Building Your Fresh Start Trust
Fresh Start Trust Lesson #2 - Building Your Fresh Start Trust ***This condensed version of the main lesson is for review purposes only. For an in-depth explanation of each of the items listed here, please refer to the main PDF file or the MP3 audio version.
This where you get into the real meat of the course. Be sure you fully understand everything
In this second lesson, we’re going to talk about: exactly how to structure a Fresh Start Trust. While all of the lessons are important, this one is the most important. Be sure to study it carefully. The Fresh Start Trust is specifically designed to start a new business inside the trust for asset protection. It is not structured to transfer an
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust existing business into it. There are ways to go about that but the Fresh Start Trust is not best suited for that purpose. This is the main goal of the entire course
When you properly structure your Fresh Start Trust, you will be able to minimize or even eliminate the money and assets that old creditors can get at. The strategy here is keeping your most valuable asset, your business, inside the Fresh Start Trust until your financial troubles pass. How long that will be depends on your individual circumstances and the state that you live in. It might be only until the creditor realizes they cannot get at your business or it might be until the statute of limitations passes on when they can attempt to collect on the debt. In this lesson, you'll learn about that. Once your financial troubles are over, you can begin taking distributions from the trust and again live the life you deserve. By the end of this second lesson on Fresh Start Trusts, you will have the tools and knowledge you need to take the action step of setting up your very own Fresh Start Trust. After this lesson, you'll completely understand how to go about it step-by-step.
THIS eCLASS’S OBJECTIVE In this eClass, you will be shown the how, what, and When it comes to why of all aspects of creating your Fresh Start Trust. trusts, one This is a uniquely designed trust offering you the size does not fit all best asset protection you will find for a business. © 2011 Financial Success Institute. All rights reserved.
2
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust The main components of the trust are structured in specific ways to achieve the ultimate asset protection goal. You only maximize your asset protection by exactly matching what you will learn here and working closely with a specialized attorney that also fully understands these concepts. You also need to begin making decisions about how to structure your business inside the trust. You want to maximize what you earn as an employee while minimizing what creditors can get atthrough the courts such as a garnishment of your wages. One way of structuring the business is by having it pay for beenfits that you receive in a manner that creditors cannot attach. That is include ith this week's eClass.
Specifically, you’ll have the following things in place… Understanding the critically important roles in the Fresh
The grantor Start Trust played by the grantor and trustees - you can't and trustee roles are build it without doing it this way. specially designed for the Why two trustees are better than one for your Fresh Start Fresh Start Trust. Trust
How keeping you separate from the business and trust enables you to keep more money rather than give it to old creditors. What you need to know to calculate the right salary to draw from the business owned by the trust.
© 2011 Financial Success Institute. All rights reserved.
3
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust An understanding of the debt collection statute of limitations in your state. The action steps you need to take to establish retirement benefits and medical insurance, paid by the business but for the benefit of you and your family. This is one action packed lesson. Let's jump right into it....
Building Your Fresh Start Trust Hello, Richard here again to show you step-by-step how to structure and build your Fresh Start Trust. First, I want to remind you that the Fresh Start Trust is It will make all the difference in what you still have after your financial problems are gone
specifically designed for you to have an operating business protected inside the trust. That way, if creditors or a lawsuit come after you, they can't get at your most valuable asset your livelihood. You can't be put in jail for not paying old bills that you can't afford or don't think you owe. But a judgment creditor can come after what you own to repay the debt after they win in court. So, as you already know, if you don't own it, they can't get at it - even if you have full control of the asset. That's the secret and power behind the Fresh Start Trust. And keep in mind, this trust structure is specifically designed to build a NEW business inside the trust. It's a low cost method of building and protecting your wealth.
© 2011 Financial Success Institute. All rights reserved.
4
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Roles the Key Components Play in a Fresh Start Trust All of the components in a trust are important. However, how these roles are assigned and what they do is what makes the Fresh Start Trust a great asset protection trust. As you already know, the trust must be irrevocable. Once it owns your assets, it will always be that way - no going back. You need The role of the grantor is one of the most important to the the help of a relative concept of asset protection. You cannot be the grantor. If it or close appears you set up the trust for your own benefit and to keep friend
creditors away from your assets, a court will most likely dissolve the trust and give creditors the assets inside.
