How to Effectively Plan for the Future – Probate Discussion with Attorney Emily Bohls

Estimated reading time: 11 minutes

How soon is too soon to start planning for the future? Never! When it comes to making future plans and arrangements, most people seem to forget about potential probate scenarios that may arise. Although, your retirement account might have the potential to bypass probate, it’s important to understand how this process could affect your self-directed retirement plan.

Attorney, Emily Bohls, joins me in this article to help define and explain some of the basic Texas probate laws, which can be difficult to navigate for the common investor. 

Sarah: 

Thank you for joining me today. Can you give me a bit of your background? Tell us who you are, what you do, etc.

Emily:

I am an attorney, and I’ve been practicing for 14 years now. I went to law school in Houston – South Texas College of Law. My first seven years I was actually working for South Texas College of Law as a staff attorney at their legal aid clinic, primarily doing family law and probate. The model of the clinic was evolving, and I eventually became the manager of the clinic and an adjunct professor. In 2013, I decided that it was now or never to start my own practice, and that is what I’ve been focused on since then.

Sarah: 

So, that’s what you did next?

Emily:

I remained an adjunct, teaching the probate clinic. It was a practical course where the students got actual cases, and they were legal aid cases. I think I gave that up in about 2018, because I needed to concentrate fully on my practice. Now, I’ve been focusing on my practice and growing that. I’m primarily a probate practice. I also do guardianships, which is kind of under that umbrella. I’m working on merging/forming with another firm that offers family law, but that’s probably six months away from coming to fruition.

Sarah: 

You wear all the hats! Jack of all trades! What made you want to get in to this type of career? I feel like most people aren’t thinking, “let’s do probate”, so what was it that interested you?

Emily:

I always thought it was interesting. I’ve experienced death in my family, and we had to go through these processes. Some experiences were good, some were bad. When I was working at the legal clinic, since it was one of the things that we did, I gravitated towards it. I find it so fascinating because you have to know something about everything, since it really depends on what people die with. In some ways, it’s formulaic and very code driven. I appreciate how well organized the area of law is, especially in Harris County. The courts are great; they have a judge, associate judge, and a staff attorney that make sure everything’s perfect all the time.

Sarah: 

Having a good system always makes things a little bit easier. If you’re already having to deal with something that’s complicated, you don’t want to have a complicated system, as well!  I’ll jump right into my first question. For those here that are familiar with probate but are reading to get a better understanding, can you define probate for us and why it’s important to understand in relation to Self-Directed IRAs?

Emily:

Probate is the formal process of getting assets out of a deceased person’s name and into that of his/her heirs or beneficiaries’ names. So, as it relates to Self-Directed IRAs, if a deceased person had any asset that listed a designated a beneficiary, then the formal probate process is not necessary and the beneficiary can deal directly with the asset holder. Usually, I’m talking about financial assets, but you can have a piece of property that you’ve acquired in your SDIRA but that account has a beneficiary. If your loved one dies and leaves you as the beneficiary, then you would contact Quest and ask them information and what you need in order to change this account over into your name.

Sarah: 

How involved is the custodian when somebody passes away? 

Emily:

The custodian is mostly passive, waiting for notification and then receiving the notification. They’re not going to find it by looking through the death records or from the obituaries. They’re going to need to be notified by the beneficiary, and the beneficiary needs to contact that institution. Whether it’s a custodian of a Self-Directed IRA, if it’s an insurance company, if it’s a bank, an investment firm – all of those are different entities and the beneficiary needs to reach out to them. If you don’t know you’re a beneficiary, that’s where it gets kind of tricky. Nowadays, no one really has paper statements anymore. In the past, you could rely on looking through the loved ones’ mail, but now you have to look through their computer, passwords, and usernames.

Sarah: 

Oh man, I never thought about that. 

Emily:

Yes, so you can see how tricky that can get. And there’s no harm in digging around!  But, if you contacted Quest because a loved one died and you’re not the beneficiary, Quest is not going to tell you any of the asset holder’s information if you’re not the beneficiary. 

Sarah: 

Thanks for answering that. It’s so important that clients understand our role as the self-directed IRA custodian.  

Emily:

If you’re really lost and have no direction, then it’s possible to open probate and to get an executor/administrator with the authority to act on behalf of the estate and perform the necessary inquiries. Now, if I was an executor/administrator and I inquired, I have authorization. I could potentially find out who the beneficiary was or get them going. But, that would be a lot of work. For planning purposes, you should write your assets and accounts down or print out a statement of account and have a folder to keep everything in one place. Even if you have old stuff in your folder, like a closed account, there’s still no harm. Try to have all of your accounts in one place, so that [your beneficiary] knows who to contact.

