LLC, revocable trust, holding company...What do I really need???

[Kerry Mertz]

I spoke to an asset protection planner (part of an asset protection company that has attorney's and CPA's) and I got completely confused about how to set up a business entity for asset protection. So I'm wondering what do I really need?

I'm a buy and hold investor and I want to start an LLC to hold my properties. The advice that I got was to set up a holding company LLC in Wyoming that holds my other LLC's that are in each state that I own property in. Since I bought the properties in my name and have financing in my name, I was told to use a revocable living trust to hold the properties in, which will own the Wyoming LLC, which will own the individual state LLC's. The revocable living trust will prevent the infamous due on sale clause from being triggered. This seems like overkill. Is all of this really necessary to protect myself from a lawsuit? I should also mention the cost to set all of this up is outrageous.

From what I understand, the purpose of the Wyoming holding company LLC is for privacy, asset consolidation into 1 yearly tax return and the laws of Wyoming will override the individual state LLC's. Wyoming laws are favorable to business owners. (Again, I am still confused about all of this, so I may not have all my facts straight.)

I'd like to simplify if possible, but not too much that I'm not protected in the event of a law suit. 

Can't I just set up an LLC in each state that I own property in, transfer title to the LLC (even though there is a risk of triggering the due on sale clause, but it seems like that rarely happens anyway) and call it a day? I know that will mean more tax returns but who cares?

What have other buy and hold investors done to protect themselves?

I'd love to get a 2nd (3rd) opinion from a real estate attorney that can help me set up my business entity (and help me with estate planning).

[Kerry Mertz]

I wanted to say thank you to everyone that offered advice and to give an update on what I decided to do. I ended up calling Royal Legal Solutions (podcast guest #109 on asset protection). Scott Smith himself was not available but I spoke to his colleague, Kellie who has gone above and beyond to help me understand everything and to answer my questions. 

They recommended setting up a Series LLC in Texas (where they are located) which will hold all the other properties. What I did not know, was even though the Series LLC is set up in Texas, I am still able to put other properties from other states within the Texas Series LLC. The properties that are in my own name are held in a land trust within the series LLC to prevent the due on sale clause and to give anonymity. The Series LLC is owned by my revocable living trust (which provides another level of anonymity). Even though this is still more complicated than I preferred from the beginning, I'm confident that my assets are protected this way. If I ever got sued, it would take a lot of digging for the lawyer to find out who I am and what I own. The price is reasonable at around $3000 and an additional $300 for every new property that I transfer into the series. The Series LLC also allows you to do 1 tax return for everything.

The other asset protection company that I spoke to (Anderson Advisers) wanted to charge me $5000 for the initial set up and wanted me to set up an LLC for every new property at a price of $1500 each, which I think is outrageous. Not to mention, they rushed me through the initial conversation and would not return my calls to answer my follow up questions.

I just wanted to put this information out there for anyone else who is confused. I think the price is worth it for peace of mind and protection.