[56강 CRT + ILIT] 가상화폐, (한국/미국)부동산, 주식매각 Capital Gain Tax고민 💥날려버리세요. CRT + ILIT - YouTube

Hello, it’s John Chung.

Last year and this year, the value of assets went up a lot.

Even if the actual business didn't go well due to COVID-19,

So now that a lot of funds are released on the market even when business income is falling,

the value of assets such as stocks and real estate has risen a lot.

In particular, Bitcoin, real estate, and stocks are about to be sold at a time when they have risen that much.

Interest in taxes incurred when I sold has increased in terms of the amount of profits from the sale.

Even for real estate held in Korea, the price has risen a lot,

so many people are asked if there is a way to solve such concerns as they pay taxes on capital gains in the U.S.

Today, I would like to introduce again a system called CRT that can be used for this.

The reason I said it again is a topic that I've dealt with once before.

There are a lot of questions and there are additional things to tell you, so I prepared it again.

For example, including stocks, real estate and even cryptocurrency such as Bitcoin,

Under the current law, the federal taxes occurring from these types of assets is 20%.

Although it's technically 15~20%, with a high income it jumps up to 20%.

And here, it's called NIIT, Net Investment Income Tax. This adds 3.8%.

In addition, the state income tax is added depending on the state in which I live,

so the total tax I pay will be more than 30% of the transfer gain.

It's a concern about how to reduce this, and as a solution to this, it's an introduction to this CRT, which is a very powerful solution.

Now, before we go in, I'd like to talk about income tax.

What we're worried about is this capital gains tax, Capital Gain Tax. In the end, it is necessary to point out that this is to reduce taxes on income generated,

but what is reducing income tax?

In the future, it will be a big picture for this income tax reduction planning we're discussing.

Reducing this income tax means reducing net income,

and net income means subtracting costs from income, so first of all, reducing income or increasing costs.

That's a given.

If I reduce my gross income, there will be very limited things I can do.

In other words, if I reduce my income, I'll eventually reduce my taxable income,

but that doesn't mean I can't help but engage in economic activities I earn, or there are a few things called tax-free income,

but it doesn't make sense to use it as my main source of income.

In the end, The thing that I won't make money so that I don't pay taxes does not make sense. That's probably why there's a limit.

Then, if we think about increasing the deduction cost,

we can deduct this and those cost deductions (vehicle, travel, food expenses) in the name of business if we do business.

Depending on the nature of this income, not this business income, but the stock sale income of the real estate we're talking about now,

or the W2, payroll salary that salaried workers receive are transparent.

It means that there's a limit to the cost deduction that you can do here.

So, what other deductions can we reduce besides business cost deductions?

Every year, we fill out a personal income tax return called 1040.

If you take a look here,

the top of the tax return is Adjusted Gross Income, which collects income.

Next, there is an item called itemized deduction.

Then if you look at each item here,

it's largely deducted from the charity by medical expenses, interest (mortgage interest, etc.), state tax, and now donation, charitable distribution.

But as you know, medical expenses, interest expenses, or state tax is limited.

For example, it doesn't make sense to increase interest costs even more just because I'm going to reduce taxes.

Then what's left now is charitable distribution, that is, charity donation deduction, so what am I talking about?

In many cases, our efforts to reduce income tax in the future can be seen as an active use of this by establishing a charity.

Then, what is it to use charity like this?

It can be seen in four main ways. In fact, there are about three things.

There are four things in a broad sense, but the first thing is that I donate directly to the charity.

It's the same thing as a church, a school. We're donating money.

It's called tirade, and all of these donations or donations to my church are deducted.

But this is too basic to be called planning.

Anyway, it will be the first way to reduce my taxable income.

The second method is the Private Foundation. I'm setting up my own charity.

I can set up my foundation and transfer money to it

The advantage is that compared to the donation I told you about in the first stage,

I can set up my foundation and transfer money to it,

so I can get a donation deduction when the funds have not been transferred anywhere else.

On the other hand, if I follow a certain level of compliance rules,

it is not a rule that I must donate the money I transferred to this institution to the outside,

so I can operate more flexibly over time.

There will be many other private foundation advantages,

and we will cover the private foundation in detail in a separate video next time.

And the third is today's topic, a charitable trust.

It's a combination of charge and trust, and there's a video in the past.

It's called CRT, charitable remainder trust.

In the end, it means that I make my trust

so that it can be recognized as a charity.

If so, I will also put the amount I paid in there into the charity, so I will get a deduction from the asset agency deduction.

Income tax from economic activities through this trust will also be multi-taxation because it is a charity.

Let's take a look at this part.

And the fourth way is to be bolder and more aggressive, but there is a concept called charitable llc.

However, the third CRT, today's topic, Charitable trust,

has been a system that has lasted for more than 30, 40 years, and has been accepted by the IRS without any problems with its legitimacy.

On the other hand, this charitable lc is relatively more aggressive and more recent,

so I personally don't recommend it to many people.