The best structure is to have someone close to you as the trust grantor. Someone that has a strong interest in your welfare. A parent makes the best candidate. A court will clearly understand why a parent wants to assure their child's well being by establishing an irrevocable trust. Especially, if you have had recent financial troubles. These could include a bankruptcy, a divorce, a business failure, or a foreclosure, the list goes on and on. After a © 2011 Financial Success Institute. All rights reserved.
5
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust financial catastrophe, a parent is likely to want to help you get a fresh start but they are also likely to be concerned whether you can manage the assets properly since you just had big financial problems. That's why a court will understand why they put the assets in a trust rather than hand them directly over to you. Now, a sister, brother, aunt, uncle, or long-time family friend will work well as the grantor also. I just want you to know that a parent often works best in this role. The role of the trustees is critical to you having maximum asset protection
The role of the trustee is also important. In the Fresh Start Trust, there are two trustees. One of them is you and the other a competent adult selected either by you, the grantor, or together jointly. The two trustees have two distinctive roles in a Fresh Start Trust. Your role as a trustee is to invest the assets. This means setting up your new business inside the trust and managing it. It also means managing the profits the business makes and pays to the trust. Or it can mean you pour the profits back into the business to make it grow. Eventually you will want to pay the business profits to the trust either to invest or to be distributed. Distributing the profits and any other assets from the trust is the role of the second trustee. He or she will carefully follow the instructions in the trust documents created by the
© 2011 Financial Success Institute. All rights reserved.
6
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust grantor. Having someone other than you distribute the assets adds another layer of asset protection. Since you are going to be at least one of the beneficiaries of the trust, this removes any appearance of a conflict of interest between you as a trustee and you as a beneficiary. It also strengthens the asset protection if a creditor demands to be paid from the trust. Instead of you (as the beneficiary and subject of the creditor collection) being the one to deny the creditor has a right to the assets, it is a third party that does. A person that does not financially benefit from the trust. Of course, one of your roles is as the beneficiary. It can be only you or you can include others that you want to take care of. Next, let's take a look at what else goes into structuring this powerful asset protection trust.
Linking You, the Trust, and the Business Now you become your own boss
You will be working for the business established inside the trust. It doesn't really matter what business you are in. If you already have a job, maybe your boss or the owner will allow you to quit and will hire you back as a contractor through the business you are setting up in the trust.
Here is a graphic of how the arrangement works. © 2011 Financial Success Institute. All rights reserved.
7
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
The business is shown as a limited liability company (LLC) here. If you prefer, you can set it up as a corporation. The next lesson explores how you go about setting up the business. As you see, you are separate from both the Fresh Start Trust and the business. You are an employee of the business but you don't own it. You receive a paycheck and benefits as an employee. You can be the boss and manage the business but you can't own it
As the investment trustee of your Fresh Start Trust, you manage the business. That means doing things such as setting policy, determining how much vacation can be taken, and what the sick leave policy is. It also means determining what other benefits, you as an employee will receive.
© 2011 Financial Success Institute. All rights reserved.
8
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Setting Your Salary - You Need to Know About Garnishment A primary objective of the Fresh Start Trust is protecting the business profits from judgment creditors. Obviously, your paycheck is important to the Fresh Start Trust structure. When you decide how much to pay yourself, you need to take into account wage garnishment laws in your state. Maybe it won't happen to you but you need to be prepared if it does
A court ordered wage garnishment is often the last method a creditor has available to attempt collecting an unpaid debt. Many will not resort to this but others will. You never know. Knowing federal and state law is important if you think your wages might be garnished. While the Fresh Start Trust will protect your business and the profits that you leave inside, the trust cannot protect the wages or salary you receive from the business. Remember you and the business are separate entities. The primary purpose of the Fresh Start Trust is protecting assets by allowing you to control them without owning them. By doing that, the assets inside the trust are protected until you work out your financial problems. After that, you can begin distributing assets from the trust to yourself. Federal law allows garnishment of up to 25% of your disposable income each week. The other 75% is exempt from garnishment (up to a certain point). This applies to wages up to 30 Xs the federal minimum wage. Currently the federal
© 2011 Financial Success Institute. All rights reserved.
