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Michael Morgan’s beach front cottage in Sag Harbor, NY was a cash cow from seasonal rentals and a mainstay of his IRA investments. Before he passed away in June, Mr. Morgan and his three adult children worked with an IRA Financial Group lawyer to set up a limited liability company for his IRA that would own the cottage. His children now jointly manage the inherited IRA LLC and follow the rules of an operating agreement that allows them to continue renting the home and while conforming to IRS rules that require beneficiaries to take minimum distributions.
The plan gave the family a system for keeping the cottage under family ownership with the tax deferred income paying for upkeep and taxes until the children decide when to take the home as a distribution, pay the fair market value taxes and simply enjoy the home as a family vacation destination.
A detailed plan made the transfer of ownership easier and establishes rules that will help prevent bitter family conflicts down the road, experts say. The first step is figuring out who is — and isn’t — interested in inheriting the cottage. For instance, children who live far away from the property and don’t earn much, or have a vacation home of their own may not be interested in the cottage and want a sale to provide needed income.
By using the self directed IRA real estate structure from IRA Financial Group’s attorneys and putting together a plan that fits your family’s circumstances, the Morgan heirs have the luxury of time to make the right decisions.
Here’s how it works:
The Self Directed IRA structure has become a popular choice for gaining total investment control (“Checkbook Control”) over IRA funds and making investments tax-free.
IRA Financial Group’s Self-Directed IRA LLC with “checkbook control” solution is tax court and IRS approved. A special purpose limited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder – which is YOU. The IRA Custodian then transfers the IRA Holder’s retirement funds to the new IRA LLC’s bank account, which can be opened at any local bank account providing the IRA holder with “checkbook control” over his or her IRA funds. When you find an investment that you want to make with your IRA funds, as manager of the LLC, you will simply write a check or wire the funds straight from your Self Directed IRA LLC bank account to make the investment. All investment income and gains would flow back to your Self-Directed IRA Tax-Free! The Self Directed IRA with checkbook control allows you to eliminate the delays and costs associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself
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Posted in Self-Directed IRA

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