A few weeks ago I wrote a post about the variation in housing costs among different regions in the country. I was reminded of that post by this report on the municipal government of Portland, Oregon, subsidizing the offering of condominiums for sale at the bargain price of $164,000. They sound like a bargain until you find out that the condos are 387 square feet. That’s $424 per square foot. That’s not exactly a bargain.
I haven’t checked it out, but I would bet that the average newly constructed house in Tucson costs less than half that much per square foot. And a new house in Tucson will have a yard, unlike those Portland condos. And no municipal subsidy to lower the price, either.
I had seen stuff about trusteed IRAs before, but since the Tax Prof Blog posted something about it recently, I thought a short post of my own addressing the subject would be worthwhile. The idea is that you leave your IRA to a beneficiary without the beneficiary gaining direct control of the account. To put it another way, It’s a way to put the account under the control of a trustee without setting up your own trust and directing the account to that trust (by naming that trust as the beneficiary of the account). The trust in turn names as its beneficiary the person(s) who you want to have the benefit of the account (but without giving them control of it).
Naming a trust as the beneficiary of an IRA can get you the same outcome as a trusteed IRA. The rules that govern the tax treatment of an IRA that has a trust as the beneficiary are very complex, however. I can see some advantages to using a vehicle that gets the desired outcome without having to contend with those tax rules.
The larger question is whether or not you need to have a trustee hold the account at all. If the people who you want to have the benefit of the account are children or are disabled, then you need to have a trustee hold the account for their benefit. Otherwise, it's probably not necessary.
A quick free speech quiz:
If I put on my web site that the moon is made of green cheese, and someone believes it, can they sue me when they find out my statement was false?
Can the government do something about the fact that I published a false statement, such as fine me or shut down my web site?
Does it change the answer to either of those questions if I thought what I published was true?
What if I published it for a “bad purpose,” for example, that I knew my audience would believe it and would be humiliated when they found out they had been misled?
Professor Volokh gives all of the answers in his UCLA Law Review article and a podcast discussing the article. I found them via a post on the Volokh Conspiracy blog.
My financial accounting teacher showed this video in class at the beginning of the semester. It’s an entertaining vehicle for introducing the debit-credit theory (as the title says). There’s a four-line stanza (is that what you call it in a rap?) in it that absolutely nails the concept. The last line of that stanza is something like: “If you get this, then you get accountancy.” That is a true statement.
UPDATE: the link above isn't working. I found another link that not only works, but has the lyrics captioned on the video. Try it.
YOU ARE NOT ENTITLED TO AN INHERITANCE; ALSO, WHAT YOUR DECEASED RELATIVE MAY HAVE INTENDED DOESN’T MATTER IF IT WASN’T WRITTEN DOWN IN A GOVERNING DOCUMENT
Sorry, these are the rules. I didn’t make them. They’re just the rules. There are exceptions, but in general:
1) You aren’t entitled to anything from an estate or trust unless you are named in a governing document or, if there is no governing document, you are legally an heir of the deceased person.
2) For a paper to qualify as a governing document for a will or trust, the paper has to meet specific legal requirements.
The reason for these rules should be fairly obvious. Without them, every estate or trust administration would be a free-for-all.
…would you have to get government approval to change the use of your property from a gas station to something else.
Is the law of supply and demand as applied to housing stocks really as simple as Professor Sowell says it is? That is, the fundamental cause of high rents is an inadequate supply of housing, and rent controls will not solve the problem of an inadequate supply of housing?
Could it also be true that the reason rent controls are proposed and enacted is widespread lack of understanding of the basic principle of economics, i.e. the law of supply and demand?
I defer to the expertise of Professor Sowell on both questions.
UPDATE: Link was wrong before. I fixed it.
HOUSING COSTS ARE INFLUENCED BY A NUMBER OF FACTORS, THE LAW OF SUPPLY AND DEMAND DEFINITELY BEING ONE OF THEM
A couple of blogs I like had posts recently dealing with the impact of regulatory burden on housing costs. While I don’t think that the difference in land use restrictions is the only reason that housing in Seattle is more than twice as costly as in Houston, as the Antiplanner says, it’s clearly a factor. And I have observed first hand the phenomenon described by Coyote, that people who relocate to Arizona from other states can’t seem to make the connection between less regulation and lower housing costs.
I don’t claim to know much at all about economics. The only econ class I took in college was taught by a grad student from Africa for whom English was his third language. I’m interested in the subject anyway. I wish I understood it better, but even I can recognize the law of supply and demand at work.
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.