9
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust minimum wage is $7.25 per hour. That comes to (30 X 7.25) $217.5 per week. For a 40-hour week, we are talking about a wage of $290. The amount above $217.50 can be garnished. This is a big reason to have the business pay for the benefits you need
If you don't want anything to be garnished, you are going to need to get by on $217.50 or less each week. Any wage below that level cannot be garnished. Federal laws says that when state and federal law do not agree, the lower amount of the two will be garnished. Beside federal law, you need to consider your state laws regarding wage garnishment. State laws very significantly. Generally, state law is more lenient than the federal law. In some states, the percentage of your wage that can be garnished may be more for child support payments than for other forms of credit or debt. A separate file comes with this lesson that shows the wage garnishment laws in each state. Use it as a reference only. State laws change frequently. At the federal level, the amount of pay subject to garnishment is based on your "disposable earnings," which is the amount left after legally required deductions are made. Examples of deductions include federal, state, and local taxes, your share of State Unemployment Insurance and Social Security. It also includes withholdings for retirement accounts as required by law.
© 2011 Financial Success Institute. All rights reserved.
10
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust Deductions not required by law include voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise. For ordinary garnishments (i.e., those not for child support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of your disposable earnings, or the amount by which your disposable earnings are greater than 30 times the federal minimum wage. Here is an example
For illustration, if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment. If disposable earnings are more than $217.50 but less than $290.00 ($7.25 × 40), the amount above $217.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $290.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The next table illustrates how federal laws apply to wage garnishment.
© 2011 Financial Success Institute. All rights reserved.
11
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Be sure to study the additional materials
In addition to the wage garnishment state law document that comes with this lesson, there is a Department of Labor Fact Sheet included that answers more of your questions about wage garnishment at the federal level.
Debt Statute of Limitations Finally, some good news. There are statutes of limitations controlling how long a creditor can pursue collecting old debt. Here again, one size does not fit all. State law applies to debt collection statute of limitations. Generally, debt is categorized into these four categories: Open accounts (most credit cards) Written contracts (wide variety) Oral agreements (what you promised)
Promissory notes (mortgages)
© 2011 Financial Success Institute. All rights reserved.
12
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust There is a separate document showing the debt collection statute of limitations for each state. Use it for a reference but make sure you know the current law before making any decisions that will affect you now and in the future.
Benefits Having the business pay for benefits allows you temporarily to live on a smaller salary
By setting up a Fresh Start Trust, you are able to continue having important benefits. Two main benefits you want to include in your LLC or corporate policy are a 401K retirement plan and Health Insurance. As your retirement plan, you want to set up a 401K rather than a different type of plan such as an Individual Retirement Plan (IRA). The reason being is that a 401K adds another layer of asset protection to your already secure Fresh Start Trust. Federal law protects your 401k from being attached in a bankruptcy. However, you again need to understand your state law in this regard. Another benefit you want to arrange to be paid by your new employer (since you are in control) is health insurance. There is a wide variety of plans available to small businesses. You can select from anything that pays 100% of medical costs to plans that only cover major emergencies and catastrophes. Sometimes it can be difficult finding individual medical insurance. Especially if you have a pre-existing condition. If this happens to you, there are two options you want to
© 2011 Financial Success Institute. All rights reserved.
13
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust explore. First, you can look at group insurance for small businesses. Most of the big insurance carriers offer to pool small businesses together in a manner similar to the way large corporations pool the medical insurance for all of their employees. The idea being that risk is shared across a broad section of people and it lowers the overall cost. Your other option is again based on the state that you live in. About 35 states offer health insurance high-risk pools for people who have been denied coverage by private insurance companies.
There You Have it. The Fresh Start Trust Structure as the Best Asset Protection You Can Create!
© 2011 Financial Success Institute. All rights reserved.
14
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust Your “Assignment” for This Module Read and familiarize yourself with the additional materials provided with this module. There is important information in those documents that you will want to know before starting your own business. Take action to find medical insurance that the business can provide to you and your family beginning day one. Talk to a good financial advisor about setting up a 401k retirement plan that benefits you and adds another layer of asset protection. Either contact us here at Financial Success Institute or find a qualified attorney to begin setting up your Fresh Start Trust today. Send any questions or comments about the material to: [email protected] Keep your eye on your inbox, because you won’t want to miss the eye-opening tips, tricks and secrets coming your way soon!
Richard Geller Publisher, Fresh Start Trust P.S. Be sure to review all of the materials that are included with this curriculum package. You should have received four other files: 1. Fresh Start Trust Module 2 – Building Your Fresh Start Trust 2. Fresh Start Trust Module 2 – Wage Garnishment by State 3. Fresh Start Trust Module 2 – Department of Labor Fact Sheet on Wage Garnishment 4. Fresh Start Trust Module 2 – Debt Statute of Limitations by State
© 2011 Financial Success Institute. All rights reserved.
