What is the best way to structure an anonymous LLC?

Question

My wife and I want to form an anonymous real estate holding LLC in AZ (Arizona does not provide anonymity, but it offers great charging order protection).  I was told in order to achieve anonymity that I have two options:

1) To create a living trust owned by my wife and I, and then make the trust be the sole member of the holding LLC (by doing this, our names will not be on the articles of organization).

2) To form another LLC in another state that offers anonymity such as Wyoming, Nevada, or New Mexico, and make this LLC be the sole member of my AZ holding LLC.

Which option would you better recommend in order to get the maximum asset and charging order protection?

Thanks for your help!

Jerry W. · Answer

@Frank Peraza, these are just opinions, not facts, but I REALLY don't like trusts.  there is the cost of creating, the duty to keep things in the trust, and they provide ZERO liability protection.  If you form a WY LLC you can have it be anonymous, have a second layer of liability protection, and a second layer of charging order protection.  Now in my opinion anonymous investing is vastly over rated, but this method would help.  It only costs $100 to form an LLC in filing fees in WY and about $50 per year for your annual filing.  You can get  a company to be your registered agent for about $25 to $50 a year too.  It depends on what you want to spend.  Just out of curiosity why do you need anonymity?

Frank Peraza · Answer

Scott Smith, thanks for your input!

Scott Smith · Answer

You can check out this article on the topic. There are generally a few different options available to different investors, so you would want to weigh them out and see which ones offer the best benefits for the costs involved, and make sure your personal desires are met. Some investors don't care and risk a lot moving forward, others move slowly and are very safe. Ultimately I am much more on the safe side of things because I've seen many people crash and burn from really simple mistakes.

I personally run my investments through Texas because it has such low filing fees and minimal requirements for corporate compliance, then I use trusts in order to create the anonymity that people approach the WY LLC for. It's a personal choice I made after reviewing the options, and I know many who follow suit.

This is just my personal opinion as a real estate investor, this is not legal advice.

Mike S. · Answer

You can also hold your real estate assets in a land trust that will offer the anonymity. The beneficial owner will be the LLC, but there would be no recorded document linking it to the property.

Most revocable trusts don't provide any asset protection, but they also don't cost anything.

You can use your living trust, or better, you can create a personal property trust. These trusts are very easy to create. You can check the book from Mark Warda called "Personal Property Trust"

Jerry W. · Answer

@Frank Peraza, the way I would do it is have someone else form a manager managed LLC, hire a professional registered agent, and then operate from there.  That will keep your names off the books.  If you want you can have the WY LLC own the LLC you buy land in.  Keep in mind that someone has to look at real estate, someone has to sign offers, buy insurance, hire contractors, interview tenants, sign checks, etc.  Your name will be showing up somewhere.

Frank Peraza · Answer

JerryW, thanks for your feedback.  Anonimity to me is just a personal choice.  I want to keep my affairs private and out of the public eye.

Thomas S. · Answer

What is you end goal. If anonymity is your priority you are wasting time and money. In the case of a law suite, which seams to be the only purpose of having a LLC or trust, your identity will not be protected.

If your goal is to protect your assets then insurance is your first and best line of defence.

Joel Belding · Answer

@Frank Peraza

You might want to reach out to Amanda Han or Mark Kohler, as I believe they are both well versed in this topic.

Joel Belding · Answer

@Frank Peraza

From what I understand, the Trust seems to be a more common method used.  Your best bet would be to spend a little money up front and hire a good real estate attorney and CPA that can advise you as to which way would work best for you personally.

What is the best way to structure an anonymous LLC?

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