How To Protect a Portfolio? LLC's cost too much

General Real Estate Investing
1

So I met with my attorney today…as it stands now each LLC I need done for my properties will cost me approx 1k for a BASIC Package. This includes publishing my new LLC (NYS requirement), “Basic” articles of Org, etc.

I have a bit of a problem with this. From his perspective, he won’t reduce cost as there’s no guarantee I’ll purchase enough to warrant a lower cost. From my perspective, I don’t want to leave all my properties in one or two LLC’s. Too much exposure should something happen or the tenants cause an issue.

My Biz partner doesn’t want to spend this amount for each LLC and I’m in the process of doing the research to prove this is a necessity but I wanted to see if anyone out there organizes their properties in a different structure (as opposed to each property in a seperate LLC). I’m looking at 20+ props within the next year or so and these NEED to be safe. I’m not sure how safe these will be if we get a hungry attorney who finds our whole portfolio through a public records search and need to depend on a $1 million insurance policy. Any thoughts? Should I put GROUPS of these under one LLC, depend on the insurance for a lawsuit payout, put them in a trust (no requirement to publish), or push for each prop to have a different LLC?

Help is definetly appreciated!! Thanks everyone.

2

Hi,

This is an interesting topic and very important to managing risk and asset protection.

Your delema is not unlike most of the real estate investing public, in fact every investor of every skill level has thought about how to protect their property from lawsuits, especially in our time of unwarranted lawsuits.

I sent you a PM with a company who files and does New York LLC’s for $234.00 as there base price. I recomend paying to have them get the EIN number for you so it’s a fully bank able entity from the get go.

You do not have to have just one property in a LLC. If you have a number that you consider reasonable risk, and you and your partner agree, stick two or more in an LLC. This is your only risk set at your limit.

Now if your talking about multimillion dollar properties then your probable better off holding one per LLC.

Now I am going to give you my strategy.

Now to protect your self file a Nevada C-Corp, do this first before you file your LLC 's, show the Nevada C-Corp as holding 97% ownership of your New York LLC’s, now go file a Wyoming LLC and give the Wyoming LLC 1% of your property and make the Wyoming LLC your managing partner. Now give you and your partner 1% each. (Should be limited parter)

97% Nevada C-Corp
1% Wyoming LLC (As Managing Partner of your New York LLC’s)
1% You
1% Partner

Now the reason I did this is in Nevada you can not pierce the vail of a corporation except for purposing fraud. Now if your Nevada C-Corp does no business with the public and has no business other than hold the 97%, your very very well protected.

The Wyoming Managing Partner in the mix with the Nevada C-Corp makes your circle of protection very expensive to file lawsuits against and detours all but the most serious from filing against you.

Now you can not and do not want to qualify the Nevada C-Corp or the Wyoming LLC to “Due Business In New York State” because the Nevada C-Corp is a non-operating holding corp which has 97% of the legal ownership of all your New York LLC’s and the Wyoming LLC approves new additions and signs for transfers, sales and management agreements it does not do business with the public and is not registered to do business in New York State.

Now as LLC’s as your actual holding group in New York and since an LLC can allocate money and tax issues in different ratio’s than is listed you and your partner can recieve 49% each of the money and tax advantages while protecting your assets.

The Nevada C-Corp and the Wyoming LLC have to recieve at least 1% each of the income from the properties, however 1% can be distrubited as benifits in Nevada and 1% in the Wyoming LLC can be distrubited directly back to you and your partner since it is a LLC.

Your property management has to be done by either an outside company with a written agreement or you create a management entity in New York that manages property and has no assets and make a written legal agreement between your New York LLC and your Management entity signed by your Wyoming LLC as the managing partner.

Do not attach your managing entity to anything in the protection group as this entity should have basically zero dollars except for collecting rents if you go this way rather than an independant management company.

I also recomend a umbrella insurance policy probable by the Nevada C-Corp covering the New York LLC’s.

Good Luck to you!

Let me know if I can be of further help!