15
www.financialsuccessinstitute.org
This where you get into the real meat of the course. Be sure you fully understand everything
In this second lesson, we’re going to talk about: exactly how to structure a Fresh Start Trust. While all of the lessons are important, this one is the most important. Be sure to study it carefully. The Fresh Start Trust is specifically designed to start a new business inside the trust for asset protection. It is not structured to transfer an
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust existing business into it. There are ways to go about that but the Fresh Start Trust is not best suited for that purpose. This is the main goal of the entire course
When you properly structure your Fresh Start Trust, you will be able to minimize or even eliminate the money and assets that old creditors can get at. The strategy here is keeping your most valuable asset, your business, inside the Fresh Start Trust until your financial troubles pass. How long that will be depends on your individual circumstances and the state that you live in. It might be only until the creditor realizes they cannot get at your business or it might be until the statute of limitations passes on when they can attempt to collect on the debt. In this lesson, you'll learn about that. Once your financial troubles are over, you can begin taking distributions from the trust and again live the life you deserve. By the end of this second lesson on Fresh Start Trusts, you will have the tools and knowledge you need to take the action step of setting up your very own Fresh Start Trust. After this lesson, you'll completely understand how to go about it step-by-step.
THIS eCLASS’S OBJECTIVE In this eClass, you will be shown the how, what, and When it comes to why of all aspects of creating your Fresh Start Trust. trusts, one This is a uniquely designed trust offering you the size does not fit all best asset protection you will find for a business. © 2011 Financial Success Institute. All rights reserved.
2
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust The main components of the trust are structured in specific ways to achieve the ultimate asset protection goal. You only maximize your asset protection by exactly matching what you will learn here and working closely with a specialized attorney that also fully understands these concepts. You also need to begin making decisions about how to structure your business inside the trust. You want to maximize what you earn as an employee while minimizing what creditors can get atthrough the courts such as a garnishment of your wages. One way of structuring the business is by having it pay for beenfits that you receive in a manner that creditors cannot attach. That is include ith this week's eClass.
Specifically, you’ll have the following things in place… Understanding the critically important roles in the Fresh
The grantor Start Trust played by the grantor and trustees - you can't and trustee roles are build it without doing it this way. specially designed for the Why two trustees are better than one for your Fresh Start Fresh Start Trust. Trust
How keeping you separate from the business and trust enables you to keep more money rather than give it to old creditors. What you need to know to calculate the right salary to draw from the business owned by the trust.
© 2011 Financial Success Institute. All rights reserved.
3
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust An understanding of the debt collection statute of limitations in your state. The action steps you need to take to establish retirement benefits and medical insurance, paid by the business but for the benefit of you and your family. This is one action packed lesson. Let's jump right into it....
Building Your Fresh Start Trust Hello, Richard here again to show you step-by-step how to structure and build your Fresh Start Trust. First, I want to remind you that the Fresh Start Trust is It will make all the difference in what you still have after your financial problems are gone
specifically designed for you to have an operating business protected inside the trust. That way, if creditors or a lawsuit come after you, they can't get at your most valuable asset your livelihood. You can't be put in jail for not paying old bills that you can't afford or don't think you owe. But a judgment creditor can come after what you own to repay the debt after they win in court. So, as you already know, if you don't own it, they can't get at it - even if you have full control of the asset. That's the secret and power behind the Fresh Start Trust. And keep in mind, this trust structure is specifically designed to build a NEW business inside the trust. It's a low cost method of building and protecting your wealth.
© 2011 Financial Success Institute. All rights reserved.
4
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Roles the Key Components Play in a Fresh Start Trust All of the components in a trust are important. However, how these roles are assigned and what they do is what makes the Fresh Start Trust a great asset protection trust. As you already know, the trust must be irrevocable. Once it owns your assets, it will always be that way - no going back. You need The role of the grantor is one of the most important to the the help of a relative concept of asset protection. You cannot be the grantor. If it or close appears you set up the trust for your own benefit and to keep friend
creditors away from your assets, a court will most likely dissolve the trust and give creditors the assets inside.
The best structure is to have someone close to you as the trust grantor. Someone that has a strong interest in your welfare. A parent makes the best candidate. A court will clearly understand why a parent wants to assure their child's well being by establishing an irrevocable trust. Especially, if you have had recent financial troubles. These could include a bankruptcy, a divorce, a business failure, or a foreclosure, the list goes on and on. After a © 2011 Financial Success Institute. All rights reserved.
