Asset Protection Strategy

[Klemens N.]

I want to share the details of my Asset Protection Strategy. I welcome constructive comments.

- First of all, I live in California as it has very little asset protection (for instance no tenants by the entirety) and it's costly for LLCs maintenance.

- At the base, we established Family Revocable Trust (FRT) to avoid probate. This FRT will be a single member of the LLCs.

- For all rental properties and primary resident, I established California Land Trust (LT) with my wife and I serve as grantors, trustees, and initial beneficiaries. Each California LT is for each house (regardless of which state the house is located). I transfer Grant Deed the title of each house to each LT and record with the owner for example as “1352 Orange Trust” with the county. So our names are not recorded with the public records, thus anonymity. LT is a private document that I keep in my cabinet.

- I set up one Wyoming series LLC with as many daughter series LLC as many houses. I then transferred the beneficiary of each LT into each daughter series LLC. This way each house is owned by each California LT, and its beneficiary is owned by the Wyoming daughter series LLC. So all properties are separately shielded from each other. One WY Series LLC (with our FRT as single-member and I serve as manager) serves as a holding LLC for all properties.

- For other investments in RE syndications, I set up another WY LLC (with FRT as a single member, and I serve as manager) and I invested in the name of this LLC.

- WY LLC: it protects me personally from any risk from tenants (inside risk) and each house is protected from each other in the series LLC. The properties and all investments are protected from me if I personally cause risk (outside risk) as WY LLC has a strong charging protection order even for single-member LLC.

- For all our income I stored them in multiple "vaults" using high cash value life insurance contracts. I collateral-assigned the cash values (CV) to a bank (Investor Bank) who gave me a business line of credit at a lower interest rate to use for investment, expenses. This serves as a "lien" on the CV so it has strong asset protection. In addition, since it's a business LOC, the interest I pay is tax-deductible (easier to claim than the interest you pay the life insurance company if you borrow money from the ins directly). California has very little protection on the CV of life ins.

- I live in California. WY Series LLC serves as holding company for the beneficiary of LT, and the other WY LLC serves as holding for syndication investment. None of them is doing business in California. So I avoid $800 per LLC annually from California.

- Tax: all pass through to my 1040: all rentals go to Schedule E page 1, all investments with K-1 go to Schedule E page 2.

- People would not know that I have these WY LLC as they are not reported anywhere. Even lawyers would not be able to search up these WY LLC related to my name.

- The setup cost is not expensive and maintenance cost annually is also minimal.

- The majority of my assets as above (except the CV in life insurance contracts) are owned by the WY LLCs, not me, so the plaintiff attorney cannot "touch" them beyond the reasonable amount. I just have "control" over them.  It appears that I own nothing but control everything.