All Forum Posts by: Brian Bradley

@David Burton You will learn a lot form @Lane Kawaoka podcast Simple Passive Cash flow and @Whitney Sewell REI Syndication.

@Scott Emsley @Howard Woo  In my opinion it does not appear to be a real thing. It appears to me to meet the definition of an abusive trust scheme.Their claims simply do not make any tax sense whatsoever, except in the context of an abusive trust as defined by the IRS. I advise clients to avoid any type of planning which makes the type of claims this website makes. https://www.irs.gov/businesses/small-businesses-self-employed/abusive-trust-tax-evasion-schemes-facts-section-i

Abusive trust arrangements typically are promoted by the promise of such benefits as:

• Reduction or elimination of income subject to tax.
• Deductions for personal expenses paid by the trust.
• Depreciation deductions of an owner's personal expenses paid by the trust.
• Depreciation deductions of an owner's personal residence and furnishings.
• A stepped-up basis for property transferred to the trust.
• The reduction or elimination of self-employment taxes.
• The reduction or elimination of gift and estate taxes.

Abusive trust arrangements often use trusts to hide the true ownership of assets and income or to disguise the substance of transactions. Although these schemes give the appearance of separating responsibility and control from the benefits of ownership, as would be the case with legitimate trusts, the taxpayer in fact controls them.

I don't care what asset protection system you set up, You got to pay your taxes that you are legally required to pay. Asset protection cannot be about tax avoidance. 

@Scott Emsley it depends on your entire situation and holdings, your entire profile etc. and please don't start listing that in a public forum. Generally, I am not a big fan of anything purely domestic. Especially if you have a net worth of $1MM +. If asset protection is the desire, then you should be looking into strong asset protection trusts that combine both a domestic component and an offshore component. A hybrid basically. Combine the best of both worlds. Anything purely domestic, just does not have the ability to level the playing field in court, when it matters, and against judgments. and then when you are talking about deferring taxes etc, that should not be done out of your asset protection strategy. Then you open yourself and your system up for an attack based on fraud and tax evasion. That is why true asset protection planning is always tax neutral. Anonymity does not work once you are sued. Its really only good for doing business and keeping your name off public record. But once you are sued, it does nothing for you. So the system you set up better be strong and seen as very effective and impenetrable in court and to the other parter. That is why for the HNW world, the offshore component has always been the global world standard. You can actually look at over 40 years of case law on those. Then it comes down to your state and jurisdiction on your asset protection trusts and how they hold those up and to what point (if its just domestic). Grantor trusts also give you more flexibly as an investor. Best of luck. I know I put a lot to think about in a small space. But did not want to over load. 

@Brian Mollo  @Evan Polaski just make sure that you talk to a knowledgable attorney on this before hand so they can go over every legal liability and option before you make a decision that has liability that can come with it. As always should be the case, one must first look to explicit language in the contract relating to “force majeure,” “impossibility or impracticability of performance,” “ purpose,” and “early termination.” In many states around the country, such as New York, the specification of any force majeure event necessarily precludes other force majeure events from being included within the definition. In other words, if earthquakes and fires are listed, but viral pandemic is not listed, many of these courts will not find the force majeure provision to excuse performance obligations. However, California interprets these provisions a bit “less narrowly” than other states, in as much as a non-listed event can still fit within a written force majeure provision if it is “unforeseeable at the time of contracting”. See Autry v. Republic Productions (1947) 30 Cal.2d 144.

Ca is its own very different beast and politics and State Legal system. 

COVID-19’s classification as a “pandemic” by the WHO will trigger a force majeure clause that expressly accounts for “pandemics.” That said, the declaration of pandemic standing alone—without a reference to pandemics in a force majeure clause—will not automatically constitute a force majeure given the courts’ focus on whether the event is specified within the contractual language. Clauses that are silent on pandemics, epidemics, or other viral outbreaks are likely to be insufficient for a force majeure defense due to COVID-19, unless, of course, courts liberalize the force majeure analysis to account for market realities.[11] If a force majeure clause clearly covers COVID-19 as a qualifying event in light of the WHO’s declaration, parties seeking to invoke the provision will not need to establish the event was unforeseeable, but will still need to show: (1) that they took steps to mitigate the damage, and (2) that performance is truly impossible (or meets any other standard the clause requires). 

Bricker & Eckler based out of Ohio wrote a great article on this specifically on Ohio law for you Ohio residents. 

"The party seeking force majeure bares the burden. 