                     GR
3

You only need insurance unless you are actions are so egregious that they warrant a multi-million dollar judgment against you and in that case no amount of structuring is going to protect you. The judge and jury will bend the facts to make you pay. Look what happened to OJ. Everything he has was taken except his FL mansion and NFL pension. He keeps those because the law says they cannot be seized by creditors, but FL has changed the law to prevent another OJ. The more convoluted the set up and the more unable you are to explain why did what you did using legitimate business reasons, the judge will just assume you are up to no good and undo it. The set up is even easier to pierce when the entities involved are under-funded or do not conduct actual business.

Failure to maintain corporate formalities or get a NV business license (in addition to the paying the annual fee) is enough to pierce the entity, especially if it is not conducting business. Business entities must conduct business to prove they are legitimate.

4

Wow.

Three LLC’s. Five tax returns. Paperwork nightmare. One wrong signature somewhere and suddenly you’re inverted full power on.

Or you could just pay the atty $1,000 for a legitimate LLC with a sound operating agreement and buy some insurance.

One would think that if you’re really planning 20+ houses, that spending $2k-$3k on some good planning wouldn’t be so onerous.

5

Hi Guys,

        You did not read the original post, as this investor is intending to file one LLC for one property.

As for LLC’s every LLC comes with the exact same corporate package as the next, in fact they are the same reguardless of company. (State Corp Law)

An operating agreement should be done by an attorney but you only need one, not twenty. (In this case for the Wyoming LLC)

When you file any corporate entity in any state you must comply with everything required to legally operate the corporation. (Including business license, process of service provider, EIN #, etc.)

In Nevada if you file a lawsuit against a corporation and can not prove you directly did business with it, your lawsuit is thrown out. (A NeW York LLC is a legal entity in New York and under Nevada ownership law has to be settled at the New York court level) (As the individual LLC)

Nevada and Wyoming are tax free states so there are no state tax returns to file so you as an individual only file your New York state residence tax returns and your Wyoming LLC is flow through to your New York tax return and then file your federal tax return.

How big of a deal is it for you to file a Federal Corp return for nevada for 1% of the pre tax net of the New York LLC’s.

When you go to sell the property even if you make $1,000,000 dollars on the sale of a New York property you only are paying the Nevada entity 1% or $10,000 dollars.

By owning legal ownership of 97% of NY LLC’s you are effectively making your NY LLC’s only liable for there own assets as like I say, you can not file against a Nevada C-Corp that does not do business with the public and have the suit upheld and carried over for litigation.

There are a lot of US citizens holding legal ownership of LLC assets this way in Nevada, Wyoming and Delaware.

If you don’t have much to lose you don’t have much to worry about, but for those of us who could lose tens of millions of dollars or more, asset protection is the very best thing we can do to protect our assets.

Once you get used to it, it’s easy to remember to sign documents “Gold River for Investor, LLC Wyoming”

So to each situation his own, but you ask a question you get the correct answer, ask your attorney! (Or I should say ask a Asset Protection Attorney)

                         GR
6

Hi,

Well I missed a point or two last night as it was really late.

The Wyoming LLC should also be owned as 98% the Nevada C-Corp and 1% to each partner.

The Nevada C-Corp does business through recieving income and mandating by board approval how the New York and Wyoming entities work and operate. (It manages and directs the Wyoming entity as to how to manage the New York entity assets and is the legal owner of 97% of the New York LLC’s)

The Nevada C-Corp does not work with the public within the state of Nevada.

The original posting states that he intended to file 20 plus LLC’s to protect the properties he and his partner would acquire.

Asset protection is not about the properties it is about protecting your current and future assets.

Insurance is not fool proof, if you read the provisions and exclusions in your policy you will understand?

Do you think the insurance company is just standing there with an open check book?

What is your personal liability if you own 1%?

Because they are LLC’s you can own 1% and allocate any percentage of the income and tax advantages to your self and your partner without exposure.

The only thing that has to occure to be legal is the Wyoming LLC has to recieve at least 1% of the income and the Nevada C- Corp has to recieve 1% of income from the LLC’s.

Nevada and Wyoming have no personal or corporate state tax and therefore no state tax returns.

