All Forum Posts by: Scott Smith

hey @Thomas Manglaviti you should look into the Series LLC since you can form it in Texas and use it anywhere (it compartmentalizes your liability for each asset). Article I wrote on it here. If you combine that with a Land Trust you have the maximum protection from liability with anonymity. 

@Logan Allec when you say "you cannot" what are you meaning? Of course title could pass, but are you suggesting that if closed on in his personal name that he cannot then transfer to an S-Corp for that type of tax treatment from income from the property? 

@Amy Greger right, it would be doing business for owning property, but then the money flows from that state into the home state of the LLC (to be potentially taxed again) and then to you (to potentially be taxed again). The "how to protect" issues is really only part of the coin because the real gold advice is how to minimize the taxes and "how to protect efficiently for cost and management purposes"

@Amy Greger from the prospective a real estate, asset protection and estate planning attorney myself I have a few recommendations and clarifications for you...we help clients nationally so I feel confidant with giving you the "full picture":

WA State does not have Series LLC. In case of litigation, will the Nevada Series LLC provide the liability protection limited to one property? Or will WA State treat the Series LLC as a "normal" LLC?

1. You can form the Series LLC in one state and use it in any state, just like any other LLC. Nevada is expensive to use, Texas is just as strong and cheaper.
2. WA should recognize the Series LLC laws form the other state. The national trend in law is that the Court will look to the "home state" of formation for the Company to determine validity and protections.

Should we set up a Series LLC in Indiana to hold the IN properties? And separate LLCs for the WA properties?

1. I recommend you set up one Series LLC and then hold the properties in the other states in individual anonymous land trusts. This would allow you one company to create and maintain. Since the land trust will hold title in the various states, the LLC does not have to be registered/have a registered agent/business address/franchise taxes/etc. in each of the states. The series LLC with anonymity trusts provides all the compartmentalization with anonymity with none of the expenses traditionally required.

Any concerns with rental income generated by the WA properties subject to Nevada state income tax since it's owned by a Nevada Series LLC?

1. If the money is flowing through the LLC then the LLC is subject to the taxes of wherever it is "doing business". So, yes.

@Jeff D. You compartmentalize every asset into it's own LLC (best way to do this is through a Series LLC). The LLC should be formed in a state with advantageous Charging Order rules (like Texas). A lawsuit against you can't touch the LLC, and a lawsuit against one property won't affect you or the other properties.

Insurance is great, always have it. The Asset Protection Company protects against different kinds of risk than insurance, and serves as a "stop gap" if insurance denies, excludes or provides insufficient coverage. The AP Company is your "worst case scenario" type of insurance, it is your last line of defense. Moreover, insurance only protects against accidents, an AP Company protects against other claims such as breach of contract, gross negligence, fraud, etc.

Fact is that getting sued is like a flood, it is unexpected and it may not happen to you. But if it does, you'll be happy you have the insurance. Given we live in the most litigious country in the world, why wouldn't we purchase lawsuit protection insurance (which is an asset protection company)? 

@Richard Davis I'm an asset protection attorney. What I recommend is closing on the loan in your personal name, and then transferring the property to a land trust that is owned by the LLC. The transfer to the land trust avoids the due on sale clause and provides anonymity. Since the Land Trust is owned by the LLC the property is also protected.

@Navid A. the best asset protection is to compartmentalize the each asset using a series LLC and to hide the ownership using a Series LLC. You can integrate that Asset Holding company into your estate plan with a living trust and pour over will. This can be set up once and be good to go for the rest of your life (if done correctly).

@Anthony Dooley I am an Asset Protection attorney as well and what I can tell you is that you got great information that is actually not always true. It depends on a states charging order. If you establish the LLC in Texas (a state that is cheap and strong) then a lawsuit against you would not result in them being able to take your individually wholly owned LLC.

@Michael Doll hey guys...you don't have to have an LLC to get the 20% deduction...an unfiled sole proprietorship works just the same...@Jay Patadia

I do recommend using an LLC with land trusts to have protection as well as anonymity.

@Anthony Chara is right about the lender, the best way is to have an LLC in that state take title originally to the property. The question becomes what do you do after closing if you want anonymity @Terry McPherson and the answer to that is you can deed it to a land trust without violating the due on sale clause. The land trust is in turn owned by the LLC. The Land Trust provides the anonymity, the LLC provides you the protection.

Another consideration for you might be to split up the other properties you have...consider using a Series LLC filed with a Trust as the owner so that the LLC ownership is anonymous. You can then isolate each property inside the child Series and hold them anonymously with individual land trusts. This is the best asset protection plan you can actually get, complete compartmentalization and anonymity.

If you set up the Series LLC in a state like Texas you don't pay franchise taxes or yearly fees, and you can have it anonymously by the use of land trusts. Just like any other LLC, you can form a Series LLC in one state and use it anywhere.

@Travis Olson I'm a real estate and asset protection attorney and I also invest in real estate. Here is my thinking:

(1) you need a partnership agreement (either separate from an LLC or part of an LLC in the form of the LLC's "operating agreement")

(2) you should each buy the properties separately so you can qualify for the maximum number of FHA loans possible as a group. After you acquire the properties, you can deed them into an LLC or into a Land Trust to share in the partnership interest. There is some nuance to this part since deeding directly to the LLC without using a Land Trust could trigger a due on sale clause