How should I set up the holding and subsidiary LLC?

Question

Hi everyone,

I am trying to set up an anonymous holding LLC and one anonymous Georgia subsidiary LLC (for my Georgia rental) and one anonymous California subsidiary LLC (for my California rental). I am a bit confused about how to set it up. Could you share your view on this?

Holding LLC:

1. Which state should I choose? Wyoming or Delaware?

2. Should I set it up as member managed instead of manager managed? I put my own name as the member.

subsidiary LLC:

1. Should I set it up as member managed or manager managed?

2. If I should set it up as member managed, should I put my holding LLC as the member?

3. If I should set it up as manager managed, should I put my holding LLC as the member and myself as the manager?

4. Is the manager of a LLC could be found in public record or a lawyer?

Thank you! Any suggestions would be greatly appreciated.

Best,

Jin

Mitchell Zoll · Answer

Managers and members are different roles but can be overlap (think CEO and shareholder). The decision matters but you need to work through it based on your personal goals.  As for anonymous - as said above it’s not easy to do.  Think of it this way- if there is litigation and the ask to take a deposition of the entity… who will you send? If there is litigation on the level needing all this protection there will be discovery.  The key is how you operate not just how you set it up.

Katie Balatbat · Answer

@Jin Zhang

Are you a CA resident?  Note that CA does not recognize series LLCs, and has a pretty broad interpretation of what constitutes "doing business" in the state.  The California Secretary of State requires a lot of information about the LLC to be publicly filed, including the name of the member and/or manager, and an address.  You may wish to invest the time to discuss your situation with an attorney to get personalized advice before you build an elaborate structure.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.

David M. · Answer

@Jin Zhang

the manager is still a member.  The members are just the LLC's term for the owners...

Thus, the members of a LLC are listed publicly for those states that "aren't anonyumity" states.  That's why WY and DE (and I think NV) keep coming up for anonymity.

If you just want liability protection, just form a LLC in the state the property resides.  Also, learn how to operate the LLC correctly to maintain its corporate veil which is a legal matter.

David M. · Answer

@Chris Seveney Out of curiosity, what if you do a POA?  For example, attorney signs the docs POA, then your name isn't on the doc, right?  POA don't have to be recorded, right?

@Jin Zhang As mentioned, anonymity can be overrated.  Plus, its VERY hard as pointed out to truly hide.  You or somebody just has to put your name on one recorded doc and all that effort and cost is wasted.

To your questions, you of course should consult a qualified professional or two....

WY and DE i hear are really the same.  I think the fee for WY is a bit lower, and my feeling is we have more west coast people here so they default to the closer state :)

the management style really doesn't matter to my knowledge.  Its an administrative thing..  mgr mgr is necessary if some of the members are "silent partners," for example.

For the anonymity, you wouldn't put yourself as the member of the GA or CA LLC's.  That defeats the purpose.  The WY / DE LLC is the member (i.e. the owner) of the sub LLC's.  The whole point of using WY / DE is the states don't make the ownership/membership of the LLC's public.  Most other states do.

Anyway, happy to chat if you like.  Good luck.

Chris Seveney · Answer

@Jin Zhang

LLC today provides zero anonymity

I have never found a LLc whose name I could not find. You can waste money and file in Wyoming but guess what- if you finance it and get a mortgage it has to be signed….

If you are ever sued or have to file suit you will need to sign documents in public record.

Before creating all these companies and structures what is your goal? Are you really that famous that you need to hide your identity?

Do you do some crooked things which require stacking LLC’s ?

How are you financing these properties? If you are using your name then you don’t need a LLC as it will not give you asset protection.

Definitely should speak with a few attorneys