                    GR
7

They are not all the same unless you are buying some DIY or Internet kit. In that case, they are basically worthless as most of that have language that actually harms you if the LLC is subject to a charging order.

An LLC for wholesaling is different from for rentals is different from one for investing and each state has its own case law for LLCs.

NV will recognize the New York judgment and it isn’t to hard to show the NV corp is conducting business in NY, especially if all the principals are located in NY and decisions are made in NY.

Sounds like the same person owns everything. A personal judgment will link everything together.

and many of them engage in money laundering and tax evasion. There is stench to using Nevada in the eyes of the government and the courts. Delaware isn’t too far behind as it tries to take back the business it lost to NV. I suspect WY will get the same scrutiny when people abandon NV.

If you have tens of millions, then you can afford the 50K to do it right without resorting to convoluted structures pushed by so called gurus that are nothing more than one-size-fits-all templates.

The average person can’t tell the difference between a guru pushing junk and a qualified professional. One easy way to tell the difference is to find out how much time the attorney actually spends in court. That is where this stuff matters. Entities don’t prevent lawsuits. They are about forcing a settlement on your terms either before or after a judgment.

8

Hi BLL,

      In every US state the basic corporate package either ordered from a high priced attorney or bought from a company who files and forms entities on the internet are exactly the same as per state law.

All contain:

Corporation: Articles of Incorporation, Bylaws, Minutes, Stock Certificate, Stock Transfer Ledger and the Corporate Seal.
(You can not incorporate a corporation without the corporate kit including at minimum all of these documents. These are designed by state law) Please refer to any states Secretary of State office!

Optional Items: Fictitious or Assumed Name, Services Agreement, Non-Voting Stock, Capital Stock - Common Stock, Capital Stock - Preferred Stock, Sub Chapter S Subsidiary, Federal Tax ID Number, D&B Number, IRS Section 1244 Corporate Stock, State Business Registration, State Unemployment Tax Registration, State Sales Tax Number, State Initial List of Officers & Directors, State New Hire Reporting Forms, State Retailers Resale & Exemption Certificates, Indemnification Agreement, Lenders Agreement & Promissory Note, Security Agreement for Corporation, Perfecting the Lien Created by the Security Agreement - Uniform Commercial Code, Shareholder Restrictive Agreement, Shareholder Divorce Protection Provisions in the Shareholders Restrictive Agreement, Lease Agreements - Home Office / Motor Vehicle & Office Equipment, Employee Benifits and Policies, Employment Agreement, and Independent Contractor Agreement.

These items are optional to a legal corporation filing.

Limited Liability Company (LLC): Certificate of Orginization, Operating Agreement, Minutes, Certificates, and Membership Ledger.

Optional LLC Items: State Fictitious or Assumed Name, Service Agreement, Operating Agreement, Members Restrictive Agreement for LLC, Member Divorce Protection Provisions in the Members Restrictive Agreement for LLC, Management Agreement, Non-Voting Membership Interests, Duel Class LLC, Duel Class Management Agreement, Special Purpose LLC for Self Directed 401K, Federal Tax ID Number, Sub Chapter “S” Tax Status, IRS Section 1244 LLC Membership Interests, State Sales Tax Number, D&B Number, State Business Registration, State Unemployment Tax Registration, State New Hire Reporting Form, State Retailers Resale & Exemption Certificates, Indemnification Agreement & Covenant Not to Sue, Lenders Agreement & Promissory Note, Security Agreement for LLC, Perfecting the Lien Created by the Security Agreement - Uniform Commercial Code, Lease Agreements - Home Office / Motor Vehicle and Office Equipment, Employee Benefits & Policies, Employment Agreement and Independant Contractor Agreement.

These items are all optional to a legal LLC filing.

This investor is going to file actual LLC’s in the State of New York where his property is, the managing partner is a Wyoming LLC. This is no different than me being a Nevada resident and signing a LLC document in New York.

The LLC’s are exactly the same except how they operate and how they are managed. (Operating Agreement & Management Agreement)

A C-Corporation and LLC stand completely as it’s own entity, it is essentially a person without a soul.