5
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust financial catastrophe, a parent is likely to want to help you get a fresh start but they are also likely to be concerned whether you can manage the assets properly since you just had big financial problems. That's why a court will understand why they put the assets in a trust rather than hand them directly over to you. Now, a sister, brother, aunt, uncle, or long-time family friend will work well as the grantor also. I just want you to know that a parent often works best in this role. The role of the trustees is critical to you having maximum asset protection
The role of the trustee is also important. In the Fresh Start Trust, there are two trustees. One of them is you and the other a competent adult selected either by you, the grantor, or together jointly. The two trustees have two distinctive roles in a Fresh Start Trust. Your role as a trustee is to invest the assets. This means setting up your new business inside the trust and managing it. It also means managing the profits the business makes and pays to the trust. Or it can mean you pour the profits back into the business to make it grow. Eventually you will want to pay the business profits to the trust either to invest or to be distributed. Distributing the profits and any other assets from the trust is the role of the second trustee. He or she will carefully follow the instructions in the trust documents created by the
© 2011 Financial Success Institute. All rights reserved.
6
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust grantor. Having someone other than you distribute the assets adds another layer of asset protection. Since you are going to be at least one of the beneficiaries of the trust, this removes any appearance of a conflict of interest between you as a trustee and you as a beneficiary. It also strengthens the asset protection if a creditor demands to be paid from the trust. Instead of you (as the beneficiary and subject of the creditor collection) being the one to deny the creditor has a right to the assets, it is a third party that does. A person that does not financially benefit from the trust. Of course, one of your roles is as the beneficiary. It can be only you or you can include others that you want to take care of. Next, let's take a look at what else goes into structuring this powerful asset protection trust.
Linking You, the Trust, and the Business Now you become your own boss
You will be working for the business established inside the trust. It doesn't really matter what business you are in. If you already have a job, maybe your boss or the owner will allow you to quit and will hire you back as a contractor through the business you are setting up in the trust.
Here is a graphic of how the arrangement works. © 2011 Financial Success Institute. All rights reserved.
7
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
The business is shown as a limited liability company (LLC) here. If you prefer, you can set it up as a corporation. The next lesson explores how you go about setting up the business. As you see, you are separate from both the Fresh Start Trust and the business. You are an employee of the business but you don't own it. You receive a paycheck and benefits as an employee. You can be the boss and manage the business but you can't own it
As the investment trustee of your Fresh Start Trust, you manage the business. That means doing things such as setting policy, determining how much vacation can be taken, and what the sick leave policy is. It also means determining what other benefits, you as an employee will receive.
© 2011 Financial Success Institute. All rights reserved.
8
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Setting Your Salary - You Need to Know About Garnishment A primary objective of the Fresh Start Trust is protecting the business profits from judgment creditors. Obviously, your paycheck is important to the Fresh Start Trust structure. When you decide how much to pay yourself, you need to take into account wage garnishment laws in your state. Maybe it won't happen to you but you need to be prepared if it does
A court ordered wage garnishment is often the last method a creditor has available to attempt collecting an unpaid debt. Many will not resort to this but others will. You never know. Knowing federal and state law is important if you think your wages might be garnished. While the Fresh Start Trust will protect your business and the profits that you leave inside, the trust cannot protect the wages or salary you receive from the business. Remember you and the business are separate entities. The primary purpose of the Fresh Start Trust is protecting assets by allowing you to control them without owning them. By doing that, the assets inside the trust are protected until you work out your financial problems. After that, you can begin distributing assets from the trust to yourself. Federal law allows garnishment of up to 25% of your disposable income each week. The other 75% is exempt from garnishment (up to a certain point). This applies to wages up to 30 Xs the federal minimum wage. Currently the federal
© 2011 Financial Success Institute. All rights reserved.
9
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust minimum wage is $7.25 per hour. That comes to (30 X 7.25) $217.5 per week. For a 40-hour week, we are talking about a wage of $290. The amount above $217.50 can be garnished. This is a big reason to have the business pay for the benefits you need
If you don't want anything to be garnished, you are going to need to get by on $217.50 or less each week. Any wage below that level cannot be garnished. Federal laws says that when state and federal law do not agree, the lower amount of the two will be garnished. Beside federal law, you need to consider your state laws regarding wage garnishment. State laws very significantly. Generally, state law is more lenient than the federal law. In some states, the percentage of your wage that can be garnished may be more for child support payments than for other forms of credit or debt. A separate file comes with this lesson that shows the wage garnishment laws in each state. Use it as a reference only. State laws change frequently. At the federal level, the amount of pay subject to garnishment is based on your "disposable earnings," which is the amount left after legally required deductions are made. Examples of deductions include federal, state, and local taxes, your share of State Unemployment Insurance and Social Security. It also includes withholdings for retirement accounts as required by law.