Sarah: 

It definitely sounds like it could get complicated. Especially if you didn’t know you were a beneficiary! Is it possible to avoid this probate process all together?

Emily:

It is possible, but it requires planning. I think you need to sit down and write out everything you own as an asset. And don’t say cash! If you have life insurance policies, financial accounts, self-directed IRAs, IRAs, homes, boats, whatever – list it all out! Then go through your goals. If your goal is to avoid probate, then you need to make sure each asset is planned in such a way that that’s what would happen. The first step is listing out everything, so that you know what to do to plan for each asset.

Sarah: 

Let’s say a family has done poor planning, and they do have to go through the probate process. Can you explain that process for us? Is it long? Is it complicated? Does it differ for everybody? 

Emily:

It can be long and difficult, but sometimes it can be quick and straightforward. It really depends on the types of assets the decedent has and how well the heirs/beneficiaries/personal representative get along. An attorney will advise your executor/administrator or interested party as to the proper probate process for your estate, but, generally speaking, an application is filed, all interested parties are notified, a hearing is held and the executor/administrator gets court authority to officially commence his/her role as fiduciary. The executor/administrator then begins collecting assets, paying debts, taxes, etc. After everything is accounted for, debts/taxes paid, then the executor/administrator will distribute the assets according to the will or the laws of descent or distribution.

Sarah: 

Okay. Yes. It does sound like a lot of moving parts and a lot of steps there. It’s definitely important to have somebody who knows what they’re doing.

Emily:

Sometimes it’s not even because you have a complicated estate. It just depends on how long it is. And there are always things that can get jammed up.

Sarah: 

Speaking of those jams and things that could get complicated. How does the probate process differ from state to state? Can this hold things up? How do different laws in each state factor into this?

Emily:

They do differ and every state will have different requirements. It could also require ancillary probate. When I say ancillary probate, it means you’re going to have to do something in that other state to get that asset turned over. It’s the process of transferring property that is located in a state.  That’s why a lot of people who are residents will put their non-Texas assets in a trust. 

Sarah: 

Because you mentioned an executor, let’s touch on that. Who should I appoint as my executor?

Emily:

I would say first and foremost, it should be someone that is trustworthy, somewhat business savvy, resourceful, diligent, and dedicated, because it’s a job. It’s a job, no matter how simple it is. For example, everyone’s going to die with some bills. You’re going to have a Verizon account or a Comcast account, and you’ve got to shut all that down! It may be just trying to get it transferred over to your name, but you know what it’s like to even get on the phone with someone if you have an issue. It may take two hours. And that’s just the preliminary phone call! First, you’re going to call to find out what they need, then there’s a follow-up where you have to send them a death certificate or whatever. Then you maybe pay the final bill, and finally, actually follow up to make sure they did it. You can see, every little thing is going to take time, and it’s a lot of work. So, you could appoint your spouse or child, just as long as they have those attributes.  At the very minimum, your executor needs to have the ability to understand that this is going to be a process and that they could hire a good attorney to guide them through it. 

Sarah: 

What would happen if your loved one died without a will? What happens then?

Emily:

This is called dying intestate. If there is no will, someone needs to step forward to choose a process of getting the loved one’s assets out of their name and into the name(s) of the heir(s). The method of doing this will depend on the assets your loved one leaves behind. The loved one’s heirs are defined under the laws of descent and distribution.

Sarah: 

What actually constitutes a valid will?

Emily:

With this, it’s such a specific question, and you can’t generalize. It’s the law. It’s as follows:

  • Testator was at least 18 years old (or has been married or a member of the armed forces) at the time of execution
  • In writing
  • Signed by the testator or another person on the testator’s behalf in the testator’s presence and at the testator’s direction
  • Attested by 2 or more credible witnesses who are at least 14 years old and who subscribe their names to the will in their own handwriting in the testator’s presence
  • Credible cannot be a beneficiary
  • For holographic will: wholly in the testator’s handwriting

Sarah:

And does that have to be official? Typed up or notarized?

Emily:

No! It could be on a napkin. As long as it’s all in your handwriting. Just have something that works in a pinch. It could be better than having nothing at all.

