Ok, quick question here. I’m assuming everyone on the board (well most people) have heard of or already know the standard three levels of asset protection (Insurance,LLC’s,Land Trust). What I’m wondering is: Are there more COMPREHENSIVE, MULTI-STRUCTURED, “INTENSE” forms of asset protection?
For example, stronger entities, different trust forms, different legal representation?
I’m not looking to complicate something simple, I just believe that options help to increase successfullness. Maybe substituting a Corp for a LLC may be stronger. Any info, comments,suggestions, or ramblings are welcome. THanks.
I don’t want to get into all that as it seems to be a religion to some and heresy to others. I just mean do people layer their asset protection in different way’s by possibly substituting one entity for a different one to make it stronger.
I think it’s an open-ended question unless you are talking about some specific issue. Mike Wagner and others would probably be the best to talk about it, but it would seem to me that having more than 1-2 “layers” of entities would not only over-complicate things, but may lead to more problems than solutions.
corporate stock, even Thoward, Inc., is considered an investment. As such it is available to satisfy judgement creditors. so when you rearend the lady in the pinto, she sues and wins, she can be awarded your investments. Now she owns the stock of the corporation that owns the property.
LLC membership, by contrast, is considered personal property by statute. As such it is not available to satisfy judgement creditors. Now the best the lady in the pinto can get is a charging order against LLC income, which you can frustrate.
Both the corporation and the LLC protect you from liabilities arising within the entity, but only the LLC protects the entity from your personal liabilities.
I think I explained the question a bit wrong at first though, but I can use your explanation to help this make more sense.
Lets say for example I own 6-10 properties that are currently in my personal name. I’m looking to build an extremely strong level of asset protection (or as strong as possible) and am looking at my options. I know the three levels discussed on this forum are: insurance, LLC’s & Land trusts. The insurance is obviously a must, and the LLC as you showed in your previous post is the best option for liability protection. What about the privacy that the land trusts help to provide? Is there another entity that can be formed to increase the privacy and possibly perform any other services a land trust is incapable of?
If a person only owns one or two properties, wouldn’t obtaining personal liability insurance be sufficient protection for safeguarding investment properties against any judgements??
you tell me. grannie got $10,000,000.00 for a spilled cup of coffee. how’s your million dollar umbrella going to stack up when little Johnny slips on that loose board you didn’t repair and snaps his neck?
Ok , got it now. So, if I transfer my investment property to my LLC, would you still recommend getting liabilty insurance? Also, from what I have read in other posts, I understand that it is best to transfer title of property by a warranty deed as opposed to a quit clam deed. Correct?
Thanks
technically, yes. but, unlikely. at worst I think they would find you in default, and most mortgages allow you time (30 days?) to cure a default. You transfer the property back and everything’s fine.
however, I have never seen a case where a bank has called a performing mortgage due for this reason.
If your transferring the property from your name to an LLC that YOU own wouldn’t it just be easiest to contact the bank and let them know. I can’t see how it would be a problem being that YOU have already personally guaranteed the loan, and YOU own the LLC. I would think that maybe a signed affidavit stating the bank has authorized you to make this transfer and it doesn’t invoke the DOSC or something like that in writing would do the trick. This sound about right?
what would be the difference between a personal guarantee for the LLC and transferring title to the LLC AFTER the initial purchase? Either way aren’t you responsible for the loan and technically don’t own the property? I’m not sure but maybe i’m missing something?
two scenarios. 1) the bank makes the loan to the LLC that owns the property with a personal guarantee from you.
the bank makes a loan to you and you own the property. then you transfer the property to the LLC, thus violating the DOSC. yes, you are still on the mortgage, which is why this is not the preferred method.
the difference is who the bank makes the loan to and not having to violate the DOSC to get the property into the LLC.
Mark, how would this be any different than doing a Sub2 where the property is put into a land trust and insurance taken in the name of the LLC or Beneficiary?
trusts come with some additional hassles: have to deal with trustee (who is the actual owner) with respect to sales, etc rather than just being able to get on with it. if you have multiple properties in the trust, you have to dissolve the trust to sell any individual property rather than if the LLC is owner, it can just go ahead and conduct business. etc.
the end result is the same for LLC ownership or trusts: get it out of your name.
for LLC direct ownership, there are two ways to get it there, as outlined in my previous post.
in response to mcwagner on preventing dos clause when taking title under your llc, if you are a single member llc which owns and operates the entity would that still trigger a violation?
also,
in a land trust when you sell under it the trustee is the owner of record for sales purpose but nothing to do with ACTUAL ownership right( meaning the beneficiary has the control and should only sell knowing that the money is allocated to their discretion) when you sell aproperty the trust dissolves, why wouldn’t you just have different trusts for different real property, all with the same names, could u do that? should you use a land trust for your principle residence or living trust or is there no difference? thanks CPA , im from cali by the way… ;D