All Forum Posts by: Delia Lopez

It does but Real Estate is the area where anyone is most likely to be sued. Insurance does not cover civil suits and wanting to try to segregate each property from liabilities of the others as easily and with the least ongoing expense and hassle is the idea. That said our set up is supposed to be pretty good, and is easy to maintain and not co-mingle etc.  The idea being it is more complex to sue, there are lots of frivolous lawsuits and the Judge does NOT throw them out, Right to a trial, lawyers lie under oath and direct clients to do so, the BAR does nothing it is all corrupt. I was shocked and saddened. Lawyers have a lot of debt to service and need a way to do so. I prefer it not be by robbing me. 

James Miller Irrevocable Trust owning property and Trust as Member of the LLC is I think the way Douglas Lodmell sets his up for the domestic part of the bridge trust. Which does make sense to me (not an attorney) I have read a lot of information and case studies, case law results of suits, I am still so curious on set up. Mine was set up differently from any of the ones I read about on bigger pockets, it has been in place 8 years and could be altered by the trust protector if it needed to be. So I am curious, different lawyers have different strategies and their ideas conflict.

Mike that is a commercial umbrella policy to cover rentals, Just as a home owners policy is different than a landlord protection policy. Curious as in OR you must accept HUD or it is considered discrimination.

A personal Liability Umbrella will not cover anything on your rentals, only personal issues, car wreck etc. A commercial liability policy would be needed for rental issues. We have different trusts and an LLC all WY as rentals are unearned income (according to the IRS) so we do not have a biz in ant state. With the Trust and both trustees in WY the business address and trustee address are in WY.

Lucus it sounds like you have what we have. WY has a statutory Trust and allows series trusts like series LLC's and our properties are owned by separate trusts irrevocable grantor trusts, All managed by the same trustee LLC and co-trustee Statutory Trust co and the insurance is made out to the trust whish has a blanket name and a letter for the series. As the grantor trust is a disregarded entity per IRS code we have a bunch of schedule E's. That sort of clear?

I would love more details Matthew. Our properties were put into irrevocable trusts years ago and I often see an LLC suggested as the beneficiary while ours has a property Management LLC as the trustee of the trusts which each series of trusts has a separate checking account. So it is different than what people discuss here. I am very curious as to why the differences? The settlor retains only an interest in the income so the assets are supposed to be safe and the income goes into the LLC so it should have charging order protection. I think.

But if the property is owned by a trust there is no need to lie to anyone about owning the house, you would not own it.  I do not own ANYTHING, nada, zip. I am destitute.  I am only the manager of the properties. 

There are so many ways to set up entities to hold property and so many pros and cons to each. As only you know your plans only you can decide. Are you going to hold and manage rentals? Rehab and sell? 

I had to redo my mom's entities she had paid a lawyer to set up her Trust and LLC's and retitle her properties into said entities. After reading "Lawyers are Liars" and going over all the trust docs and LLC's etc. I discovered her lawyer made one of the common "mistakes" mentioned the lawyers do. He created the ABC LLC and titled her property to the ACB LLC on the quit claim. I find it difficult to imagine how that could be accidentally done as mush of these trusts come out of software so the name is typed in and spit out the same everywhere. I don't know what she paid but she got ripped off. I was glad we discovered it while she was alive so we could fix the problem more easily.

That said I trust no one completely and research everything to try to know what it all means BEFORE I do anything. LLC's can be useless. In every state except WY single member LLC's do not seem to have any asset protection value. If you do not do all the annual formalities and keep things separate same deal. Trusts do not have annual fees and I have read each property can and should be owned by a different Trust. Once you have a good Trust template you can print them up yourself for each property you purchase. WY allows series Trusts like series LLC's and if all the properties owned by the various trusts are managed by the same LLC you need only one account for all the properties owned in the series, if you are managing your properties in your state you may want to have an LLC there as the management company. However if you are starting out and have no assets to protect if you have the property owned by a trust or LLC you have to get a lawyer and can not represent yourself. Legal fees ad up quick and they can compel you to settle.

I can not imagine having to pay for an LLC and have a separate account for each property. It is bad enough to have one for each series of properties.

That said search on Trust or LLC here and you will see it is an area where many have different ideas and the strategic set up between them seems to be different depending on which "expert" designed the strategy for asset protection or probate or? I am very curious if anyone knows the "why" on how the set ups are different.

Our properties are all owned by trusts and managed by a LLC with a LLC as Trustee and a family trust as beneficiary (family trust is a grantor WQST) so we have only 5 LLC's with operating agreements and all the annual crap that goes with them, resolutions, meetings, etc. The corporate books and paperwork (YUK)! We also have insurance and an umbrella liability policy on top of the mess. It is complicated, but it has grown into this over 3 decades and many properties.

I have a landlord plus type with replacement cost, wrongful eviction 1 mil/2 mil per and a personal liability umbrella for 1 mil. I have yet to be sued for a rental for something insurance covers. As one lawyer on this site mentioned suing outside of ins coverage is a biz strategy.  I have also had a judge uphold my status as trustee of the trust and no personal liability.  I have not found insurance useful for asset protection on small suits most would consider frivolous extortion shake downs.  I mean trespass on a sidewalk that was there for 40 years before they bought the house.  Greedy dirt bag sees a rental thinks landlord has money and after years (at least 10) decides to file suit.  There will always be ambulance chasers and landlords are considered deep pockets. 

This is an interesting subject and one I would love to have attorneys give their 2 cents on as well.  There is a lot of conflicting ideas and it is very confusing.  I think part of why it is so confusing as the law says one thing but Judges rule however they decide to.

Our properties are held by Wyoming situs trusts and a WY LLC is the trustee I am manager of the LLC. The beneficiary is a WY family trust all the trusts are grantor irrevocable trusts and have EINs. My understanding is the only way for real estate to not be able to be sold to satisfy a judgement is if it is mortgaged otherwise a judge can order it's sale. Even a Belize trust won't protect real estate located in the USSA.

I have been sued as the trustee and the Judge said the trustee is not personally liable. Only the assets owned by the Trust being sued could be at risk and since it is mortgaged it can't be sold unless there is enough equity available (makes equity stripping important). As the Trustee is a LLC in WY it has charging order protection. I think that would mean only distributions would be available for a creditor. Our operating agreement does have a few poison pills to make a creditor less excited about a charging order. WY has statutory trusts and allows series trusts like series LLC's.

I am almost ready to have a property in CA and will be titling it to a separate trust and would love to hear from others who have used a trust in lieu of a CA LLC.

I agree with you.  I want a good tenant, in order to collect from a co-signer you must go to court.  I prefer a large security deposit if I am unsure of the tenants ability to pay the rent.