Method and apparatus for releasing value of an asset

• US 5,083,270 A
• Filed: 12/14/1990
• Issued: 01/21/1992
• Est. Priority Date: 11/02/1988
• Status: Expired due to Term

• Current Assignee: Interforce Ltd.
• Original Assignee: Interforce Ltd.
• Inventors: Gross, Hyman, Checkley, Jonathan R. P., Hatcher, Melvin J.
• Primary Examiner(s): Shaw, Dale M.
• Assistant Examiner(s): CHUNG TRANS, XUONG MY
• Application Number:
  US07/628,938
• Time in Patent Office: 403 Days
• Field of Search: 364/408, 364/406, 364/407, 364/400, 364/900
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03

Abstract

A data processing method and system for implementing a program to produce income from assets not normally income-producing, or to increase income from assets that already produce some income, is provided. According to the program, an interest-free mortgage is taken against the asset as security for a promissory obligation by a participant to pay a sum certain on his death. The promissory obligation becomes part of a fund which derives income through payment of such obligations as participants die, funding distributions to other participants still living. The data processing method and system of the invention determine eligibility, calculate distributions, monitor the value of the pledged assets with respect to the amounts against which they are pledged, and handle discharge of the obligations as participants die.

Claims

1. A data processing system for administering a program for releasing to an owner of an asset at least a portion of its cash value without transfer of ownership of said asset and without transfer of control thereof, said system determining eligibility for said program and determining program payouts, said system comprising:

means for entering application data derived from an application by said owner to participate in said program, said application data including date of birth of said owner, an amount of a promissory obligation to be offered for participation in said program, and an estimate by said owner of current market value of said asset;

means for determining the probability of death of said owner during any particular year based on said date of birth;

means for determining, based on said current market value and said probability, whether said asset will support a predetermined minimum distribution of cash and for rejecting said application if said asset has insufficient value to support said minimum distribution;

means for generating a mortgage document against said asset and a promissory note to be signed by said owner, said promissory note being in the amount of said promissory obligation, being secured by said mortgage, and being payable on death of said owner;

means for computing and making periodic distributions to participating owners based on the current probability of death and the amount of the promissory obligation of each owner;

means for entering the death of said owner;

means for notifying program personnel to procure payment of said promissory obligation from the estate of said owner and, if said estate cannot otherwise settle said promissory obligation, to procure sale of said asset and reimbursement from the proceeds thereof; and

means for terminating said mortgage on receipt of said payment, whereby;

said owner retains ownership and control of said asset during his lifetime, while value of said asset is available to him as cash.

2. The data processing system of claim 1 further comprising means for comparing said estimate of current market value to an independent appraisal of current market value and for rejecting said application if there is a discrepancy between said estimate and said appraisal exceeding a predetermined plausible percentage of said appraisal.

3. The data processing system of claim 1 further comprising means for comparing said promissory obligation offered to the product of said current market value and a proportionality factor, said proportionality factor chosen from a list of proportionality factors according to type of asset and representing the smallest fraction of current market value normally likely to be achieved because of price fluctuations of said asset over the life of said owner, and for rejecting said application if said promissory obligation exceeds said product, whereby on the death of said owner said asset is likely to have sufficient value to settle said promissory obligation.

4. The data processing system of claim 1 further comprising means for determining, based on said current market value and said probability, whether said promissory obligation will support said predetermined minimum periodic distribution of cash, and for rejecting said application if said promissory obligation is insufficient to support said predetermined minimum distribution.

5. The data processing system of claim 1 wherein said periodic distribution computing and making means additionally bases said distributions on distributable profits of said program.

6. The data processing system of claim 5 wherein said distributable profits are distributed to each participating asset owner based on a pro rata share determined by a ratio that capitalized value of his asset bears to a total capitalized value of all participating assets.

7. The data processing system of claim 1 further comprising means for periodically comparing a reassessed current market value of said asset to the amount of said promissory obligation and, if said current market value has increased, for generating a notice to said owner that said amount may be increased, and, if said current market value has decreased, for generating a notice to said owner that he must do one of (1) reducing said amount of said promissory obligation, and (2) mortgaging additional assets.