If a lawsuit is brought against a legal entity in any other state or country and that entity is owned by a Nevada LLC, Nevada law says the liability is strictly against the entity in the filed state. A Nevada Corporation in good standing and not operating with the public is strictly protected and can not be breached except to prove purposeful fraud.

A new york judge can not make a legal decision of judgement against a owner (Nevada C- Corp) of a New York LLC unless the New York entities “Veil” is broken. (Who manages the New York LLC.)

The Nevada Corporation is not doing business, this entity is only legal owner. (What constitutes doing business is acting to make contract or recieving finacial rewards for goods or services.)

If the Nevada C-Corp only recieves money from the Management Entity (LLC or C-Corp) or A independant Property Management Company then the owner is not doing business in that state and is only an owner recieving 1% from a New York LLC. (The Nevada C-Corp does have to file a New York State return for the 1% income minus expenses and write off’s)

A judgement in New York can not attache assets in any other state without the prevailing party having the judgement upheld in another state.
A Nevada C-Corp can get around this by putting all the stock ownership in a non-revocable trust. However Nevada will not break up a c - corporation for a personal judgement against an owner, the only recourse in Nevada is garnishment of wages or attachement of Dividends.
(Remember this c-corp does not make enough money for any attorney to feel good about sueing.)

I would be extremely careful about accusing or slandering someone by stating that they are money laundering or tax evading. I sense some distain however let me assure you however you may personally feel about Nevada, Wyoming and Delaware if you have the assets and money, nothing protects your business interests and assets better. Maybe the hard feeling come from realizing that frivolus lawsuits don’t belong in America and the Rich and Famous (Be it businesses or Personal Parties) know something about protecting there income and assets that you are just learning.

I am a resident of the state of Nevada, My Corporations are primarily registered in Nevada, Wyoming and Delaware. I have dozens and dozens of LLC’s and over 15 Corporations. I have paid well over $50,000 for the legal protections and structure of my estate and assets.

As a real estate investor I have bought and sold over 400 properties directly and have participated as a partner (1/2 - 1/3 - 1/4) in another 250 properties or so since 1980.

Now on top of that and of which most people don’t know is I work full time as CEO of a group of corporations I run and operate.

I probable know better than 95% of all people how asset protection works and what goes into the deal.

The companies who structured my asset protection are upstanding lawfirms in California, Colorado and Missouri who don’t even have direct interests or ties to Nevada, Wyoming or Delaware.

This is the same structure that wealthy families and public corporations have known for years.

Keep in mind most people do business with good ethics and principles and don’t conspire to cheat or steal from the public, however we also don’t want our assets or estate sitting out there for someone to frivolusly plunder.

                 GR
9

That is the opinion of the IRS and the DOJ. Law enforcement is getting sick of people who abuse NV entities and Congress is debating changing the law. That is why legitimate planners use NV entities for NV residents only. Judges are looking unfavorably at NV entities that have no presence in NV. Since you are a NV resident, you have no worries.

As to corporate packages, the items you listed are common among every state, but its the details that are very different. Operating agreements and bylaws should be specific to the individual setting them up. That is where the protection lies. They require a conversation between the client and attorney, not the filling out of some form with boilerplate language. Having an LLC or corporation is useless if the operating agreement or bylaws aren’t drafted properly.

As to a NY judge ruling against a NV c-corp, here is my concern with your comments. The principals are NY residents and act in NY. That is enough for NY to claim the c-corp is doing business in NY and must register in NY. If it isn’t registered in NY, then it doesn’t have legal protections and a judge could rule the principals personally liable and he can rule the corporation liable since it is conducting business in NY. NV will honor that judgment under the full faith in credit clause of the US Constitution. NV law would bar a NY plaintiff from suing in NV court. It does not bar a NY judgment from collection in NV. However, NV law would apply to any collection action.

Can you explain how the irrevocable trust in the context you described? I’m curious how you maintain control and protection at the same time in an involuntary BK situation.

Read my posts in this section. Then, tell me I am just learning.

10

…

11

Hi,

BLL you did not think I would respond to the other post and not respond to this post did you.