Sarah:

Thank you for clarifying! One of my last questions relates to potential complications with large families. If somebody is in a mixed family, how can somebody protect themselves in those types of situations, i.e. stepchildren, new spouses, etc?

Emily:

First, make sure you know what you have by writing it down and when you acquired it (before or after marriage). Familiarize yourself with the laws of intestacy and where real property vs. separate property goes if you die without a will. Once you do that, picture how you would want your estate to pass once you die. Make sure you have a will. A lot of times people choose to utilize trusts to take care of a surviving spouse while they are alive, but leave the trust assets to their children once their spouse dies. There can be unintended consequences of not doing anything. 

Sarah:

I think there’s a lot about the trusts that people just like. Plus, it’s a good shelter for things. 

Emily:

I think so, too. 

Sarah:

Well, Emily, I really appreciate you taking the time to dive deep and answer all these questions for me! Before we wrap up, what’s one piece of advice that you would give somebody who is planning and preparing for the future?

Emily:

I definitely think they need to write lists for what they have. That is a preliminary for figuring it out on your own. If you’re going to go see an attorney, a lot of times they’ll send out a preliminary questionnaire and that’s exactly what the goal of that questionnaire is – to see what you have. Also know, you are never responsible for a deceased person’s debts. Never. If you’re going to pay any expenses of administration or debts of a loved one, just make sure you keep all the receipts and then you can get reimbursed. 

Sarah:

That’s really helpful to know! I’m glad you threw that in! I think I’ve asked all of my questions, and I’ve loved getting to hear your answers and learn a bit more about the probate process. Thank you, again. I’ll include your contact information at the bottom for those that would like to learn more!

When preparing for the future, being proactive ahead of time is the best thing you can do. By following these practices, you can do everything you need in order to set yourself up later in life. To learn more about the probate process in Texas, you can contact Emily Bohls at emily@bohlslaw.com.

If you have questions regarding your benefices or any other Self-Directed account need, we would love to help. You can speak to an IRA Specialist by scheduling a free consultation HERE.

Sarah Bio

How To Maximize Your Investments Funds With Partnering

Estimated reading time: 3 minutes

It’s no secret that people choose self-directed IRAs because of the many benefits they offer, like reducing taxes and providing options for alternative investments. They are also very powerful accounts for real estate investors, as they allow the possibility for utilizing creative investment strategies. 

What is Partnering? 

One of the great features of self-directed IRAs is that they don’t have to be used only on their own. Self-directed IRAs can work together by using a beneficial strategy called “partnering”. This term is used when one entity (or more) and an IRA come together to put up the funds for an investment. 

In this strategy, all parties have a vested percentage of ownership in the deal. When doing this, the percentage of ownership is decided at the beginning of the investment and must remain the same throughout the life of the investment. This means that any profit the investment receives is returned based on this percentage of ownership. Additionally, the IRA would be responsible for its percentage of any expense associated with the investment, too. 

Who does Partnering work for?

Partnering is a great strategy for a variety of people. For investors who are just getting started, partnering allows the chance to participate. Even having only a small percentage of a total investment allows a small dollar IRA to gradually grow. Oftentimes, Coverdell Education Savings Accounts (ESAs) and other small dollar accounts will partner together to purchase an investment. 

There are also many occasions when a good deal is available, but an investor doesn’t have enough money in their IRA to make up the total cost of the purchase. Being able to partner with another IRA account they may have or another money partner provides the ability to purchase the investment after all. 

It is also beneficial for account holders that have multiple IRAs. For those who want to utilize all of their accounts at once, this is a great way to have all accounts involved in one deal. Over all, partnering provides more possibilities for accounts to be involved in deals when they may not have been able to before.  

Who can your IRA Partner with?

Not only can one or multiple accounts be partnered together on investments, self-directed IRAs can also partner with personal funds. When partnering with personal funds, your IRA has a percentage of ownership and you do, too. This is not to be confused with doing a transaction with yourself. Keep in mind that when partnering with a disqualified person, the percentage of ownership is decided at the time of purchase and must remain the same throughout the life of the investment.

Knowing what you can do is great, but it’s even more important to know what you and your IRA can and cannot do. If you haven’t heard about disqualified people and prohibited transactions, it’s important to know these terms to better understand how partnering is different. Disqualified people are certain people or entities that your IRA is not allowed to transact business with, and it’s important to understand who they are before entering into any deals to avoid doing a prohibited transaction. 

