Congratulations – there’s oil, coal, gas, salt, gemstones, or some other valuable material under your property. But how exactly do you sell someone the right to develop it? Most sales of real estate are sales “in fee simple” – which means the buyer owns the surface of the land, the earth underneath it, and the air space above it. But it’s possible to split up these rights. In particular, it’s possible to sell the earth underneath
The second owner of a building could sue the builder for construction defects that led to the development of mold, the Iowa Supreme Court has ruled. The case involved a home that was built in 1995. In 2000, the original owners sold it to another family. The second family then discovered water damage and mold. They claimed the mold was the builder’s fault, but that the defects that caused the mold were hidden and couldn’t have
There’s a growing trend among condominium owners to ban smoking – not just in common areas, but inside individual units and in outdoor areas as well. Bans on smoking in common areas have been around for years. But a ban on smoking in individual units is a relatively new idea – and there are many questions about its legality. Recently, an upscale 118-unit condo in Minneapolis banned all smoking within the building as well as on
A family-owned limited liability company saved a family $14 million in taxes, in the latest ruling from the U.S Tax Court on this technique. With a family LLC, parents create a company and fund it with valuable assets. Then they give their children ownership interests in the LLC. Giving these interests triggers less gift tax than giving the underlying assets, because they are “worth” less on the open market. That’s because outside investors would be reluctant
An heir to the Johnson & Johnson fortune created a trust to benefit four children. The trust was set up so that it would provide money to charity for a period of years, then be distributed to the four children and their spouses. By the time the distribution came around, one of the children (named Mary) had died. Her third husband, Martin, who was married to her when she died, claimed that he was a “spouse”
From 1997 to 2003, a family could take an estate tax deduction of up to $675,000 if more than half of the estate property consisted of interest in a family business. This law is scheduled to go back into effect in 2010, so it’s wise to be aware of it. In particular, you should be aware that certain business decisions you make now- such as making personal loans to your company as opposed to capital contributions
The IRS has given families a little more flexibility in handling a 401 (K) and pension plans. According to an IRS announcement, children who inherit a 401 (k) or pension plan can now roll it over directly into a Roth IRA. Before, a spouse who inherited a 401 (k) or pension plan could roll it over into a Roth IRA, but this was not true for a beneficiary other than a spouse, such as a child.
The recent dip in interest rates has created a golden opportunity to save taxes while giving income-producing assets to your heirs. You can do this with a “grantor retained annuity trust,” or GRAT. It allows you to continue receiving income from the property for a number of years, and you can then give it to your heirs while dramatically reducing your estate and gift tax. The amount of taxes you can save is determined by a
A new federal “identity theft” law prohibits merchants from printing more than the last five digits of a credit or debit card number on a customer’s receipt. The law is triggering a lot of class-action lawsuits against companies that haven’t updated their receipt systems. For instance, many companies still print credit card expiration dates on receipts, which is prohibited by the law and can easily lead to a lawsuit.
Shareholders in closely-held corporations have won an important estate tax battle with the Internal Revenue Service. The issue is how to place a value on a corporation that has a lot of “built-in” capital gains-meaning that if the company’s assets were liquidated, it would owe a hefty capital gains tax. In this case, a man named Frazier Jelke owned about 6 percent interest in an investment company. The company had $188 million worth of assets. However,
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