Many of my clients ask me about the damage that will be done to their credit score if a foreclosure judgment is entered against them.  A foreclosure judgment will cause your credit score to drop around 200 to 300 points.  A good credit score of 700 could drop to as low as 400, which is considered pretty terrible.  The minimum FICO score is 340.  In addition, a foreclosure judgment may lead to tax consequences from the capital gain on the short sale of propety or a deficiency judgment for the remainder of money owed to the bank.

While a foreclosure can remain active on your credit report for three to seven years and make it difficult in certain buying situations, it won’t ruin your credit score for life.  If you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as two years.  The important thing to remember is that a foreclosure is a single negative item.  If you keep it isolated, it will be much less damaging to your credit score than if you had a foreclosure in addition to defaulting on other credit obligations, such as filing bankruptcy.

For more information on how to protect yourself from the consequences of a potential foreclosure, please contact the foreclosure defense team at Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.

A wrong determination of whether a trust qualifies as a designated beneficiary of retirement benefits can cost the owner decades of tax deferral as well as 50 percent excise tax penalties. Our attorneys know how to provide the best asset protection and estate planning benefits for large retirement plans so that the valuable stretch out does not become a blow out. Most trusts are inadequately drafted to handle retirement plans, especially in light of the recent changes of the Pension Protection Act. New preparer penalties put an additional premium on determining whether the trust is likely to qualify.

Learn more about how to protect your retirement and reduce your estate tax consequences by contacting the Florida asset protection attorneys of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.

As you begin planning how to leave what you have to those you love, it makes sense to want to increase what you currently have.  A good financial planner can guide you down the right path but you need to do as much due diligence when hiring a person to grow your estate as much as you do in hiring an attorney to plan it.  Financial planners are poorly regulated, poorly credentialed, and your remedies against a crooked one are few.  Our firm works with a number of very reputable financial advisors and we can recommend two or three that we feel might fit your needs, but you should still take the time to interview each of them yourself and choose the one that feels right for you.

• Find out how long the planner’s been practicing. Better yet, ask them if they’ve passed the CFP (Certified Financial Planner) exam — that’s an exam that only 56,000 planners have passed out of the 650,000 folks out there who say they are financial planners.
• Notice if they are trying to give you advice or trying to sell you products. Stay away from those who are primarily selling products — the odds are that they’re steering you toward products that get them maximum compensation rather than those that will meet your needs best.
• Ask them if they are preparing your financial plan or hire outside consultants to do so.
• Find out how they are compensated. Are they fee-only or commission-based? It’s not that one is necessarily better than another, but it’s important to understand how they are being paid and to make sure that they will act in your, not their, best interests.
• Check with the SEC to see if they have received any complaints about the planner.

For more information on growing and protecting your assets, please contact the law firm of Wild Felice & Pardo, P.A. for a free consultation.  You can reach us by phone at 954-944-2855 or via email at info@wfplaw.com.

If you are facing foreclosure, and the property being foreclosed is your primary residence, you may want to attempt a mediation prior to giving up on the possibility of saving your home.  Homesteaded properties where the bank has filed a foreclosure summons are eligible for mediation as long as the mortgage falls under the federal truth in lending act regulations.

After you receive a foreclosure summons, you should contact a foreclosure defense attorney.  Included with the summons will be an explanation of the court required mediation program.  Mediation fees of up to $750 are paid by the bank.

Between 60 and 120 days after the summons is received, a mediation program manager will contact your attorney. You will fill out a financial disclosure form and meet with a foreclosure counselor.  A mediation session between you and lender is scheduled.  If mediation is successful the case is settled.  If there is no resolution, the case proceeds in litigation.

The mediation will be held in the mediator’s office or a room provided by a mediation service.  The lender or the lender’s designee will likely attend via speaker phone.  Using your financial information, the lender should be able to tell you during the one- to three-hour meeting whether you are eligible for an alternative to foreclosure such as a short sale, deed in lieu or loan modification.

Your attorney should be well-versed in the mediation procedure and the risk and rewards that go with a loan modification.  For more information, contact the certified mediators and experienced Florida foreclosure defense team at Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.

As I have posted before, current federal law taxes estates exceeding $3.5 million for an individual or $7 million for a married couple at as much as 45 percent.  Any gift to an individual of more than $13,000 in any given year may also be taxed as much as 45 percent with the exception of a $1 million lifetime exclusion per donor.  For any individual concerned about these tax consequences, intra-family loans can be used for estate planning purposes, since any realized gains will be treated as free of all estate and gift taxes.

During our priliminary consultation with all of our estate planning clients, our firm will determine if our client is subject to the estate tax and if they can use intra-family loans to reduce the value of their estates.  The appreciation of any investment made with the loan accrues outside of our client’s estate, as long as it is above the IRS rate.  Rates for intra-family loans have declined as much as 53 percent since 2008.  Since the interest rates are low and most asset values -such as stocks and real estate- are depressed, there is a much greater possibility that any investments purchased with an intra-family loan in 2010 will appreciate more than the loan’s cost.

The rate for a three year intra-family loan made in January 2010 is currently 0.57 percent.  The rate is 2.45 percent for a loan of three years to nine years and 4.11 percent for a loan of nine years or more.  These rates compare favorably with an average rate of 10.55 percent for a personal bank loan and 12.51 percent for a credit-union loan.

Parents can loan their children money to buy a business and the children can repay the loan using profits from the firm.  Any future appreciation or income derived from the business beyond the loan amount are then considered part of the children’s estate and the parents’ estate remains protected.  Moreover, any amount above the 1.65 interest rate will pass to the children free of all estate and gift taxes. 

Family members should be aware the loans must be repaid in full with interest at the rate specified by the IRS. If the borrower doesn’t repay, it may be considered a gift subject to the gift tax.

For more on ways to protect your family from future estate tax issues, please contact Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.

With the holiday season upon us, it is important that we not lose sight of the fact that charity begins at home.  While serving food at a soup kitchen or donating toys to a hospital are noble ventures that should definitely be continued, neither of those acts of charity will provide you with the same kind of tax savings and asset protection that you will receive from opening a charitable remainder trust. 

A charitable remainder trust (“CRT”) can be established during the lifetime of the donor of the trust or upon his death.  If the CRT is established during the lifetime of the donor, it will give the donor an income tax deduction each year the trust exists.  In addition to the income tax deduction, the CRT itself is a tax exempt entity which means that it is a great place to store real estate or securities owned for longer than one year.  The CRT will not recognize income resulting from the sale of long-term capital gain property contributed to the CRT by the donor.

A CRT is an example of an extremely viable way to minimize or avoid the imposition of federal income taxes and reduce future estate taxes simultaneously.  As with all estate planning tools, the CRT has some minor disadvantages, but those disadvantages are insignificant when compared to the potential income and estate tax savings that they may provide.

For more information on charitable remainder trusts, or to learn about how you can protect your assets and provide for your family for generations to come, please contact Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.