So these four methods would be deduction planning using charity,

and today, the third of them, let's take a look at CRT at each stage.

Now, the first step is to establish a trust and determine the corresponding trust and beneficiary benefits.

You can build the trust yourself.

And for beneficiaries-beneficiary, CRT like this is called split interest in technical terms,

but it's not a difficult story, it's divided into come interest and reminder interest.

How does this work?

I take the income or principal from the trust's assets.

This can be 10, 20 years for a certain period of time or my whole life.

Then, after that period, the charity will take the remaining assets.

That's why this is called Split Interest. In this way, trust will be established.

The second step is my assets in this established trust,

such as stocks and real estate that I mentioned earlier, which have increased in value.

These assets are transferred. We're moving it to Trust.

This process is called the second stage.

The third stage is this second stage, the stage of asset transfer, where we receive income deductions.

How much do you get? If you enter the technical part of this trust in the value of the assets I move,

you will receive a deduction of approximately 30-35% from your income.

For example, if there is real estate with a cost of $100,000 and the market value is currently $1 million,

you can receive an income deduction of approximately $300,000 to $350,000 by transferring the asset to Trust.

If this deduction is too large to spend all of it because I don't have that much income,

these deductions will be available in the future over the next five years.

Now, the fourth step is to sell the assets transferred to this trust.

The trust took ownership of the asset.

If you sell this asset, there will be a transfer gain.

In that case, I don't pay any income tax.

Because this trust itself is recognized as a charity, it is a duty-free institution,

so it is not subject to income tax.

And the fifth step is to pay you a certain amount of income every year.

I said earlier that it's "income interest."

Depending on how the trust is established, some determine a certain percentage and some determine a certain amount.

and some determine a certain amount.

So, it is divided into CRAT, CRUT, NICRUT, and NIMCRUT, and for today's video purpose, the distinction is not important,

and we can say that we receive a certain percentage,

approximately 5-10% of that asset, based on year-end assets.

And it's the annual dividend you get here. Income was level three.

You will not pay taxes for about four or five years using the income deduction for this charitable distribution I mentioned here.

In other words, you can see the advantage of working as a text-free income.

And sixth, you can look at the asset protection provided for the value of the one million dollar asset.

When we do business or economic activities like this, there are many risks that arise from the business.

No matter how well I make money, I can be concerned about situations where stakeholders raise questions about my property from my business.

The assets transferred here to this trust (million-dollar real estate)

and the annual income I receive from this trust

will be completely protected from any claims made by these stakeholders, credit holders.

It can be a strong advantage, right?

If you look here, I've explained all the general descriptions of CRT. What do you think is left?

You can see it as a reminder.

Charity for the remaining assets,

so asset institutions will take them, which is of course good.

Nevertheless, there may be some people who are disappointed.

Why? For those who are left, I guess it's their family.

You might think it would be better if we could take all of this.

What we can use to solve this situation again is the Life Insurance Trust, ILIT.

Of course, I've told you in a separate video before. It'd be nice if you looked for it!

I establish this life insurance trust to invest in life insurance

and use the income interest I receive for the first five years as the payment of insurance.

If the amount received in the future from this insurance

can be established to match the amount transferred to Charity,

it will eventually achieve the effect of transferring the reminder interview to the family, which is transferred to the charity.

Due to the nature of this ILIT, the fact that the amount passed on to the family like this

does not incur the burden of gift inheritance tax will also be a bigger advantage.

That will eventually complete the picture of transferring the cash flow that comes out after I founded CRT to the precious people I want.

That's it.

Now, this is the CRT whole picture, and you can see that this alone is very good,

but as I said earlier, it is a system that has been fully recognized by related agencies such as IRS for the past 30 or 40 years.

So, if I summarize it,

First, you can receive a deductible for asset transfer.

Second, since the trust is a duty-free institution, the income from my business is completely tax-free.

Therefore, if I move and sell stocks or real estate that I currently have personally, the transfer tax will not be levied.

Third, the advantage was that I could continue to receive such income that I was guaranteed throughout my life or for a certain period of time.

Fourth, I also told you the advantage that all assets transferred to the trust here are guaranteed asset protection.

And finally, the fifth, the rest of the transfer to this asset institution, I also said that they were linked to life insurance and subscribed to life insurance, income from the initial trust, and non-taxable income.

If a portion of this income is used as a deposit for insurance, we have established a charity, but we can complete an inheritance plan that actually transfers the entire investment to the family.

Rather than understanding any technical part of this content, there is something I really want those who watch this video to understand.

If I have such investment assets, real estate, investment, and even crypto current, which has risen in asset value,

and I'm considering future sales, and if this potential sale profit is more than $500,000, you'd better consider establishing CRT.

Then we'll end today's video here.

In the following video, let's take a closer look at how this CRT works with a real case.

This is the end of today's video. I hope it was helpful and I'll see you next time.