I am sorry to tell you but illegal activities occur in every state every single day, nothing new here. Everyone including the IRS and DOJ are welcome to there opinions.

But what the IRS and DOJ won’t say is specific to any absolute crime because for the most part 95% of Americans are hard working, honest people trying to scratch out a living, The Federal government has absolutely no control over the corporate laws in any state, the US constitution affords the protections afforded by law to all states to govern their interests.

Very few people actually abuse any corperate entity in any state, and law enforcement in any other state has no jurisdiction in any other state and the federal government has limited powers to control a states legislature.

Congress can certainly change laws, but a federal law change blankets every state and without changing our constitution you can not take state law from the states.

Most every large US Corporation has a entity in either Nevada, Wyoming or Delaware. In fact over 2/3 of all fortune 500 companies are incorperated in Delaware. Probable over 75% of every company on the US stock exchanges are incorporated in one of these three states.

It makes no difference what state I live in and I can tell from your writing you do not understand what a corporation is? A corporation is a stand alone entity, an LLC is a type of corporation, the stock holders or members own and control the corporate entity.
Who owns TEXACO? Who Owns BANK OF AMERICA? Who owns ALLSTATE INSURANCE? Who owns AMERICAN EXPRESS? Who owns FIDELITY COMPANIES? Who owns RE-MAX REALTY? Who owns SOUTHWEST AIRLINES?
All these companies and many more are owned by the stock holders of a Corporation or members of a LLC.

Your local Burger King Franchise, McDonalds Franchise, Taco Bell Franchise are all individual LLC’s owned by the members.

They are stand alone entities. Just because you own one does not mean it does not protect you, quite the contrary!

According to my attorney the boiler plate bylaws, operating agreement or management agreement supplied by a corporation kit is adiquate to do business under and unless you are really building up assets and wealth you probable don’t need to change the documents.

Now I would imagion your attorney really has not said anything to you or you are just guessing at your statement that the bylaws, operating or management agreements have to be rewritten or your attorney really wants your money from you? At least when I called today I was not charged for time against my retainer. But that’s part of building professional relationships.

A C-Corporation is owned by the stock holders, the court in New York has to honor the ownership of assets owned by any states corporation.
And every other state honors a corporation owning assets in any other state!

BLL, when I go back and read this full line of offtrack, offbeat questions and comments it distracts and confuses fellow investors even though I presented a completely legal completely in compliance way to protect a large number of properties.

A state judge in any state can not take apart a corporate entity in any other state, it is outside there jurisdiction and as far as my method is concerned the owners own 1% each. That’s it in a nut shell!!!

Nevada will not honor nor will any other state a judgement that is personal or corporate unless the judgement is upheld in the other state.
Get on the phone and talk to your attorney because he will tell you a judgement is not collectable in any other state unless the prevailing party goes into that state and petitions the court to have the judgement in another state upheld! This is absolute fact!

I am not talking about collections of a credit card or car debt, this is consumer collections but a judgement can not be collected in any other state without going to court there, we do it all the time and for an individual person you have to ask your self is it worth it as individuals can move from state to state. Of course a corporation can defend it’s self in a petition to uphold suit and delay a decision for years and years in court initially and in appeals.

A judgement is not Credit?

BLL you lack the sophistication to understand how the full structure of asset protection works and I don’t have the time to educate you right now, not to say you could not educate yourself to learn these things but it is complex and it took me a few years to completely understand.

Lets just say it works, I have full direct and in-direct control and nothing we have is going BK.

BLL I am sure you are a great guy and you mean well and generally supply a lot of good information!

I will give you a hint a irrevokable trust can own all the corporate stock for a corporation so the stock is not owned by an individual.

                   GR
12

You can post or not. It doesn’t matter to me. My goal is to provide information to all members of the board. I will post to add something substantive to the discussion or correct inaccurate information.

Those opinions make into the courts where a judge may view you negatively when you use a NV entity and have no business ties to the state. Court is a matter of perception, not the law. Judges and juries will twist the law to reach the outcome they want. If you can’t explain what you did and why you did, it looks like you are up to no good. Simple structures with properly drafted documentation hold up better than multiple entities spread across several states.

