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7. Children's Trust . Although a creature of many forms, usually it is couched in IRC 2503 (b) or (c). Generally it is an irrevocable trust used to hold property for the benefit of your children. Parents may gift or sell assets to the children's trust and lease or loan certain assets back. This device does carry a high measure of estate and asset protection from creditors. It can also reduce estate and income taxes.

8. Charitable Remainder Trust (CRT). This irrevocable trust is usually used to receive and hold property for the purpose of making charitable gifts, supplying income from such assets for life, achieving current charitable donations, or reducing capital gains tax. It requires the making of a "complete" charitable gift. It may also be used in conjunction with your estate plan including a family Foundation (which are no longer recommended), or "your" own charity. In the most basic sense, your property is transferred to the trust, and the trust sells the property, deferring certain taxes. The trust then invests the sale proceeds, and you receive an income and/or principal payout therefrom (depending upon the device, and factors including the term of the trust and your life expectancy). The trust monies (or res) are protected from most outside liability attacks.

Life insurance must also be seriously considered for wealth replacement and also as a wealth creator. Life insurance is effectively used in a CRT to replace any so-called "gift", and often times results in an increase in wealth for your heirs. See you attorney, and life insurance specialists before acting upon such a plan. Also consider a CLT (Charitable Lead Trust).

9. Limited Liability Company (LLC). An LLC is a creature of state statute. It varies from state to state. It most often takes the form of a limited partnership for purposes of liability, accounting and taxation. Certain LLC s can elect to be taxed as corporations. Most clients will desire the form of a "limited partnership" (not a "corporation"), especially if residential or commercial rental properties or other capital assets are to be held or owned by the LLC. See Articles and the Landlord's Asset & Insurance Protections


on www.LandlordsClub.Com.

Generally all of the favorable attributes of the (family) limited partnership discussed above apply to the LLC, including but not limited to: asset protection, favorable pass-thru taxation (Subchapter K partnership taxation), the ability to control transferred property (as a managing member or per the LLC), ability to reduce estate or income taxes, life insurance ownership, fractional gifting with the use of beneficial "discounts", ability to allow passive investors a voice in management without fear of losing the limited liability status, the ability to make passive investors active without loss of limited liability status, favorable asset protection charging order laws (Ca.Corp.C 15522, 15673; Fla. Stat. 620.22; Ariz.Rev.Stat.Ann. 29-341; Nev. Rev. Stat. 88.535; NY Partnership Law 111 McKinney; Tex, Code Ann art. 6132a-1 7.03, etc.), and the favorable single-member ownership taxation (TR 301.7701 et seq) which does not require a separate entity tax return or Federal ID number. However, be aware that some states, for example, in California, effective January 1, 2003, changed the law to allow "foreclosure". Also note that certain cases have allowed single-owned LLCs to be pierced. These are dangerous changes and a blow to the asset protection feature of the charging order and the single-

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