Being able to combine funds with other investors and IRAs opens a door to a whole new world of possibilities, and understanding how to partner accounts will allow more investors to grow their accounts faster. For more information on partnering or how to maximize all of your self-directed IRAs, give an IRA Specialist a call at 855-FUN-IRAs (855.386.4727). To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

The Ultimate Guide for Finding the Right Self Directed IRA Custodian

Estimated reading time: 3 minutes

If you’ve ever wanted to start a retirement account that gives you flexibility and greater oversight, a self-directed individual retirement account (IRA) is the way to go. 

A self-directed IRA not only allows you to choose your investments, but it gives you the ability to invest in a wider range of assets, such as real estate. 

However, to do this, you’ll need to find a self-directed IRA custodian. And not just any IRA custodian – ideally, you’ll be choosing someone who you can trust to make sure your money is safe.

This article will provide you with a detailed guide on how to find the most suitable IRA custodian.

What is a Self-Directed IRA Custodian?

Self-directed IRA custodians are banks, financial institutions, or trust companies who will maintain your account on your behalf. With self-directed IRAs, most of the responsibilities involved with investing goes to the investor, so this is where you’ll have more flexibility. At the same time, since the custodians will not be evaluating your investment choices, there is a greater risk of choosing fraudulent investment options.

Choosing A Custodian

The fact that self-directed IRAs can be risky is why choosing the right custodian becomes important. There are a handful of companies and institutions that offer this service, but if they’re not as aware of your investment wishes, they may not be the best fit for you. 

Here are the factors to consider when choosing the ideal self-directed IRA custodian.

1. Make Sure They’re Approved

The IRS has a list of approved nonbank trustees and custodians that they regularly update. Choosing an approved custodian can give you peace of mind because you’ll know that they’re following government regulations when holding on to your account. 

2. Are They Experienced in Your Area?

While some custodians are more general in providing their services, others specialize according to the area of investment. For example, if you are investing in real estate, having a real estate custodian to assist you in understanding your accounts and assets will be beneficial.

You will rely on the expertise of your custodian if you are new to investing or if your investment area is highly niche. They will be the ones to ensure that your documents and investments are IRS-approved. 

3. How Are They Charging You?

Before you choose a custodian, find out the fee structure that they’ll be using. Different custodians bill differently, with some charging based on services and others based on flat fees. 

Make sure you know the sort of payment they’ll expect, and how much it will cost you every year. If you need to, ask a lot of questions to clarify this and ensure that you’re not paying more than you should. 

Self-Directed IRA Carries Risks

Holding a self-directed IRA does involve more awareness on your part because it is riskier. This is why you’ll have to be the one doing the leg work and conducting the due diligence on investment options. It’s also why choosing a trustworthy self-directed IRA custodian can give you one less thing to worry about.

To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Making Money Moves: Understanding IRA Transfers and Rollovers

Estimated reading time: 6 minutes

When you leave your job, one of the things you will have to consider is what you will want to do with your old 401(k). A common option is to roll it over into an IRA at a custodian who can help invest your money in publicly traded investments. For some people, this is great. However, for those who want to take true control of the hard-earned money they have been saving and have the options to diversify their investment portfolio… they take a different route. Moving your old 401(k) into a Self-Directed IRA, like the accounts we have at Quest, allow investors the option to put their money in alternative investments and privately held assets. Even for those who may already be investing an IRA and do not have a 401(k) anymore, your investment options expand whenever you perform a rollover or transfer into truly self-directed IRA.

What Account Do I Move My Money To?

Moving your money between accounts might seem like a daunting task at first, but we’ve broken it down to explain the way retirement accounts move. One of the first couple of things you will want to ask yourself are “What type of self-directed account do I want to have?” and “What type of account do I currently have?” Asking yourself these two questions will help you make sure you move your funds to the correct self-directed accounts. Not all IRA accounts have the same tax benefits, and it is very important to remember what tax advantages each account has, that way you can always do your best to accurately move your funds to the correct account, keeping the taxes the same. This eliminates tax reporting you could create for yourself and ensures the smoothest movement from one custodian or entity to another.

So, what’s the actual difference between a rollover and a transfer?

How do you know when to initiate a transfer or when to do a rollover? These terms often get confused and misused, but they have very certain traits that define the type of movement they perform. It’s important to know the difference between the two, also. The most distinguishable difference is that an IRA transfer occurs when you move funds between like accounts or one IRA to another IRA, for example Traditional IRA to Traditional or Roth IRA to Roth IRA. If you want to move money between two different types of retirement accounts, for example a 401(k) to IRA, that’s would be considered a rollover. Rollovers between IRAs can be done, but certain rules are attached when this movement occurs.

