Out-of-State Investing - Umbrella Policy = No Foreign CA FTB Fee?

[Aaron Moayed]

Hi there,

New here and to the RE investment world.

My question:

If I buy a property in a different state (say Indiana)/use an Umbrella insurance policy instead of Indiana LLC, and I reside in CA, can I forgo the Foreign LLC cost ($800), or am I still considered doing business in CA?

I would assume not since it's personal, but I just want to make sure.

[Weston Couch]

@Aaron Moayed Hi Aaron, that's a good question. The best way around this problem in our experience is to use a Delaware Statutory Trust (DST) instead. The DST is not obligated to pay the $800 franchise tax mentioned above, and can contain as many assets as you like. The DST is viewed as an estate planning tool, and therefore exempt from the far-reaching corporate tax laws set forth by California's FTB. A properly set-up DST will both protect your assets and bypass the burdensome franchise tax that would be levied against a Series LLC.

Feel free to connect with me if you'd like to know more.