New LLC Company owning an established LLC Co.

General Real Estate Investing
1

Hi: :biggrin

Is it possible to have a new LLC Company (owned by a land trust) to own an already established LLC Company tht’s been around for some years now?

Any assistance would be greatly appreciated!!!

thank! :biggrin
ruukie

2

How does a land trust own an LLC? A land trust must own land.

You can’t buy an LLC like you would a c-corp as membership interests are not the equivalent of stock and there can be tax issues. I prefer to purchase the assets of the target company and then dissolve it.

3

LLCs are bought and sold everyday just like C Corps.

And a Trust can own RE and whatever else the trust authorizes or directs the trustee to own.

4

I didn’t say they weren’t or couldn’t be bought and sold. I said they are different. C-corps have shares, which are easily bought and sold. LLCs have membership interest, which is a different type of ownership that is more complicated. I also wouldn’t advise someone to buy a business. The assets should be bought so that the liability stays with the company.

I didn’t say a trust can’t own RE. I said a land trust can’t own an LLC. A trust that owns an LLC is not a land trust. It is something different. I can’t draft a self-settled trust where the beneficiary and grantor are different. I can’t draft a spendthrift trust where the beneficiary can influence the trustee. Both examples are contradictory by definition just like a land trust that doesn’t own real estate.

5

Thank you both for your wise advise.

For clarification purpose, a Trust (not land trust) can own an already established LLC?

BLL: Can you elaborate more on what you mean by purhcase the assets of the target company and then dissolve it? Wouldn’t it be expensive to do that when choosing to go that way? If yes, is there a better way that won’t involve lots of steps to go through?

Greatly appreciate your advise… :biggrin

6

[quote author=ruukie link=topic=38337.msg185188#msg185188 date=1221464019]
For clarification purpose, a Trust (not land trust) can own an already established LLC?

[quote]
Yes.

You, as the purchaser, buy the individual assets of the company. That means you pay some amount for the office equipment. You buy the individual real estate at market value. You are not purchasing the company. You are just purchasing what it owns. The main reason is liability. If you buy the company, then you buy its responsibilities and liability along with its assets. However, you are not responsible for the acts of the corporation or it’s officers, employees, owners, and agents if you buy just the assets. You aren’t responsible for the accidents of the previous owner of your car.

It is slightly more expensive and not that much more complicated, but not that much for a typical company. Unless the company is public, you are going to need a business appraisal not matter what you do. The benefits of an asset purchase far outweigh the hassles.

From a tax perspective, it’s awful for the seller, but that doesn’t affect you. Knowing this, you can negotiated more favorable terms or a better price if the seller complains.