Hey Guys,
I’m trying to figure out which entities you all are using. I know to set up and LLC for each investment property (potentially a Series LLC). What about the parent company?
I recently Incorporated a company in IL. I set it up as a corporation. I haven’t chosen the C or S yet.
Q1. Did I make a mistake in setting things up as a Corp?
Q2. Which should I choose for a Holding company that will own a Flipping company? C or S?
Thanks,
How do you know this? This strategy fails more often than it works. It is more guru smoke and mirrors than anything else and extremely expensive in terms of time and money to make it work correctly.
I would go with a trust. Other entities require t too much work and money for me.
Yes.
Do you plan to distribute or accumulate wealth? I can think of several reasons for each, but I don’t know what applies to your situation.
To the best of my knowledge, a series LLC has not been tested in court.
There is some case law for CA. Each series is considered a separate LLC for purposes of paying annual fees and they are considered one LLC for purposes of liability separation. Series LLC should only be used in series states and only after there is some case law to define how they will work.
BLL - I’ve seen you say many times for people to get a homestead on their personal residence. However, Maryland does not offer a Homestead along with a few other states. Is there anything similar one can do?
Thanks
That’s a bummer. Outside of more insurance, you have a few options. You can leverage the home so that there is no equity, making the home unattractive to creditors. That isn’t too risky if you have a stable income stream that can pay the mortgage or the lender is a 3rd party entity friendly to your situation. The second option is to structure the ownership in some kind of trust, but that is very complicated and has income and gift tax consequences as well as risking the tax exemption for homesteads. I would only recommend such a path when your estate exceeds the estate tax exemption since you need advanced planning anyway. The third option applies if you have significant equity. Borrow as much as you can and then use non-borrowed funds to purchase equity indexed insurance or an annuity. Those assets are exempt from creditors, but again, it’s a complicated strategy. Unfortunately, there is no quick and easy solution.