All Forum Posts by: Daniel McNulty

@Benjamin Arritt

The financial services industry has a couple tools that likely do what you are looking for. MoneyGuidePro and EMoney are the primary tools that almost all financial planners use to accomplish what you asked for.

It’s definitely not free and may be unreasonably expensive to license for personal use. You may consider just working with a planner who already pays for it and hope they can add value in multiple other ways.

@Tim Wirick

It’s certainly an interesting idea. You may find it tough to limit the inherent conflict of interest between your franchise business and the real estate structure.

There would also be more idiosyncratic risk than most people want from their real estate. That much exposure to the underlying business they might prefer equity upside of the franchiser.

@Tim Wirick

That’s not an uncommon requirement in the franchise model. The problem most franchisees have is the upfront capital to get it off the ground.

It’s normally a few hundred thousand up to a few million. The more capital you incorporate into the model the more limited your potential franchisee base is.

It’s also common for people to borrow to start their franchise, so they may run into borrowing limits the larger the capital requirement is.

That being said many franchises require real estate purchases and the franchiser can be intimately involved in that process. Just depends on the nature of the business you are attempting to stamp out.

@Sai Li

Many agencies will let you operate as a 1099 employee. If you can convert to 1099 you would be able to fund a solo 401k.

@Harvey Corsino

Yes you should file w-4 and I-9. Make sure you are tracking their time / activity for good measure and make sure it’s reasonable work / compensation for a 9 year old.

The Roth part is the easy part. Any financial institution can help. Creating earned income for the child is the tougher part. It can be quite the headache if your child will be your first employee.

@Brian H.

It really depends, there are a lot of passive investors with their own approach.

You can be on either side of the capital stack. Put another way, you can lend or you be an equity partner.

Plenty of people learn to underwrite and fund properties. It requires building a network of partners you trust to get the job done. It’s passive in that you don’t swing a hammer, but takes some effort to build and manage what is essentially a business.

Other go even more passive and learn to underwrite syndicators. Most of the work is upfront and periodic.

Either way you need to learn the ins and outs of real estate. There is an excellent book that is literally called “The Hands Off Investor”. Pickup a copy it’s a good place to start.

@Ryan Fox

Most financial institutions and attorneys offer services like you are looking for. It is tough to find a single provider for real estate and the liquid provider.

However taxes are likely of limited consequence as there is a step up in basis after it passes to the estate upon her death. Assuming of course she is below the large lifetime exception which is about 11.5 M if she’s single, double that if married.

The real question to ask is what is the estate plan? There are many important questions to answer before who the trustee is.

@Casidy Marks

Correct, you are only taxed on the gain.

A securities based line of credit isn’t a half bad option but you can normally only borrow about 60-70%. With the amount you are talking about the interest rate is likely in the 4% rate to borrow that. No taxes on borrowing so that is a plus.

If he has more than 150k, like maybe 300k, you could certainly borrow that 150k.

Watch out for borrowing all 60-70% of the loan as it can be called if the collateral value falls (ie. Stock price falls)

@Andrew Pettit

Real estate losses are generally passive losses, so they can only offset passive gains. W2 income, interest and dividend income are not considered passive and therefore cannot be offset by the passive real estate losses.

@Maia Garcia

A series LLC and a Trust are different. There is clearly some confusion somewhere... not sure if it's you, the attorney or our communication on here.

Assuming you actually mean trust, it’s somewhat odd to name the attorney as the trustee if you intend to have control. The trustee will be fully in control of the trust assets which is unusual if you are using the structure to further some kind business you are in charge of.