Nouveau Riche Associates

10/11/2004

Guest Speaker - Chuck Newton - Self directed IRAs
Chuck Newton
Asset Planning
3236 Cameron Park Ct.
South Jordan, UT 84095
801-446-2849
Toll Free: 877-963-9407
Fax: 801-446-2849

Credentials:
* Served as a staff assistant to a US Senator
* Former executive director of investment newsletters
* Former lobbyist in Washington DC on economic issues
* Former Financial Radio Program Host
* 16 years experience in estate protection and financial planning.

Cash Management
- Have 3 - 6 months of cash in the bank (instead of this you can have
8000-10000 cash in a savings account)
- Need to have some liquidity if you are investing in real estate. You
may be equity rich and cash poor. That is a good way to get into
trouble.
- Real Estate market is cyclical, so you have to plan for that.
- When you retire, you really ought to have 20,000 dollars in a
savings account for reserve. As you got older, everything else that
you own has gotten older also.

Three types of Cash Management Accounts
- Short term savings - bank account
- Intermediate savings - for additional investments or larger purchases
- Long term savings - for retirement and life after working. (401k, IRA)

Risk Management
- Insurance (Health, Home Owners, Auto)
Many people are underinsured and you don't realize it. Many have a
cap on them of a certain amount.
Most health insurance policies have a cap of 1MILLION dollars
Home owner's insurance - most cap at 100,000 of liability and 3,000
of medical. Someone gets hurt on your property, you need to have a
personal liability policy or umbrella (1M, 2M, or 3M). They may
require that your current policies meet certain standards.
Minimum requirments in the state of utah - 25/50k
- Need to shelter your assets in an LLC or an FLP (Family Limited
Partnership) or an S-Corp

Investment Planning
- Stocks and Bonds
Stocks give you ownership in the company. As the company value
grows, so does your stock. If they are doing well, they will issue
dividends. They give the shareholders money back for investing in
their compnay
the advantage of having an S-Corp - Salary 30% and the rest is
Dividend money. Save money because don't have to pay FICA tax
Bonds - loan money to a company. They pay you an interest rate. the
company determines the rate. At the end of hte stated period, you get
your money back with interest or roll it into another bond.
Asset Allocation - diversify your money into different types of
accounts. Stocks or Mutual funds.
Municipal bonds are free from federal and state tax. 100% liquidity.
4% interest rate. Use this for intermediary funds.
Tax Free - Roth, Mutual funds
Tax Deferred - IRA's, Real Estate (but you can do 1031 exchanges to
defer it longer 45 days to identify the property and 90 days to close
- time limit)

Tax Planning
- When you deal with an accountant, they are only looking at a
snapshot of them, they are not looking at your entire life span. You
need to keep track on that.
- If you are married and a spouse dies, your tax brackets come down to
affect you- your retirement will be the same, but now you are a single
filer and so now you get to higher tax brackets with less money.

Estate Planning
- Wills vs. Trust
- wills go to probate, trusts don't
- Trusts avoid conservatorship. If one of you get sick or injured
your spouse can use the money in the trust without going to court to
get a signature power.

Corporations - 850 to set up. LLC's - 650 to set up with attorneys -
Watch out for someone that only files your articles. You need to have
bylaws, minutes, etc. If you are in business for a few weeks, you are
ok, but if in business for a few months, you are going to be in
trouble.

Have a Living trust that serves as your managment of your assets.
Then LLCs for properties. LLCs for different TYPES of real estate
holdings. If you want to shift money to your kids, you may want to
have an FLP so that you can rent your own condo from yourself and
right it off as your own business expense. Pay the kids income from
the FLP - tax free.

Self Directed IRA -
Investing in real estate is kind of tricky. 401K - you can borrow
money and invest it. If you quit working then, you roll it into the
IRA. Zero self dealing in an IRA. You can't take proceeds from real
estate deals in IRAs and use them for personal matters.
Set up an LLC that is owned by an IRA.
You cannot personally guarantee your IRA's real estate deals.

Roth IRA's
- Says that you cannot use a ROTH IRA to do

Attorney associated with this visit:

Walter "Wally" Bornemeier
Attorney and Counselor at law
1000 N 500 E Suite 100
North Salt Lake, UT 84054
P: 801-2926400
F: 801-292-6414
WallyB@JJBLegal.com

Pam - No Thursday Night Meeting this week - the following thursday -
SLC downtown Hilton 7pm thursdays 21st - $25.00 per colleague

posted by John Andersen @ 11:56 AM