Belleville, IL · Member since 2016 · 7 posts · 2 votes
I am curious how investors in Southern Illinois approach asset protection and privacy protection, specifically for a partnership. I've hear that most buy and hold investors use an LLC, however the cost of an LLC is much higher than most states. One opinion I've heard is that a C-Corp is the better than an LLC in Illinois. I am aware of the power an Illinois Land Trust provides for privacy, but this is not asset protection. I also understand that an umbrella insurance policy is my first line of defense. Any thoughts?
CPA · Belleville, IL · Member since 2014 · 255 posts · 269 votes
9y
@Jeff Hursey, as a CPA and Insurance Agent I know that there are always a few different ideas and paths on what people want to do and how to do it. I think for the starting investor, you would want to hold off on spending the money on the LLC, especially as much as they cost in Illinois (starting at $500) compared to a state right next door, Missouri (starting at $50). Additionally, you can get better terms from a lender for a buy and hold when it's in your personal name. If I had to do it all over, I'd buy my first few properties in my own name for the better terms and buy a larger personal umbrella policy to cover me on liability.
As I grew, I'd look to add the LLC (or C-Corp) used in conjuction with an Illinois Land Trust depending on my activities.
Illinois Land Trusts can be read about in more depth here IDPR - Land Trusts
Purely my opinion, but if you're concerned about the cost of an LLC your primary concern is not either privacy or asset protection.
Stop pinching pennies like a typical consumer - treat your business AS a business and invest in the protection (and insurance!) you need to secure your assets.
You can't earn $100's while you're stepping over them to pick up pennies.
Insurance Agent · Irvine, CA · Member since 2016 · 6 posts · 0 votes
9y
Hey Jeff,
I just listened to podcast 109 with Scott Smith and think that would be a good hour of your time spent hearing from an attorney on asset protection. As an Insurance Agent, I know an Umbrella is important but just remember that when you get an Umbrella policy it doesn't mean that your covered from anything. He actually gave some good examples of how an umbrella will not cover you and I would highly recommend that episode.
The basic premise is that an umbrella policy will sit on top of your general liability policy and it's an extra bucket of money that is available to defend yourself (or entity in this case) as well as to settle a lawsuit. But, I would highly suggest reading the policy jacket to see what is excluded so you don't get surprised on the backend of something actually happening. I know it's boring legal language but it's really important for you to understand how the policy is triggered and how the carrier can avoid getting involved.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
9y
Any legal entity ONLY provides a degree of personal asset protection. As they are all filed with the Secretary of State, there is no privacy whatsoever - - privacy is a common misunderstanding.
It is possible to play games with the State Filings to create a degree of privacy BUT a diligent search will always lead back to you.
It bothers me greatly that the gurus teach this stuff are willing misinforming their clients.
Take any LLC or S-Corp name and search the appropriate State site and you will get the full disclosure of who created the entity. :sigh:
It's similar to filing a DBA - - the business points to the individual.
Belleville, IL · Member since 2016 · 7 posts · 2 votes
9y
Thanks for the responses, they are very helpful. I think I'm starting to zero in on what to do. From what I understand, the land trust is a means of maintaining privacy. The trust holds the title, not me, so when its searched my name is not shown. Am I wrong about this?