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Updated about 4 years ago,

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22
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2
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Trevor Levine
2
Votes |
22
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Land trusts or LLCs? (For lawsuit protection & anonymity)

Trevor Levine
Posted

Hello! I live in CA and I'm a passive investor in two rental properties. For each, I'm named on title as a tenancy-in-common partner. 

My partner is also named on title, and his property management company does ALL repairs, renovations, marketing, property management, etc.

Anderson Advisors suggested deeding each property to a separate CA LLC, both of which would have a WY LLC as member/manager. Anderson explained that this will give me charging order protection and some anonymity -- assuming I also use their mail forwarding and Registered Agent services. I have a few questions...

Since I'm truly a passive investor, can I legitimately deed each to a WY LLC? Or does California interpret just living in CA and collecting quarterly distributions as "doing business"?

If it's the latter, then are land trusts a valid alternative to CA LLCs? 

I imagine my WY LLC could be the beneficiary, and I could appoint either a CA lawyer or a different WY LLC as the trustee. (If that's even allowed.... Does an LLC need a banking license to be the trustee of a CA land trust?)

But a lawyer explained that land trusts wouldn't give me anonymity. Here's why:

Anyone checking public records would see that no transfer tax was paid -- when ownership of my percentage changed form me to the land trust. So it would be obvious there was no sale, and pretty obvious that I'm the beneficiary of the land trusts.

If you disagree, or see a way to make land trusts work, please let me know. Thanks a million!

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