What the proposed laws concern is more transparency in the public record to determine the owners for purposes of combating organized crime and tax evasion. They are going after the offshore tax havens now and it won’t be long before they turn inside the US. The UBS situation is a taste of what is to come. People who are honest have nothing to worry about, but it may become easier to find out who owns what and that does concern many people who use entities legitimately.

There are enough people doing it to draw the attention of the government and it will be done in the context of the Constitution. The states won’t object as it will allow them to collect more taxes and fight crime. When something gets popular and the government sees a problem, it reacts. The private annuity trust business went out of business when the IRS ruled those transactions did not defer taxes. Smart money said they never did, but that didn’t stop promoters from pushing it at conventions and seminars. NV is being abused, not by everyone, but by enough that you can be lumped together with them in the eyes of courts and government agencies. If I needed to organize/incorporate out of state, I wouldn’t use NV unless I actually conducted business in NV. Feel free to disagree.

What’s your point? These companies aren’t associated with organized crime or taxpayers looking to hide assets. They are legitimate enterprises and they won’t get lumped together with the bad apples. A small investor or closely-held company might. I see no reason to incorporate or organize in a foreign state unless you plan to do business in that state.

Ownership doesn’t create liability. It’s owning along with actively managing the business that weakens the shield. A big corporation isn’t going to get pierced as the shareholders do not actively participate in the business. Their subsidiaries won’t either because they have their own separate management in place. Limited partners have no say in the management of the partnership and thus risk only their investment in the partnership.

Big companies aren’t my point. My point is that a newbie or small investor who does everything himself won’t benefit from entities because it will be his personal actions that generate the liability. That makes his personal assets available for any judgment. The entity isn’t pierced as much as it is bypassed.

I would say the entity isn’t needed at all because there aren’t enough assets to justify the expense. Those boilerplate documents won’t withstand a determined creditor and it is more likely the plaintiff will settle for the insurance limits or just go way if you won’t settle. The entity doesn’t matter.

I’m saying that a one-size-fits-all solution doesn’t provide adequate protection. Most of the standard language is fine, but there are nuances specific to the individual that should be addressed. Whether a change is required or not is another matter, but it should at least be discussed.

I never said otherwise. I said a corporation of a foreign state (e. g. NV) that owns a business in NY, where the decisions of the corporation are made in NY, where the principals reside in NY, where the annual meetings are held in NY, and where it has no business activity in NV can be conducting business in NY and subject to NY laws. That is a nexus that a court or taxing authority can make to justify its position. If a NY judge rules the corporation is conducting business in NY, NV will honor any NY judgment. Collection will be subject to NV laws, but the creditor will not have to retry the case in the NV courts.

Your way is confusing. There is no need for so many layers and there is huge paperwork burden along the fees for maintaining all the entities. The same protection can be accomplished with a more simple structure.

There are many ways to protect assets. My problem is with your blanket statements such as only fraud or a crime can be used to pierce an entity. That isn’t true. Failure to maintain the formalities is neither a crime nor fraud, but it is a reason to ignore an entity. You also assume the law is absolute. It is not. Judges interpret it.

The judge can rule against that corporation, seize any assets in his jurisdiction, and put any principals in his jurisdiction in jail. The 1% doesn’t matter if everything and everyone is in the judge’s jurisdiction, which is the case for the OP.

A judgment in one state is recognized in every other state without another trial to determine the facts. There is a process in the new state that must be followed to record the judgment, but the new state will not reject the judgment and force the creditor to prove its case again.

I never said otherwise. I said the other state will uphold the judgment without deciding its validity. It will assume the judgment is valid. It is a matter of recording the judgment properly in the new state.

That is true of every lawsuit. They aren’t filed if there is no chance of a positive outcome for the plaintiff. The corporation has a high bar to prove the out of state judgment is not valid or legally enforceable. If a NY court rules a NV corporation is conducting business in NY and gives a plaintiff a judgment against the corporation, NV will recognize the judgment. It won’t force the plaintiff to prove the judgment is valid. The time to argue facts was at the trial in NY. The corporation can try to argue NV shouldn’t recognize the judgment, but it won’t be the slam dunk you imply.

