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The Future of Self-Directed IRA Investing – Episode 430

Adam Talks

On this episode of Adam Talks, Adam Bergman, Esq. discusses the Self-Directed IRA Trust and if it is the future of investing.

The Future of Self-Directed IRA Investing – Episode 430

This episode discusses the Self-Directed IRA Trust as a potential future of Self-Directed IRA investing. Adam Bergman, a tax attorney and founder of IRA Financial, explains that the Trust structure has gained attention due to Beneficial Ownership Interest Filing Requirements under the Corporate Transparency Act. The Trust acts as a special purpose vehicle allowing checkbook control without LLC fees, offering speed and control over investments. Unlike an LLC, a Trust does not provide limited liability protection, a crucial aspect Bergman values.

Bergman describes a Trust as a private agreement between a grantor, beneficiary, and trustee, highlighting the differences between revocable and irrevocable trusts. While trusts offer checkbook control, speed, and control, they lack limited liability protection compared to LLCs. Bergman emphasizes the importance of limited liability protection provided by an LLC, making it a preferred choice despite the convenience of a trust structure. However, the structure offers privacy and flexibility, with the potential to be a valuable solution in light of regulatory requirements like the Beneficial Ownership Interest report.

Bergman delves into the complexities of state-specific trust rules and tax implications, noting popular states for setting up trusts due to tax advantages. While most states align with federal tax treatment for IRAs and trusts, some states have unique rules, potentially impacting taxation. Bergman advises setting up trusts in states where investments are made to minimize tax liabilities, especially for residents of California facing aggressive state tax laws on trusts. Despite the nuances of state tax laws, the trust structure could be a future trend in self-directed investing, offering checkbook control and privacy benefits.

In consideration of the Beneficial Ownership Interest filing requirements and the desire for privacy, Bergman suggests that the Self-Directed IRA Trust could become a prominent solution for investors seeking control without the burden of additional reporting. The trust’s ability to provide checkbook control, freedom, and privacy, while avoiding LLC fees and filings, makes it an attractive option for certain investors. Although the Trust lacks limited liability protection, its advantages in control and privacy may outweigh this drawback for some investors. Bergman plans to focus more on educating individuals about the trust structure and its potential benefits in self-directed investing.

Bergman acknowledges the evolving landscape of self-directed investing and regulatory requirements, suggesting that the Self-Directed IRA Trust may offer a viable alternative to traditional LLC structures. By emphasizing the benefits of checkbook control, privacy, and freedom, the structure presents a compelling option for investors navigating regulatory complexities. Despite Bergman’s initial preference for LLCs due to limited liability protection, the trust’s unique advantages, especially in terms of privacy and flexibility, indicate its potential to shape the future of Self-Directed IRA investing. Bergman encourages listeners to consider the trust structure as a strategic investment tool that aligns with evolving regulatory needs and investor preferences.


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