Self Storage- Convention, Asset Protection

Had a chance to go to the SelfStorage Convention in Las Vegas this past week. Although there were many things that interested me from the vendors and the conferences, the best one was an "Asset Protection" seminar I sat in on. "American Society for Asset Protection" Las Vegas. This is a fee based group. The presenter went over a few items, that I can't wait to go over with our support team, next week.

"I'm not your Attorney or your CPA": As I discuss the following.

Item 1:

Felt we had everything tied down. Financial Advisers, Trust Attorney and plan, CPA, and LLC.

Couple of things I can't wait till Monday to check on with the above team, they mentioned:

1. Where is your LLC located? Should be in Nevada, Alaska, Delaware or Wyoming. Preferably Nevada or Wyoming.

2. Around section 2 of your LLC document, there should be a phrase, "managing partner reserves the right to withhold all distributions of profit". Normally an off the internet LLC Operating agreement won't have this, and requires or allows distributions.

They mentioned normally people try to prevent being sued and losing. Their approach is so what if you do get sued and lose.

LLC's are relatively new relative to C and S corps, thus there is less case law and tax provisions for them. They recommended Nevada and Wyoming because there is more case law in favor of LLC's.

A. Thus, if you position your "At Risk" assets in one state, but the LLC in another, you have less chance of a loss of asset value, even if you lose the suit.

B. If you lose the case, and they can't go after your assets in Nevada or Wyoming; they will go after your Income stream. By adjusting the terms of your LLC and withholding distributions, they don't get any money. But the IRS requires them to pay taxes on that possible income or distribution. Most Attorneys, if they understand the two things above up front, won't start the law suit, if the best case if they win, is their client has to pay taxes, even though not receiving any cash.

Item 2:

Since C and S Corps are older there are more advantageous Tax laws and deductions for them, versus LLC's. They recommend you have your CPA file your tax return under a "C" corporate versus the LLC. Wait a minute. I don't want a C corp. He said the IRS allows you to file your return however you want; doesn't mean you have to actually be a "C" corp. Will talk with our CPA on Monday and check if this is the case. Then as he has time, re-run our return under C Corp and see what the tax difference is.

Yes, they baited the hook, and caught my attention. Luckily the above can be validated very easily by our team. If the above is true, I'll pay their fee and see what else we can audit on our legal and financial set up. If not true, got me excited for a weekend.

I tell people not to trust me, everything about Self Storage can be validated. I guess I'm the one doing the validation on the above.

Start small and Make Your Big Mistakes Early.