IRA to IRA rollovers can occur, but it’s very important to be aware of the rules. Often times, custodian processing times can vary anywhere from a couple of days to weeks; this will depend on your current IRA custodian’s transfer procedures. If you don’t want to wait on a custodian to go through the transfer process, you do have the option to do what is called a “60 day rollover”, meaning you have 60 days from when you get the funds to put the funds back into an IRA account In this scenario, the funds are sent to you and you are responsible for putting them into a retirement account. Whatever portion is not rolled back into an IRA will generally be taxable and subject to a 10% penalty. You are limited to doing only 1 of these IRA to IRA rollovers per year, and if you exceed this number, the second rollover is then treated as an excess contribution.

There are other characteristics that define the two, and rollovers have certain rules that must be followed. This chart outlines the common characteristics of a Transfer vs a Rollover.

image001

How do I initiate a transfer/rollover?

Now that you know the difference between the two and have decided which is going to be the best for you and your account, you can begin moving your funds. To initiate a transfer, you will want to complete your receiving custodian’s Transfer Form by printing and sending back a completed copy to the office. This will allow the receiving custodian to send this off on your behalf. Some custodians will require original forms, notary or medallion stamps, and statements of your current; others will simply accept a fax. Calling your self-directed custodian can help during this process if you are unsure of a custodians requirements. Once the form is sent, the last step is to simply wait for the funds to arrive back at your new account. It is helpful in the meantime or even before, to let your current custodian know you want to liquidate your assets that way your account is in a cash state. This can eliminate rejections that can sometimes occur when transfer requests are made. Typically, within a few days or weeks, the transfer will be complete.

If you are going to be initiating a rollover, you will need to be aware that there are usually more forms for this movement, often at the former employer or custodian. Distribution paperwork from the employer you are leaving or the IRA custodian you are moving from is customary. Contacting them to provide your account number and any delivery instructions on their distribution forms will need to be done in order for this movement to occur. The custodian receiving the funds may have an internal form (like the Rollover Form) that will need to be completed for the incoming funds, but it’s important to note that this form does not initiate the actual movement. That is done by the account holder initiating the distribution/rollover request from the previous/former custodian.

If you ever have any questions or need assistance, call us at 855-FUN-IRAS and a Quest representative can help with this process. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

There’s no need to be intimidated when rolling over or transferring IRA funds. From beginning to end, the process is quite seamless once you understand the different types of movements and their processes. At Quest, we have a whole department focused on the portability of your funds and can help with a transfer or rollover question you might have. If you’re ready to start moving your funds over to a self-directed account to invest, let us know how we can help with the process or simply provide more education! For more information, visit www.questtrustcompany.com .

Here is a helpful portability chart to help you decide which accounts can be move between each other!

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3 Ways to Fund Your Self-Directed IRA
Check out this video on how to fund your Quest account today!

Can I Move My 401k Into a Self Directed IRA?

Estimated reading time: 3 minutes

Did you know 45% of Americans fear they will run out of money during retirement?

If you have started taking more steps towards planning for retirement, then you are already ahead of the game. Those who want to be more in control of their money typically like to explore the options available, like a self-directed IRA.

What Is a Self-Directed IRA?

In short, a self-directed IRA has many similarities with other traditional IRAs. With a self-directed IRA, you can get tax advantages that will help you save for retirement. 

However, it’s essential to keep in mind the IRS will limit the types of investments you make. The IRS will allow your self-directed IRA to make investments in real estate, developmental land, mineral rights, cryptocurrency, and livestock. 

How Does a Self-Directed IRA Work?

If you plan to switch to a self-directed IRA, the first step is to pick a custodian from a brokerage or investment firm. The custodian’s job is to manage the IRA assets and coordinate the sale and purchase of the investments. 

Keep in mind the same rules of a traditional IRA apply to self-directed IRAs. For 2020, the maximum IRA contribution is capped at $6,000. However, those over the age of 50 can make an additional contribution of $1000 to catch up. 

Who Should Switch to a Self-Directed IRA?

If you’re wondering about switching to a self-directed IRA, it’s important to learn if it’s the right move for you. Those who decide to switch to a self-directed IRA do it for several reasons. 