8. The data processing system of claim 7 further comprising means for generating a new promissory note and a new mortgage when said promissory obligation is changed.

9. A data processing method for administering a program for releasing to an owner of an asset at least a portion of its cash value without transfer of ownership of said asset and without transfer of control thereof, said method determining eligibility for said program and determining program payouts, said method comprising the steps of:

entering application data derived from an application by said owner to participate in said program, said application data including date of birth of said owner, an amount of a promissory obligation to be offered for participation in said program, and an estimate by said owner of current market value of said asset;

determining probability of death of said owner during any particular year based on said date of birth;

determining, based on said current market value and said probability, whether said asset will support a predetermined minimum periodic distribution of cash and rejecting said application if said asset has insufficient value to support said minimum periodic distribution;

comparing said estimate of current market value to an independent appraisal of current market value and rejecting said application if there is a discrepancy between said estimate and said appraisal exceeding a predetermined plausible percentage of said appraisal;

comparing said promissory obligation offered to the product of said current market value and a proportionality factor chosen from a list of proportionality factors according to type of asset and representing the smallest fraction of current market value normally likely to be achieved because of price fluctuations of said asset over the life of said owner, and rejecting said application if said promissory obligation exceeds said product, whereby on the death of said owner said asset is likely to have sufficient value to settle said promissory obligation;

determining, based on said current market value and said probability, whether said promissory obligation will support said minimum periodic distribution of cash, and rejecting said application if said promissory obligation is insufficient to support said predetermined minimum distribution;

generating a mortgage document against said asset and a promissory note to be signed by said owner, said promissory note being in the amount of said promissory obligation, being secured by said mortgage, and being payable on death of said owner;

computing and making periodic distributions to participating owners based on the current probability of death of said owners, the amount of the promissory obligation given by each owner, and distributable profits of said program, wherein said distributable profits are distributed to each participating asset owner based on a pro rata share determined by a ratio that capitalized value of the asset bears to a total capitalized value of all participating assets;

periodically comparing a reassessed current market value of said asset to the amount of said promissory obligation and, if said current market value has increased, generating a notice to said owner that said amount may be increased, and, if said current market value has decreased, generating a notice to said owner that he must do one of (1) reducing said amount of said promissory obligation, and (2) mortgaging additional assets, and generating a new promissory note and a new mortgage when said promissory obligation is changed;

entering the death of said owner;

notifying program personnel to procure payment of said promissory obligation from the estate of said owner and, if said estate cannot otherwise settle said promissory obligation, to procure sale of said asset;

computing interest from date of death to date of receipt of payment from one of (1) said estate, and (2) sale of said asset; and

terminating said mortgage on receipt of said payment and said interest.

10. A data processing system for administering a program for releasing to an owner of an asset at least a portion of its cash value without transfer of ownership of said asset and without transfer of control thereof, said system determining eligibility for said program and determining program payouts, said system comprising:

means for entering application data derived from an application by said owner to participate in said program, said application data including date of birth of said owner, an amount of a promissory obligation to be offered for participation in said program, and an estimate by said owner of current market value of said asset;

means for determining probability of death of said owner during any particular year based on said date of birth;

means for determining, based on said current market value and said probability, whether said asset will support a predetermined minimum periodic distribution of cash and for rejecting said application if said asset has insufficient value to support said minimum periodic distribution;

means for comparing said estimate of current market value to an independent appraisal of current market value and for rejecting said application if there is a discrepancy between said estimate and said appraisal exceeding a predetermined plausible percentage of said appraisal;

means for comparing said promissory obligation offered to the product of said current market value and a proportionality factor chosen from a list of proportionality factors according to type of asset and representing the smallest fraction of current market value normally likely to be achieved because of price fluctuations of said asset over the life of said owner, and for rejecting said application if said promissory obligation exceeds said product, whereby on the death of said owner said asset is likely to have sufficient value to settle said promissory obligation;

means for determining, based on said current market value and said probability, whether said promissory obligation will support said minimum periodic distribution of cash, and for rejecting said application if said promissory obligation is insufficient to support said predetermined minimum distribution;