Let’s keep the personal attacks out of the discussion. Seriously, I haven’t heard any type of sophistication from you. I only hear general comments about statutes without any reference to case law (which is what really matters) or your declaration that something is an absolute fact. It must be true because you said it? Your plan sounds like the stuff that comes out of real estate conventions and that isn’t the most sophisticated. The people who sell that type of stuff are in the sales business pushing low cost product to the public. They don’t spend time in court seeing what actually works and what doesn’t. They don’t inform their clients when their plans need updating. You encourage people to use legal zoom for setting up entities. Legalzoom and other such providers are the legal equivalent of the free clinic. They are for people who don’t have the means to seek better care. If that is all you can afford, then you don’t need advanced planning. That being said, they are fine for filing the paperwork with the state and providing you with a fancy corporate kit. The real work should be done by qualified professionals.

It took you a few years to completely master the subject? Asset protection planning covers many topics such as corporate governance, entity structuring, estate planning, trust law, tax and insurance law, bankruptcy law, debtor/creditor law. Then, you’ll need actual courtroom experience to see how it all works together. It takes years to master just one aspect and there is no legitimate planner in the US that claims to be an expert in every topic.

Good plans are drafted by experts in their respective fields using a team approach with your local, personal attorney as the point man. People can purchase low cost items or use unaltered boilerplate documents, but they should be aware of what they actually do and not assume a $100 LLC online is the same as the $100,000 LLC provided by Jay Adkisson.

I take that to mean your plan has survived a multi-million dollar judgment with your assets intact. You only know it works when you need it. Up until that point, it is just theory. Many people assumed a single member LLC had charging order protection until Albright. Many people assumed money put offshore was safe from creditors until judges started putting people in jail. No one can cite a case to prove series LLCs actually work. They are untested at this point.

What’s wrong with what I said here? It’s pretty much the same things I have been saying on this board for the past few years, which is newbies and people with a low net worth don’t need planning. Taxes destroy more wealth than lawsuits and people are better off finding ways to reduce taxes. When planning becomes necessary, they should seek out competent planners to do it right.

I know that. I was referring to an involuntary bankruptcy and the clawback period for irrevocable trusts. That is how a creditor is going to attack the trust and I was curious to see what you did to mitigate the possibility. I didn’t want the language you used. I wanted just a general approach. Are you the settlor and beneficiary? Can you influence the trustee even though he is independent?

13

Hi,

When a corporation is filed in any state and the correct licensing and documents are submitted along with a group of officers and a board of directors which represent the stock holders the entity is a legal business entity within that state.

There are many national companies incorporated in the US that manage and operate manufacturing facilities, distribution facilities and retail sale facilities across the US. A lot of these entities are solely owned subsideraries filed as corporate entities.

We have an appeals process to insure that judges or juries define the law according to the way it was intended.

Explaining what someone is doing is relevant only to the business within that state, a corporation or individual is not required to answer to apposing councils examination of issues outside of the specific scope of a lawsuit.

Law enforcement at the federal level already possess the legal ability to determine public or private record when investigating a federal case.
State law enforcement should only be able to access records within the state of jurisdiction!

The situation with UBS involves only 52,000 US citizens, hardly worth discussing in a country with over three hundred million people, in fact the UBS case involves roughly .0002% of the US population.

The problem with a few bad apples in the financial world is nothing in comparison to the 2007 statistics for crimes in this country. There were 16,929 Murders in this country of completely innocent victims who should have never died, in our country this is unexceptable and these lifes are worth much more than all the money in the world as far as I am concerned.

But not only do we have a huge amount of murders but in 2007, we had 90,427 Rapes, 1,408,337 Violent Crimes, 445,125 Robbery’s, 855,856 Aggrevated Assaults, 2,176,140 Burglary’s, 6,568,572 Larceny Thefts, 9,843,481 Property Crimes and 1,095,769 Auto Thefts.

