All Forum Posts by: Jason Marino

Hi Carley,

If the entity is created as a pass-through LLC, putting your name alone as a Manager or a Member or both you and your Husband's name on the LLC as Managers or Members should not make a big difference. An issue to consider though is whether you both want to be Managers on the LLC. If you both are listed as Managers, it is likely that you both will be required to be present to create a bank account for the LLC as well as when entering into contracts for the LLC. This can sometimes be an inconvenience if both parties are not available.

Hi Janea,

I agree with the reply to post above. Once a lawsuit is started, the anonymity provided by an anonymous LLC will be removed. Despite this, there is still a benefit to having an anonymous LLC. An anonymous LLC can be useful in deterring a lawsuit before it is started. It is not uncommon in a situation involving a contingency lawsuit for the attorney or the firm who is covering the cost of the lawsuit to research the Defendant before filing the lawsuit. If your name is associated with your LLC or another limited liability entity, this research is much faster and makes it easier to determine whether the LLC and its Member or Members are good targets for a judgment if the corporate veil can be pierced. If an LLC is anonymous, this likely demonstrates that the entity was set up by an attorney and additionally can make the LLC look less like a good target because of the lack of a connection to a Member that is searchable.

Hi Lee,

The structure that you are speaking about is something that California investors with out of State properties can use to help legally avoid the California franchise tax. The combination of a Land Trust and a Statutory Trust can offer you both anonymity and limited liability protection. Something to note is that you are not limited to using a Wyoming Statutory Trust. Delaware additionally offers this option.

Hi Diane,

I agree with the reply to your post above. In my experience, I have not seen Single-Member LLCs and Multi-Member LLCs divided into different classes based on ownership. Generally, there is a test (this will be State-specific) that is applied to all LLCs to pierce a corporate veil. The Court will usually look at how the business is being run and whether it is merely an extension of the owner to determine whether the corporate veil should be pierced.

Hi Sri,

I agree with the posts above. A quality asset protection structure has a price when it is created by professionals. You can try to create these entities yourself, but you will need to spend time and research them in detail to have entities that will be able to withstand a lawsuit. The time that you are spending on learning about these entities could be used on other things, and it additionally has a price as a result of this. I will lastly say that, in my own experience, I have never seen a lawsuit (not including a small claim's court case) that cost a defendant less than what many of the common asset protection structures cost to create.

Hi Shivam,

For the type of structure that you are speaking about and this amount of detail, it may make sense to speak with an attorney and an accountant. Despite this, I will try to provide some information to help with your questions. The structure that you are speaking about is fairly common. It makes sense to have an Operating Company for all interactions as well as a Holding Company to own the properties. The issue that I see though is that Series LLCs can currently only be created in 13 States, so this structure may work if you have properties in those States. If the properties are not in a Series LLC State, you would need to register the Child Series LLC to do business in the State that the property is located in. This would more or less be the same as having an individual LLC per property, as you would be using a registered agent and have a State compliance cost for the entity. Another thing to consider is that if these LLCs are single member (with only you or a Trust as the Member), they generally are disregarded for tax purposes, so there would not be multiple tax returns that you spoke about. You did say that you may elect these entities to be treated as S Corporations for tax purposes, but this is more common to do on the Operating Company side. As for the Trust, you could use an Agent Trust. An Agent Trust is usually a common law revocable Trust that will give your LLC anonymity. Despite this, an Agent Trust is usually not set up with the same amount of detail as a Living Trust, which is meant for Estate Planning. Based on that, you might want to consider using a Living Trust as the owner of the LLC.

Hi Scooter,

I saw your post and thought that I could try to provide some additional information, as the firm that I work with creates asset protection structures for real estate investors. Both of the options that you listed are fine. You may hear mixed information about the Land Trust option, but this is mainly due to many attorney's and investor's lack of familiarity with the structure, as opposed to any inherent flaw in the structure. It is accurate that a Land Trust, on its own, does not offer limited liability protection. However, it offers better anonymity than an LLC, and, when combined with an LLC as the Beneficiary, you will get the limited liability protection of the LLC (as the LLC owns the Land Trust) if the Land Trust were broken and dissolved during a lawsuit. The benefit of this structure is the additional anonymity. Additionally, when you use a Series LLC with the Land Trusts, the maintenance cost is much lower than the maintenance cost of multiple traditional LLCs. The other option that you noted that is related to the single LLC per property or an LLC for a couple of properties is fairly standard. Attorneys are familiar with the structure because traditional LLCs have existed in the United States since 1977. This option will give you good limited liability protection if the structure is created the right way and it is maintained the right way. This generally means maintaining a registered agent for each LLC and doing annual maintenance for each LLC with the Secretary of State (if applicable in the State). You will need a separate bank account and book of business for each LLC, and you will need to be sure to not commingle any funds from any of the entities.

Hi John,

There are 2 good options for the Trustee of a Land Trust. The first option would be to use an attorney as a nominee Trustee of the Land Trust. This would offer you anonymity and can additionally give you attorney-client privilege if information related to the Land Trust is being looked for. The second option would be to create an anonymous LLC to serve as the Trustee of the Land Trust. This is usually a Wyoming LLC, as the Wyoming Secretary of State webpage does not show any information related to the Manager or the Member of the LLC. This would give you anonymity, but there would be no attorney-client privilege when using an anonymous LLC as the Trustee of the Land Trust.

Hi Matthew,

I agree with the post above that notes that an LLC that elects to be treated S Corporation for tax purposes could be used in this situation. This would offer a tax advantage of avoiding the self employment tax at a certain income level, and the entity would provide you with limited liability protection if a client that you interacted with decided to initiate a lawsuit. In the case that the lawsuit was not covered by insurance, this entity would protect your personal assets from being involved in the lawsuit to pay a judgment.

Hi DeAnna,

I agree with the posts above. For many investors, an LLC acting as a Holding Company is going to offer the ability to manage the entity simply and provide limited liability protection. If you had concerns about the asset if and when you pass away and would like to avoid probate, a Revocable Living Trust that owns the LLC that acts as a Holding Company is a good option. This Living Trust can be amended or terminated by you while you are alive. An Irrevocable Trust, provides asset protection (you would already have this with the LLC), but it cannot be generally altered or terminated in the same way that a Revocable Trust can be altered or terminated. Additionally, Irrevocable Trusts usually require that a 3rd party be the Trustee, which means that you will not have a primary role in decision-making as it relates to the Irrevocable Trust. Additionally, this Trustee is usually an attorney or a Trust Company, and this service has a cost. As noted above, an Irrevocable Trust is used at times to get around the Federal Estate Tax legally, which is currently only applicable on Estates valued over 12 million dollars. Based on this, an Irrevocable Trust may be a useful entity for investors that have Estates whose value is above that limit