You want to diversify your portfolio and plan to split your savings between a conventional IRA and a self-directed IRA.

You’re worried about your retirement investments after the 2008 financial crisis and want a safer investment. 

You’re an experienced investor in a specific type of investment, such as real estate. 

How to Set Up a Self-Directed IRA?

To qualify to set up a self-directed IRA, you need to fulfill specific requirements. For starters, you need to prove you earned taxable income during the current financial year. 

Some employers might offer their employees the option of enrolling in a self-directed IRA.

To set up a self-directed IRA, you can start by requesting the transferring of funds from the traditional IRA to the new one. Some people choose to transfer any profits they make into a self-directed IRA. Another way to do it is by deferring income directly to the account.

Can You Move Your Managed 401k?

The short answer is yes. However, you need to consider if it’s the right move for you. Remember to learn how a self-directed IRA works, who can benefit from one, and all pertinent details. 

A self-directed IRA could be a great move for you. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

A Wise Investment: Your Guide to Investing in IRS Tax Liens

Estimated reading time: 3 minutes

In an age where interest rates are at rock-bottom, and the US property market no longer promises strong returns, alternative forms of investment are on the rise.

One of these is tax liens, which have attracted billions of dollars of investment in recent years. Put simply; an IRS tax lien is when the government places a ‘lien’ on a property where the owner has not paid their taxes.

The government can then sell that lien to an investor as a means of recouping delinquent taxes.

If you have the know-how, determination, and skill to make a success of it, then investing in federal tax liens can be a significant boon to your portfolio. Read on to find out everything you need to know. 

1. How Do I Invest in an IRS Tax Lien?

If you want to invest in an IRS lien on property, then you will need to bid for a lien at auction.

The IRS and local governments routinely organize lien auctions, both online and at auction houses. You can conduct an IRS tax lien search online to find out where and when your nearest auction is taking place. 

Here, you can bid against other investors to obtain the rights to a delinquent taxpayer’s lien.

Typically, the winner is whoever is willing to pay the highest premium or accept the lowest rate of interest. If you bid successfully, the lien is yours. 

2. How Do I Make Money from a Tax Lien? 

A common misconception of a federal lien is that you can use it to gain control of a property and flip it. However, this almost never happens, and there are a ton of laws in place to prevent this from happening.

Instead, investors make money from the interest that the property owner must pay on the lien. Their overdue tax goes, naturally, to the IRS. Any interest due on that overdue tax goes directly to you – or in other cases, your Self-Directed IRA.

Most homeowners (about 98%) manage to redeem their property before the foreclosure process can begin. This means that you should not expect a bargain-basement home as a result of your investment. 

3. Do I Gain Ownership of the Property? 

As mentioned already, you will most likely not gain ownership of a property once you have invested in a federal tax lien.

If the homeowner does not manage to clear their debts, you do reserve the right to begin the foreclosure process.

If this is successful, then you will be able to take control of the property. However, this is a vanishingly rare occurrence, and you should not count on it when making your investment. 

4. What Are the Risks Involved? 

No investment is risk-free, and this is especially true of tax liens. If property owners refuse to pay their taxes or interest, then you won’t get a dime. Your only option after this is to begin foreclosure.

This will involve considerable expense on your part that might nullify the initial investment returns. You will have to hire security and clearance professionals to help you vacate the property.

After this, you will have to deal with the expense and effort of home maintenance in your attempt to sell. Also, even when bidding for a lien in the first place, you might find that interest rates are driven so low that it is barely worth it. 

Learn More 

Investing in an IRS tax lien can be challenging, but the returns can be substantial. In order to fully understand the ins-and-outs of tax investments, make sure to contact a Quest IRA specialist today for all of the expert advice to learn more about how these types of investments can be done in a Self-Directed IRA. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

Know Your Value: A Guide to Fair Market Values

Estimated reading time: 2 minutes

You want to get the most out of your investment. After all, the point of any investment is to make money, so the last thing you want is to be getting less than you deserve.

The problem is that you don’t really know the fair market value. You don’t want anyone ripping you off after all of your hard work, so what do you do to make sure this never happens?

This article will show you exactly what you need to know about fair market values. Read on to find out more.

What Is Fair Market Value, Exactly?

The first thing you need to learn is what fair market value actually is. To put it simply, the fair market value is the price that an asset (such as your investment) would sell for on the open market. It’s the typical value under normal circumstances.

