All Forum Posts by: Mike S.

Quote from @David M.:

@Mike S.

Just a layman's point of view, I'm not really liking his approach. He even says its just anonymity 'hiding' that you own the LLC's. So, you aren't declaring what you own because he figures CA can't find out?

At least with his second example, at least he says the "business trust" isn't subject to the franchise tax. I guess the WY LLC provides some lmited liability protection (and anonymity to the trust)? Otherwise, without the limited liablity, its just as good as owning in your own name (yeah, I'm not that big on anonymity).

I guess I don't like playing "smoke and mirrors" with the tax man...

The anonymity part he is talking about is for asset protection, not the CA franchise tax. However he is explaining how to use the WST while keeping asset protection. Anonymity is very important to limit ambulance chaser lawyers. The real asset protection part is coming from the charging order protection from WY LLC. Watch his others video on his Youtube channel, it should go deeper into the process. I remember he also has plenty other videos on CA specific issues.

There are ways to avoid the CA franchise tax for out of state properties by using trusts.

See this video.

Asset protection is important, and I would say even more when you don't have a lot of asset, as losing the few you have may be devastating.

The often recommended structure for passive real estate is one WY holding LLC that is the sole member of individual LLC in the state where each property is located. The WY LLC has strong charging order protection and anonymity, while each individual LLC insulate each property from each other.

When dealing with flips, each property also would also be in its own LLC for asset protection, but for tax issue, as it become an active business, you would want to have them under a separate holding that would probably be taxed as an S-Corp.

These are the general guidelines. But there are some tweaks depending on the state (like CA where you may want to use a statutory trust instead of an LLC, or Florida where a land trust may be advisable to avoid some transfer taxes, etc...)

Also your specific situation may also trigger some other requirements.

So yes, consulting with an asset protection attorney, who is knowledgeable about real estate and taxes is a must. You can also educate yourself on the subject. I highly recommend the Youtube channel of Clint Coons that is filled with hours of knowledge on thee subject.

Last, some people will tell you you don't need LLC and instead should only use umbrella insurance. Using LLC doesn't negate the need for insurance. But insurance won't protect your asset on some lawsuit.
Other will tell you they have never been sued and so you are worried for nothing. It is like saying because you never had a fire you don't need fire insurance.... It is a matter of personal risk taking behavior. At the end of the day, you have to decide what will make you sleep at night.

Could you give some feedback on what happened?
Was someone considered responsible and who is paying back the buyer (title insurance; title company; broker?).

Notify the county records to flag this sale as a possible fraud and get in touch with their legal department. Get a copy of all the recorded documents. Contact the title company and title insurance. Make a police sworn statement regarding this fraud and have them forward it to the local police department having jurisdiction where the land is located. Forward a copy of your complaint to the county records, title company and title insurance.
As the real estate agent was not your agent, I don't know what his liability is, but you can probably contact the broker and ask them for their E&O insurance. You can also contact the Florida Real Estate Commission (FREC) that is regulating the real estate brokers and agent and can receive and investigate complaints (but again was there a fraud or lack of due diligence on the agent's part?).

Also in Florida some counties let you register with them an email address as the owner of the property and will notify you everytime there is a new record attached to your property.

If you are using the same lender that may be possible but you have to make sure that they are aware of it. However, if using different lenders, you will probably screw up both loans and they will cancel the closing....

It is much safer to wait at least a month or two before applying for the HELOC to give time to your new loan to be reported on your credit report. Some lenders would be more comfortable waiting even longer so it may limit your choice of lender.

Quote from @Lane Kawaoka:

Also IULs are more investment in stock market tools. They don't have as much liquidity as wholelife policies - the Paid up additions are not a large so you can't over fund as much.

I'm not sure to understand your statement. There is no PUA on IUL. And the payment are much more flexible than in a WL. You can overfund in the same ratio on a IUL and WL, expect 75 to 85% in cash value available in the first year with the early cash value add-on.
In a WL however, you may not be able to put as much PUA every year.

I am investing in real estate and using an IUL. While the WL provides a steady growth and has more third party lenders, IUL has a variable growth and less lenders but on the long run will probably outpace the WL. Also the IUL is more flexible for the premium schedule.

Most of IUL cash value will not be available immediately unless you pay for an early cash value option that will slightly reduce your IRR on the long run. Depending on the value of your premium, it may be worth paying for that option as you get more cash available to reinvest earlier.

I concur with the previous statements that whatever kind of policy you use, it has to be set up properly to maximize the funding and minimize the death benefit. It is probably easier to set up a optimized IUL than an optimized WL as the later is more an art than a science (see the diversity of opinions in the WL about the 10/90 vs 40/60 due to risk of MEC with a 10/90).

Quote from @Todd Goedeke:

@Mike S.stay in your own lane. Don t talk about financial products you know nothing about. 

You talk about IRR without even knowing what that would be for a whole life policy. You can t get as high a return with life insurance when upfront commissions and cost of insurance is subtracted from the premiums paid.

I have posted multiple times on these forum that you can expect a 3 to 5% IRR for whole life and 4 to 8% on an IUL. And that is after all fee. And it is also tax free.

So before insulting me, please get your facts straight.

Quote from @Todd Goedeke:

@Mike S.you are showing your ignoranc of life insurance commissions vs ongoing investment monitoring and advice with securities.Before you make uninformed comments about life insurance commissions include yourself in the group you are criticizing as you don t even know what you paid when you bought the life insurance product. You probably have bought a timeshare. Can I sell you the  Brooklyn bridge?

How can you tell others they don t understand whole life or universal life when you don t have a clue how much in commissions you paid for the same product? Clearly, you don t know what you don t know.

Again you seem fixated on the commission. I don't care what portion of the fee is commission, state tax, insurance company overhead or life insurance cost. What matter to me is the IRR, that is the result net of fee over the duration of the product. Yes the front loaded fee are important, but divided by the duration of the life insurance they are very low, often lower than most low cost mutual funds.

Why are you not also talking about the 6% commission that real estate agents are making for a one time sale for just driving you to visit a house?
Why are you not talking about the 1 or 2% yearly commission that some financial advisers are charging on the totality of your asset under management every year?
Why are you not talking about front loaded mutual fund?
Why are not talking about the 20% commission of edge funds?

If you really were a licensed insurance agent, I hope you were not blindly selling the product that was making you the most commission without looking for your clients' best interest. Or if you were, that would explain your bias believing everybody else is as unethical as you.