© 2011 Financial Success Institute. All rights reserved.
10
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust Deductions not required by law include voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise. For ordinary garnishments (i.e., those not for child support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of your disposable earnings, or the amount by which your disposable earnings are greater than 30 times the federal minimum wage. Here is an example
For illustration, if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment. If disposable earnings are more than $217.50 but less than $290.00 ($7.25 × 40), the amount above $217.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $290.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The next table illustrates how federal laws apply to wage garnishment.
© 2011 Financial Success Institute. All rights reserved.
11
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust
Be sure to study the additional materials
In addition to the wage garnishment state law document that comes with this lesson, there is a Department of Labor Fact Sheet included that answers more of your questions about wage garnishment at the federal level.
Debt Statute of Limitations Finally, some good news. There are statutes of limitations controlling how long a creditor can pursue collecting old debt. Here again, one size does not fit all. State law applies to debt collection statute of limitations. Generally, debt is categorized into these four categories: Open accounts (most credit cards) Written contracts (wide variety) Oral agreements (what you promised)
Promissory notes (mortgages)
© 2011 Financial Success Institute. All rights reserved.
12
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust There is a separate document showing the debt collection statute of limitations for each state. Use it for a reference but make sure you know the current law before making any decisions that will affect you now and in the future.
Benefits Having the business pay for benefits allows you temporarily to live on a smaller salary
By setting up a Fresh Start Trust, you are able to continue having important benefits. Two main benefits you want to include in your LLC or corporate policy are a 401K retirement plan and Health Insurance. As your retirement plan, you want to set up a 401K rather than a different type of plan such as an Individual Retirement Plan (IRA). The reason being is that a 401K adds another layer of asset protection to your already secure Fresh Start Trust. Federal law protects your 401k from being attached in a bankruptcy. However, you again need to understand your state law in this regard. Another benefit you want to arrange to be paid by your new employer (since you are in control) is health insurance. There is a wide variety of plans available to small businesses. You can select from anything that pays 100% of medical costs to plans that only cover major emergencies and catastrophes. Sometimes it can be difficult finding individual medical insurance. Especially if you have a pre-existing condition. If this happens to you, there are two options you want to
© 2011 Financial Success Institute. All rights reserved.
13
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust explore. First, you can look at group insurance for small businesses. Most of the big insurance carriers offer to pool small businesses together in a manner similar to the way large corporations pool the medical insurance for all of their employees. The idea being that risk is shared across a broad section of people and it lowers the overall cost. Your other option is again based on the state that you live in. About 35 states offer health insurance high-risk pools for people who have been denied coverage by private insurance companies.
There You Have it. The Fresh Start Trust Structure as the Best Asset Protection You Can Create!
© 2011 Financial Success Institute. All rights reserved.
14
www.financialsuccessinstitute.org
Fresh Start Trust
Lesson #2 - Building Your Fresh Start Trust Your “Assignment” for This Module Read and familiarize yourself with the additional materials provided with this module. There is important information in those documents that you will want to know before starting your own business. Take action to find medical insurance that the business can provide to you and your family beginning day one. Talk to a good financial advisor about setting up a 401k retirement plan that benefits you and adds another layer of asset protection. Either contact us here at Financial Success Institute or find a qualified attorney to begin setting up your Fresh Start Trust today. Send any questions or comments about the material to: [email protected] Keep your eye on your inbox, because you won’t want to miss the eye-opening tips, tricks and secrets coming your way soon!
Richard Geller Publisher, Fresh Start Trust P.S. Be sure to review all of the materials that are included with this curriculum package. You should have received four other files: 1. Fresh Start Trust Module 2 – Building Your Fresh Start Trust 2. Fresh Start Trust Module 2 – Wage Garnishment by State 3. Fresh Start Trust Module 2 – Department of Labor Fact Sheet on Wage Garnishment 4. Fresh Start Trust Module 2 – Debt Statute of Limitations by State
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