These crimes against society should be this countries priority, we should not be chasing someone who fails to pay taxes over enforcing and convicting criminals of violent crimes, until these crimes statistics are all reduced to zero (0) we have no business chasing tax evaders.

The money saved by reducing these violent crimes against society to Zero will more than pay the taxes for all American’s, I think you’ll find if you research that the cost’s involved with violent crimes well exceeds our whole US taxes per year.

If the US Government thinks that spending and wasting money on trying to collect a few non violent criminals from the business world for unpaid taxes, we have to stand up as citizens and voice our priorities!

Like you say "They all are legitimate enterprises, and so is a new corporation with the appropriate officers, board, documents, licenses, meetings and audits. The entity becomes a business and the business operating is a tie to the state!

Let’s take any corporation, as long as stock is not issued an owner does not exist when a board of directors mandates hiring a group of officers and operates a business, but let’s just say that a LLC, LP, FLP, etc, is probable a better entity for personal protections. Berkshire Hathaway, Microsoft, Dell, and Trump Casino Resorts are all examples of owners who have huge stakes within a corporation, however I will bet that they do not own there interests directly but rather within a extravegant asset protection net!

I never said in my presentation that a corporation or LLC should not operate legally, with full officers and directors is the only way and a LLC probable should be set up with multiple managers as a council. With checks and measures, audits, and transperancy to the owners.

A creditor can collect half of the wages from a debtor under an order for garnishment, now when I was young I could not feed, cloth or keep a roof over my families head with 50% of my net income. So doing anything including choosing not to invest at all is better than losing a family.
And yes, I understand bankruptcy is an option but some people have had a bankruptcy in the last 7 years and are ineligible to file again right now!

The IRS as a Federal Taxing authority can cross all state lines, and so can most agencies such as the SEC, and the FTC. The New York Judge does not have the authority to rule on any foreign corporations out side of there jurisdiction if the Secretary of State of the foreign state specifies that the entity is in good standing and legal. A judge does not have interstate authority to reach beyond the boundries of there respective state.

There are huge numbers of corporations with officers or directors jetting back and forth every week or every couple of months for operations or board meetings. When you go beyond the formalities of a corporate entity and everything is done as legally required for compliance, in the state of Nevada proving purposing fraud is the only way to break the Veil within that state.
(By all means call a Nevada Attorney to verify this but it is the only way, it is the reason why out of all 50 states Nevada affords the best protection.)

Yes, the judgement has to be recorded to be valid, however if a Nevada Corporation has a LLC entity in another state and a judgement is issued blanketing the LLC and foriegn corporation and a collector tries to register the judgement in Nevada, a Nevada court will unwind the judgement if the corporation proves it did not directly operate in New York. (I have many friends that have investment in operating subsideraries and also sit on corporate boards but just that offense does not make the parent corporation guilty of operating in a foriegn state.)

I am no master at asset protection, and leave the advice to professionals working directly within that field, just because I understand how it works does not promote me to the position of giving myself legal advice. I work delegating work to professionals whether they are associates or outside advisors and we accomplish our agenda on behalf of our investors.

No, I have not personally had a reason to test it as I operate within the correct boundries of the law, however my attornies have had there documents tested and tried at trial with defense prevailing so I believe I am pretty much set.

Taxes are part of doing business, and yes the taxes are huge when your just starting out, however I recomend making more money because taxes only are taken as a percentage of income, so I tell people I council in real estate to work on ways to increase income and write off’s.

My estate was established during 2003 and 2004, most of the infrastructure was completed by the end of 2004. I have met and exceeded the clawback period of 2 years now by 2 1/2 years I believe. The entity is called a Nevada Asset Protection Trust. (Spend Thrift)

Nevada allows the “Settler” to also be a trustee in a multiple trustee situation and also be the beneficiery. (Or designate new beneficiaries upon a death, or change beneficiaries prior to death)

BLL this has been a fun little back and forth, I must admit I gain respect for a man who doesn’t give up so “Cheer’s to you”.

           Gold River
14

Check that clawback period. The bankruptcy period is 10 years for self-settled trusts.

Otherwise, I have nothing more to add to this discussion.