United States v. Brooks–Callaway Co. (1943), 318 U.S. 120.) Under Ohio law, the party invoking force majeure bears the burden of proof. (See, e.g., Stand Energy Corp. v. Cinergy Servs., Inc., 144 Ohio App. 3d 410, 416 (2001).) As the court in Stand Energy noted, force majeure clauses are included in commercial contracts to provide flexibility in a volatile economy. But, a party cannot be excused from performance merely because performance may prove difficult, burdensome or economically disadvantageous. Id. (citing State ex rel. Jewett v. Sayre (1914), 91 Ohio St. 85).

They identify 7 elements to review if you are considering this in Ohio:

1. Read your contract and identify the relevant clauses. 

2. Confirm if the contract actually has a force majeure clause. 

3. Examine that contracts definition. of force majeure. 

4.Research the relevant state case law before doing anything. 

5. Evaluate Causation. A party claiming force majeure generally must show that the force majeure event proximately caused a contracting party to be unable to perform. In addition, courts generally require the party invoking the clause to use reasonable efforts to avoid the effects of force majeure. A factual analysis will be necessary

6. Comply with any notice provisions 

7. Identify available remedies for a force majeure event. "

@Evan Polaski no problem. 

Their is a good article written by Finley Law Firm in Ohio about this specific topic.

“It’s a hot topic in Ohio real estate law with the problem for sellers and Realtors of buyers backing out after tying up a property for15to 30 days. Contracts mean something. And so contingencies can provide an out. But contracts are written to be enforced and if a buyer has not threaded the needle and properly terminated a contract pursuant to contingency, then the buyer is obligated to perform. If not, they can be sued for either Specific Performance, or money damages. But earnest money does not define or limit the damages available. The buyer has ‘open-ended exposure for the seller’s damages arising from a breach.’” Courts in Ohio are cracking down on this. 

@Evan Polaski that is absolutely incorrect. ANY party has the legal right to seek specific performance. It is an "equitable right" of EITHER party when damages will not be good enough (inadequate) or the item is unique. All real estate is considered unique. This is day one of real estate law in law school and heavily taught on all state bars. So that is just wrong advice you got. The non breaching party (buyer or seller) has a right to seek specific performance. Depends on the damages and stage of the deal if it will be awarded. "The buyer may pursue specific performance if the buyer is unwilling to carry out his or her obligations under the contract. Specific performance is allowed in real estate contracts because each parcel of land is unique and monetary damages are not adequate. The buyer must tender the purchase price in order for specific performance to be granted." "The remedy of specific performance is also available to sellers in many cases. A buyer may not want to go through with a sale and try to back out. However, some states allow the seller of real property to file a lawsuit against the buyer for specific performance. This remedy is permitted so that there is symmetry between the remedies available to buyers and sellers. However, this remedy is not available in all jurisdictions, such as in areas where the state believes that money damages are adequate to compensate the seller." it comes down to the language of the contract and if specific performance was included. 

@Jay Hinrichs hit the nail on the head. Lets see what real world numbers actually look like. I suspect from my clients that the number will be lower then you think. Tenants also have checks coming from the government to help them out and their businesses. @Heather Frusco also makes very good points. At the end of the day it comes down to what kind of land-lord and business owner you are going to be as well as personal and financial decisions of your own.

I would say 3-6 months depending on if you are the sole provider of the household or if you are both working, and your financial situation. This is a good reminder also of cleaning up your debt as fast as possible. And keep about $2k in petty emergency cash in the house. 

@Robert Obniski talk to a real estate lawyer in your area or the state and county that the deal is getting done in. Look over all the contingencies and see what you might be able to argue out of or has not been performed. Appraisals has been an issue in some states causing deals to fall apart. You deposit might be lost as other said. @Evan Polaski is not fully correct in saying that you cannot be forced to purchase a property. Their comes a point in deals where you are on the hook for lost damages and a court can order "specific performance" as a remedy. And it is a very common remedy in real estate. A quick basic intro to specific performance is If one of the parties does not honor the contract by breaching the terms of the contract, the harmed party often does not want money damages but instead wants actual performance of the terms of the contract. This remedy is known as specific performance. This remedy arises when a court orders the party to fulfill the contract. Specific performance is considered an equitable remedy and is governed by equitable principles. So talk to a real estate attorney and have them go over your deal. If you want out, they generally are good at finding a way out, but you might be on the hook for some money. But also keep in mind depending on the stage and other factors, the non breaching party always have the argument of "specific performance." 

@Yonah Weiss always adding value. Great info.