Asset Protection for California Resident w/ Non-CA Property
Hello BP Real Estate Attorneys, Tax Professionals, Attorneys,
What is the best "tax-optimized" asset protection strategy for a California resident who owns several rental properties in Ohio, Florida and Georgia (and does not own any California property)? I've heard so many asset protection frameworks for real estate investors but they are usually not specific or relevant for California residents, who are unfortunately the exception to every rule.
The most promising strategy for CA residents I've heard thus far is:
1. Create separate land trusts for each property (in states that recognize land trusts). I understand land trusts provide anonymity but not asset protection (but anonymity is always a great deterrent).
2. Create one single-member Wyoming LLC (disregarded entity) to act as Trustee of the land trust, and another single-member Wyoming LLC (disregarded entity) to act as Beneficiary of the land trust. This should be a tax-exempt quitclaim deed transfer in most states since the Grantor (me) is still 100% in control of the property and has the power to revoke the land trust.
3. Create one multi-member (e.g. husband and wife) Wyoming LLC as the Holding Company (tax filing entity) that has beneficial interest in the other two Wyoming LLCs.
This approach seems to provide ANONYMITY + ASSET PROTECTION LAYERS. Would this approach work?
I know the California Franchise Tax Board imposes an $800 alternative minimum tax annually on any LLC doing business in (or operated from) California, no matter where the real estate is held. If I implemented the above strategy, would I have to pay the state of California $800 for each of the 3 Wyoming LLCs, or just for the one Wyoming LLC Holding Company (tax filing entity)?