There’s a bit more to this, of course. For starters, it has to be a clean trade. Specifically, both the buyer and seller have to be reasonably knowledgeable about the asset, they have to be free of any pressure to trade, and they need enough time to complete the transaction.

Because of this, the fair market value should represent an accurate valuation of the product in question.

How to Calculate the Fair Market Value

Although there are nuances to calculating the value of your asset, for the most part, it’s actually pretty simple to add things up.

In the case of your investment, you’re going to take the price of your asset during the time of your original purchase and subtract values due to factors such as general wear and tear, depreciation, or any sudden damages that may have lowered the value.

In some lucky cases, you may be adding more to the original price. In that case, you would add any increase that accumulated to the price you originally paid for the asset, and get a new value for your investment.

This is an extremely simple way to calculate your investment’s value and get the most out of your product that you deserve.

The Company You Can Trust

Now you know about the fair market value and how it applies to your investment. However, the investment world can be a tricky one, and you’ll want all the help you can get to navigate it carefully and successfully. We’re the right team to have on your side.

At Quest Trust Company, we offer investment aid in fair market values, general investments, and even real estate. We also work with all types of IRAs, including traditional, Roth, SEP, and Simple IRA.

Ready to get started? So are we. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

We look forward to helping your investment reach its fullest potential!

Brokerage Accounts vs IRAs

Estimated reading time: 3 minutes

According to statistics from the Investment Company Institute, IRAs have enjoyed a 10% growth rate each year and are now worth over $5 trillion dollars.

IRAs are a popular and effective way to save and invest money. At the same time, they are complex enough that it can be difficult to understand exactly how they work. In particular, they are often mixed up with brokerage accounts.

Read on to learn about brokerage accounts vs IRAs and better understand the difference!

Brokerage Accounts vs IRAs

One of the reasons that brokerage accounts and IRAs are so easily mixed up is because they function almost identically. In fact, if someone were to describe a brokerage account and IRA to you, you might not be able to tell which was which.

The differences between brokerage accounts and IRAs basically come down to their purpose rather than their function. IRA stands for investment retirement account, so it’s designed to grow your savings into a nest egg you can retire on. A brokerage account is also designed to grow your savings, the only difference being that the money may not be explicitly intended for retirement.

Now, you might think, if those are all the IRA and brokerage account differences, then does it really matter which one you get? Because of the different purposes of the two types of investments, they have a few different rules, so it does matter which one you choose.

How Is a Brokerage Account Different?

Brokerage accounts are about growing your wealth. People who buy them can remove their money from the account more or less at any time. This provides a lot of flexibility.

At the same time, like other ways of making money, the government takes a cut. If you profit off of a brokerage account, that profit is called “capital gains.” Your capital gains will be subject to the capital gains tax.

On top of that, brokerage account investments do not receive any tax advantages.

The Advantages of IRAs

The government wants to encourage people to prepare for their retirement. As a result, they provide several incentives to invest in IRAs.

IRA investments can be tax-free if done properly. As long as you’re not withdrawing money early, you can actually avoid paying taxes on income that you place in an IRA.

On top of that, when the time comes to withdraw your money in retirement, you won’t be taxed on it! Even though your money may have grown by a significant amount, that profit will be yours to keep.

The only downside to IRAs are that they are designed to be used in retirement. While you technically can take your retirement money out early, you’ll pay a penalty to the IRS to do so. As long as you intend to let the money sit and grow for your retirement, IRAs are the way to go!

Apply Your Knowledge of Brokerage Accounts vs IRAs

We hope you learned something helpful about brokerage accounts vs IRAs in this brief review of them. To learn more about how you can make the most out of investing in IRAs and the benefits of alternative investments, get in touch with us here. To learn more about how to get started investing with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.

What Common Mistakes Can I Avoid When Setting up a Self-Directed IRA?

Estimated reading time: 3 minutes

Do you want to take more control over your retirement investment accounts? Have you been considering a self-directed IRA but worried about the rules?

You want to diversify your portfolio – outside of the traditional investment markets such as stocks and bonds. That’s where a self-directed IRA comes into play. It allows you to diversify while also keeping control of your investments yourself.

However, you need to make sure to avoid some common mistakes and pitfalls that plague many investors.

Read on to make sure that you don’t fall into these common pitfall traps.

A self-directed IRA allows you to invest in alternative financial investments. These can include real estate, promissory notes, oil, and gas, tax lien certificates and more.