means for generating a mortgage document against said asset and a promissory note to be signed by said owner, said promissory note being in the amount of said promissory obligation, being secured by said mortgage, and being payable on death of said owner;

means for computing and making periodic distributions to participating owners based on the current probability of death of said owners, the amount of the promissory obligation given by each owner, and distributable profits of said program, wherein said distributable profits are distributed to each participating asset owner based on a pro rata share determined by a ratio that capitalized value of the asset bears to a total capitalized value of all participating assets;

means for periodically comparing a reassessed current market value of said asset to the amount of said promissory obligation and, if said current market value has increased, for generating a notice to said owner that said amount may be increased, and, if said current market value has decreased, for generating a notice to said owner that he must do one of (1) reducing said amount of said promissory obligation, and (2) mortgaging additional assets, and for generating a new promissory note and a new mortgage when said promissory obligation is changed;

means for entering the death of said owner;

means for notifying program personnel to procure payment of said promissory obligation from the estate of said owner and, if said estate cannot otherwise settle said promissory obligation, to procure sale of said asset;

means for computing interest from date of death to date of receipt of payment from one of (1) said estate, and (2) sale of said asset; and

means for terminating said mortgage on receipt of said payment and said interest.

11. A data processing method for administering a program for releasing to an owner of an asset at least a portion of its cash value without transfer of ownership of said asset and without transfer of control thereof, said method determining eligibility for said program and determining program payouts, said method comprising the steps of:

entering application data derived from an application by said owner to participate in said program, said application data including date of birth of said owner, an amount of a promissory obligation to be offered for participation in said program, and an estimate by said owner of current market value of said asset;

determining the probability of death of said owner during any particular year based on said date of birth;

determining, based on said current market value and said probability, whether said asset will support a predetermined minimum distribution of cash and rejecting said application if said asset has insufficient value to support said minimum periodic distribution;

generating a mortgage document against said asset and a promissory note to be signed by said owner, said promissory note being in the amount of said promissory obligation, being secured by said mortgage, and being payable on death of said owner; and

computing and making periodic distributions to participating owners based on the current probability of death and the amount of the promissory obligation of each owner;

entering the death of said owner;

notifying program personnel to procure payment of said promissory obligation from the estate of said owner and, if said estate cannot otherwise settle said promissory obligation, to procure sale of said asset and reimbursement from the proceeds thereof; and

terminating said mortgage on receipt of said payment, whereby;

said owner retains ownership and control of said asset during his lifetime, while value of said asset is available to him as cash.

12. The data processing method of claim 11 further comprising comparing said estimate of current market value to an independent appraisal of current market value and rejecting said application if there is a discrepancy between said estimate and said appraisal exceeding a predetermined plausible percentage of said appraisal.

13. The data processing method of claim 11 further comprising comparing said promissory obligation offered to the product of said current market value and a proportionality factor, said proportionality factor chosen from a list of proportionality factors according to type of asset and representing the smallest fraction of current market value normally likely to be achieved because of price fluctuations of said asset over the life of said owner, and rejecting said application if said promissory obligation exceeds said product, whereby on the death of said owner said asset is likely to have sufficient value to settle said promissory obligation.

14. The data processing method of claim 11 further comprising determining, based on said current market value and said probability, whether said promissory obligation will support said predetermined minimum periodic distribution of cash, and rejecting said application if said promissory obligation is insufficient to support said predetermined minimum distribution.

15. The data processing method of claim 11 wherein said periodic distribution computing and making step additionally bases said distributions on distributable profits of said program.

16. The data processing method of claim 15 wherein said distributable profits are distributed to each participating asset owner based on a pro rata share determined by a ratio that capitalized value of his asset bears to a total capitalized value of all participating assets.

17. The data processing method of claim 11 further comprising periodically comparing a reassessed current market value of said asset to the amount of said promissory obligation and, if said current market value has increased, generating a notice to said owner that said amount may be increased, and, if said current market value has decreased, generating a notice to said owner that he must do one of (1) reducing said amount of said promissory obligation, and (2) mortgaging additional assets.

18. The data processing method of claim 17 further comprising generating a new promissory note and a new mortgage when said promissory obligation is changed.