one female parent, and a child (or children). While traditional families are still very much in existence, there are now compositions of family structures of virtually every imaginable scenario. This includes families with children raised by single mothers or single fathers, cohabiting couples with or without children, and people who neither have children nor domestic partners. By no means is this an exhaustive list. Therefore, the internal makeup of virtually every household is unique, which in turn requires carefully crafted planning techniques to be implemented for each individual family.

The first part of this two-part article analyzes planning considerations for families with young children, families with adult children, married couples, unmarried cohabiting couples, and people who neither have children nor cohabiting partners.

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Taxation Of Corporations – C Corporation And S Corporation

Haik Chilingaryan S-Corp v C-Corp

There are generally two ways corporations may be taxed under the federal rules. By default, a corporation is taxed under Subchapter C of the Internal Revenue Code. However, a corporation may instead elect to be taxed under Subchapter S of the Internal Revenue Code.

The selection of a certain type of entity structure or election of a particular tax status is an individualized decision that will depend on the characteristics of the business itself and the business owner’s surrounding circumstances. In one aspect, there may be certain advantages in choosing one type of entity or tax structure over another, while there may be disadvantages in another aspect. For example, in the context of investment real estate, it is sometimes preferable for the property to be held by an LLC rather than a corporation. Whether a corporation should refrain from making the ‘S’ election and continue to be treated as a C corporation or in fact make the ‘S’ election and become subject to the rules that govern S corporations is a decision that should be guided by a qualified advisor.

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5 Fundamentals Of Limited Liability Corporations

Haik Chilingaryan - Anatomy of Limited Liability Corporation

A Limited Liability Company (“LLC”) is a hybrid business entity which contains elements of a partnership and a corporation. LLCs consist of members and managers. An LLC may provide tremendous benefits for its members, which include asset protection, intergenerational transfers, tax saving strategies, wealth preservation, flexible management structures, and clarity on the roles of all essential parties involved in the company as set out in the Operating Agreement.

The following five concepts are fundamental for establishing an LLC: Asset Protection, Intergenerational Transfers, Tax Saving Strategies, Management, and Funding.

Asset Protection

Generally, the more assets a person owns in one’s name, the more likely it is that he or she will be a target mark for creditors. This is why it’s good practice to own as little as possible in your own name. In order to accomplish this goal, it’s important to evaluate the types of asset protections tools that are available to you. An LLC is one such tool that is effective for asset protection purposes.

For creditors of the LLC itself, a member’s personal liability will generally be limited to the amount of the member’s investment in the LLC unless the member personally guarantees the transaction in question.

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Estate Planning – Here Is What Can Happen Without An Estate Plan

Haik Chilingaryan - Pass-Through Entities

Let’s begin by debunking an age-old myth that somehow estate planning is only pertinent to those people who have a significant amount of wealth. There are many compelling reasons for anyone to have an estate plan. One such reason is to prevent the courts from making decisions on your behalf, especially in such a manner that you would probably not want to be made in the first place. In addition to overriding your wishes, the court proceedings may come with a heavy price tag and take a very long time before all the dust settles.

In essence, effective estate planning solves matters of life and death. It allows you to decide who will make health care and financial decisions in the event a mental or physical condition renders you disabled or incapacitated. It also allows you to determine who will inherit your assets and when those assets will be inherited. Similarly, estate planning allows you to determine who will inherit your business in the event you are disabled, incapacitated or dead. It also provides you with the tools you need to protect your children and any family members with special needs.

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