However, instead of being administered by a bank or brokerage you instead manage the fund yourself.

Take Control Yourself

You know you need to save your money for your retirement. But it can be daunting, to say the least when you are responsible for it yourself. 

When it comes to your retirement, the only person most invested in your success is yourself. Therefore, it stands to reason that you should be the one to make the final decisions regarding your investments. However, without the correct information, you can make some unfortunate mistakes in your choices

Take control of your financial future and get started with a self-directed IRA today. Contact a Quest IRA specialist and find out how we can help you take control of your retirement.

Avoid the Pitfalls of a Self-directed IRA

When you take control of your financial future with a self-directed IRA, you need to ensure to avoid these common pitfalls.

  1. Prohibited transactions – these can be tricky to navigate so it’s important to know the rules.
  2. Due diligence – As mentioned, the rules can be tricky, and it’s imperative that with a self-directed IRA you make the decisions yourself. Always ensure you do proper due diligence before getting into any investment.
  3. Lack of liquidity – with a self-directed IRA minimum distributions are required at 72, however, the alternative investments allowed can be hard to sell. This lack of liquidity can be a common pitfall if you find yourself in an emergency and can’t get your money out of your self-directed IRA.
  4. Lack of transparency – when it comes to your exit strategy for selling your alternative investments all parties involved must be in agreement. You also must be fully transparent as to the valuation of your investments. Without this full transparency, you can fall into another common pitfall of self-directed IRAs.
  5. Lack of diversity – as most successful investors will tell you: diversity is key to successful investment accounts. However, with self-directed IRA funds, sometimes investors forget to ensure that it is fully diversified.

With a self-directed IRA, you need a trustee or custodian that specializes in these non-traditional investments. However, remember one of the common mistakes with self-directed IRA funds is the self-directed IRA owner not performing proper due diligence on investments.

So this trustee is simply a custodian of your account, not your adviser. You need to work with a company that understands the IRA rules and you can trust.

Stay Educated and Stay out of Trouble

We set up self-directed IRAs to help you prepare for your retirement. The most prepared people for retirement are those that are best educated.Keep continuing your education so you can fully prepare for the best retirement possible. For answers to your questions, contact us today. We can help you open a Quest account to get you started.

Know the Difference: IRA Transfer vs. Rollover

Estimated reading time: 3 minutes

In order to live comfortably during retirement, you’ll need to start saving as soon as you can. Opening an IRA account is widely known as one of the most reliable ways to invest in your future.

There are two major ways to fund your IRA: transfers and rollovers.

Not everyone understands the difference between the two, though. Not sure where to start? Don’t worry, we’ve got you covered.

Let’s take a look at everything you need to know about IRA transfer vs rollover.

An IRA Transfer

When you move money from one IRA account to another, it’s known as a transfer. The same concept applies as when you move money between two separate checking accounts at different banks.

When you move funds from an IRA at one firm to an IRA account managed by another firm, the transfer isn’t reported to the IRS and no taxes are incurred. This is due to the fact that the money in the original IRA account never actually reached the account owner.

If the owner were to instead withdraw the funds and then reinvest them into another account, they would incur taxes upon withdrawal. There may even be tax penalties depending on why the money was taken out of the account.

An IRA Rollover

A rollover occurs when money is either moved from an IRA account to a retirement plan or from a retirement plan to an IRA account. When the money never reaches the account holder, it’s known as a direct rollover.

This type of rollover differs from a conventional transfer because it involves two different types of plans.

Although direct rollovers are reported to the IRS, they generally aren’t taxable since the money was never made payable to the account holder.

During an indirect rollover, the money is distributed to the account holder. But, it isn’t taxed if the money is reinvested in an IRA account within 60 days. This will allow the account funds to remain tax-deferred.

How Should I Prepare For One?

Above all else, it’s important to understand that a rollover will likely take a couple of weeks to complete. This is crucial for those handling indirect rollovers to keep in mind, as penalties occur after 60 days from when the funds are distributed to the account holder.

Additionally, most institutions will require you to fill out paperwork in order to begin the process. Some providers may have specific requirements regarding rollovers that may become a factor when reallocating your funds.

Knowing The Difference Between IRA Transfer Vs Rollover Can Seem Difficult

But it doesn’t have to be.

With the above information about an IRA transfer vs rollover in mind, you’ll be well on your way toward putting money away toward a peaceful retirement.

Want to learn more about how we can help? Feel free to get in touch with us today to see what we can do.