All Forum Posts by: Jacob R.

Hi there. I currently have a VA loan I did about 8 months ago for $233,000 at 3.5%. I do not like my home and have been actively figuring a way out prior to the market tanking. I am being offered 2.75% and my new loan balance will be $236,000 for an IRRRL. I was told the occupancy requirements are less restrictive, so it lets me move out and rent my home until the market stabilizes.

I am confused about VA loan entitlement if I wanted to try to get another VA loan. I've seen the loan limits are $510,400 for my county. Does that mean I could get another loan for $510,400 - $236,000 = $274,400? I am aware my DTI will be an issue because I need to rent out my current home for 2 years on tax returns.

Because of the tax returns issue on the rent, I am considering going with a different conventional loan option or paying cash for a new house in the next six months if I am forced to. I might then refi the house with a VA loan once I hit the threshhold of the 2 year tax returns. Any information about conventional or government backed loans that do not require the 2 year tax return history for rental income will be much appreciated.

@Jermell Shavers

IRA accounts have protections at the state and federal levels to a degree. Federal bankruptcy is one of the exceptions where an IRA can be gobbled up. Anything else is subject to your state laws regarding debt collection. If you have a car wreck and the other driver is seriously hurt, then you have the potential for civil suits (this is an example, not the situation I am in). If you, the driver at fault, transferred the deed to your home and did a bunch of things pre-emptively to a suit being filed, a court will look back at all transactions from the date of the incident as fraudulent transfers/conveyance. So if I dumped his accounts and gifted it to me, and he gets sued a year or so from now then I am on the hook for that money. I hope this answers your question/curiosity.

@Jermell Shavers This is not a normal situation. This is a situation where civil suits are possible at any point up till the statute of limitations. Removing protected money from an IRA and gifting it is something that is not a good idea, period. I agree with your assumption of tax liabilities as his liability would be extremely low since he has no other income source. After the threat of civil suits is over, then I can consider cashing it out if he is okay with that.

Quite a few responses so far. Thanks to everyone for your answers and interest. My dad did not commit any financial crimes. He has a criminal and asset management attorney so far. Asset management attorney says the IRA is safe due to state laws and it is okay to convert to a self-directed IRA. No issues with fraudulent conveyance/transfer since it remains in an IRA. Transferring via gifts is unfortunately not a viable thing at this time as that is something where fraudulent conveyance laws do come into play. Basically this account is all that he has left. I want to grow this account since I am a beneficiary, hence the reason for all of these questions. I do believe I have an unexpired ID card for him, so I will look around for it and call some banks to get the scoop from them. I am the type of person that wants to understand every step of the process. I don't want to get in a pickle with transferring all this stuff over and then running into impossible roadblocks of "what do you mean he can't come to the bank in person."

@Bill Brandt: I believe you are misinterpreting the IRS's concept of a disqualified person. His IRA can't sell me the person a property nor can it benefit me (the person) in a way that violates fiduciary responsibilities. It can be a defined percentage partner in a business partnership. Example is IRA LLC plus my personal LLC are 50/50 partners in a newly formed LLC or LLP. Since the ratio is 50/50, his account isn't giving away any money or stake to benefit me personally. Read more here. 

Thanks again, and any others that wish to offer advice please do. Any advice is helpful to make the best of this situation. I am pretty saavy with real estate, flips, renting, etc and hate to let his IRA account languish when RMDs hit since he turns 70 this month.

Hi there. My dad is in jail. He will soon go to prison for the rest of his natural life since he is already old. I am his general durable POA. I am also his vanguard POA/full agent. He has a traditional IRA. I would like to make it a self-directed IRA so I can purchase real estate or do deals with it on his behalf. Obviously this introduces a lot of complex questions. I have access to my father for him to personally sign documents and get them notarized but I live very far away and this is reserved for once or twice a year. I am able to mail him documents and he can sign and notarize them. Here are questions I am trying to figure out:

1) A self-directed account requires an LLC to be created. What additional POAs or management structure is necessary so that I can act on his behalf of the LLC?

2) If me acting in a manager role or on-behalf/POA for his LLC isn't possible, can I simply setup a partnership LLP where I am 50% owner in my own LLC and my dad's self-directed LLC is 50%, but I make all the investment decisions and he is a passive investor?

3) What type of attorneys/cpa/tax strategists should I seek out to help me make sense of this situation?

I eventually plan on setting up the things I mentioned in question 2, but I would like to buy some things directly with his LLC and diversify things. The issues are also with banks, because they want to see people in person with ID cards. They don't make visits to the local jail. I have struggled a great deal with his own personal bank account even with general durable POA. Checkbook control can be a bit of an issue in that regard. I just don't know how picky the IRS is with LLC operating agreements and having people act on behalf.