All Forum Posts by: Savannah Wallace

 Hi Rodrigo, 

It depends on how the LLC is being taxed. You mentioned it is a multi-member LLC, so it is likely taxed as a partnership. If there is income to the LLC, you will have to file a partnership tax return (Form 1065) for the LLC to report the income and expenses. 1065 returns are due annually by March 15th.

 Happy to help! 

Depending on the type of mortgage on the property, if you're looking at moving the property out of your name and into the LLC, then you may benefit from a land trust. Depending on the terms of the mortgage, transferring the property to an LLC may be considered a sale, thus triggering the due-on-sale clause that you mentioned. However, putting it into a land trust first avoids triggering the due on sale clause. Land trusts are revocable grantor trusts and under the Garn St. Germain Act, transfers of property to revocable grantor trusts are exempt, therefore, a transfer to this type of trust will not trigger the due-on-sale clause. Working with an attorney on these transfers is a good strategy.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hello Ashish, 

Entities will generally need to register in all states in which they are paying a salary to employees. If you take a salary from the HI LLC and live in CA, you will likely need to register the HI LLC in CA. Once you start issuing a W-2 you are considered an employee in CA and would be subject to CA tax and filing requirements.



Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hi Misael,

Setting up an LLC for your rental property is something that I strongly recommend for all of my clients to provide them with asset protection. Glad you're already taking this step.

LLCs can help shield you from personal liability if a tenant were to ever sue as well as offer protection against creditors in case of a personal judgment through charging order protection, when the LLC has been structured appropriately. With the property in an LLC, if someone were to sue the property, they could only go after the assets in the LLC and not anything else (again, assuming you did not guarantee anything personally and the corporate veil has not been pierced).

Also, depending on the structure, you can keep your name off the public record as the owner of the property and even as part of the LLC. For my clients, I recommend that they place the properties in an LLC that has been formed in the state where the property is located and have the member of that LLC be a Wyoming LLC. This provides for both anonymity as well as charging order protection.

If you took out a loan to purchase the property, depending on the type of loan, you may benefit from a land trust. Depending on the terms of the mortgage, transferring the property to an LLC may be considered a sale, thus triggering the due-on-sale clause. However, putting it into a land trust first avoids triggering the due-on-sale clause.

While there are inexpensive DIY options out there, I recommend working with a local attorney to help you set up your LLC. I've had the opportunity to review a number of templates from companies, like LegalZoom, and have found that they often lack the necessary detail and thoroughness required for effective business management. Important sections are frequently omitted, which can create challenges in day-to-day operations and long-term planning.

This lack of comprehensive documentation becomes especially problematic if you ever consider bringing in partners or expanding your team. In my experience, the materials provided by these companies rarely offer sufficient guidance or clarity to support such transitions smoothly.

I recommend working with a local attorney to help craft contracts that address all your needs and allow for long-term growth and expansion, or, at the very least, have an attorney review the Operating Agreements you draft on your own or through a DIY company and suggest revisions so that they better suit your needs.

Good luck with your property! 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

I've had the opportunity to review a number of templates from these companies and others similar and have found that they often lack the necessary detail and thoroughness required for effective business management. Important sections are frequently omitted, which can create challenges in day-to-day operations and long-term planning.

This lack of comprehensive documentation becomes especially problematic if you ever consider bringing in partners or expanding your team. In my experience, the materials provided by these companies rarely offer sufficient guidance or clarity to support such transitions smoothly.

I would also recommend working with a local attorney to help craft contracts that address all your needs and allow for long-term growth and expansion, or, at the very least, have an attorney review the ones you are using and suggest changes.

I recommend utilizing the business address that you used when you filed the LLC with the state. The EIN application also allows you to put in an alternate address for mailing. If the LLC is out of state and you don't have regular access to it, then I'd recommend using either your home address or getting a P.O. Box to receive mail. I wouldn't recommend using the property address as the mailing address, as then your tenants would be the ones receiving it.

Hi Steve, 

Like Randall stated in his post, there is a difference between a beneficiary and a trustee. A beneficiary is the person or entity who is entitled to receive the assets or income from the trust. In contrast, a trustee is the individual or institution responsible for managing and administering the trust according to the instructions set forth by the trust’s creator. While beneficiaries have the right to benefit from the trust assets, trustees hold legal ownership and have a fiduciary duty to act in the best interests of the beneficiaries.

If your goal is to ensure that the properties you own pass down to your intended heirs, it is essential to list those individuals explicitly as beneficiaries in the trust document. The trust should clearly outline exactly who is to receive which properties and under what conditions, such as age requirements or staggered distributions. Being very specific in your instructions helps prevent confusion or disputes later on and ensures your wishes are followed precisely.

Regarding the idea of naming your children as trustees, there are both advantages and considerations to keep in mind. Having family members serve as trustees can save money by avoiding the fees charged by professional trustees, which are often calculated as a percentage of the trust’s assets. However, because trustees hold significant power and responsibility, it is crucial to clearly define their authority and any limitations within the trust document. Without clear guidelines, there is a risk that a trustee might mismanage the assets or act in a way that favors themselves over other beneficiaries. To mitigate these risks, the trust can include provisions that limit the trustee’s powers, require court approval for major decisions such as selling property, or appoint co-trustees who can provide oversight. Additionally, including clauses that allow for the removal of a trustee if they fail to fulfill their duties can offer further protection.

If you did not already work with an experienced attorney to draft this trust initially, or if it has been a while since it was created, I'd recommend sitting down with local counsel to ensure the trust conforms with your intentions. 



Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hi Anthony, 

Congratulations on acquiring your first rental property!

Here is what I recommend to my clients when they are getting started. 

1. Have a well-drafted lease agreement in place - To avoid disputes and uncertainty, it's crucial to have a thorough lease agreement. While you can find templates online, I'd recommend working with a local attorney to assist you with this so that they can ensure the agreement complies with local laws as well as covers all of your needs. The lease agreement should clearly state the monthly rent, due date, and any late fees, and specify how rent should be paid (e.g., bank transfer, check, online portal). If there will be a security deposit, you'll need to include that as well, outline the amount, where it will be held, and the conditions for its return. Note that states have specific rules regarding where these funds must be held and to whom the interest is returned. Define what constitutes a breach (e.g., non-payment, property damage, illegal activity), the notice period for remedying breaches, and the consequences (such as late fees, rent acceleration, or lease termination). The lease agreement should also detail the grounds for early termination by either party, the required notice period, and the process for move-out and final inspection. Finally, be sure to include  maintenance responsibilities, occupancy limits, pet policies, and rules for property use. This is not an exhaustive list of what should be included; rather, some of the main elements. 

2. Consider hiring a property management company - Especially for first-time landlords, a property management company can be invaluable in helping you retain tenants, take care of maintenance and repairs, and save you time. 

3. Set up an asset protection plan - Owning rental property exposes you to liability risks, such as accidents or injuries on the premises. While insurance is essential, it may not cover all scenarios. For robust protection, consider setting up an LLC to own the property. This separates your personal assets from your rental property, limiting your personal liability in case of lawsuits. If you expand your portfolio, owning each property in a separate LLC isolates liability. If an incident occurs at one property, only the assets of that LLC are at risk, not your other properties or personal assets.

Hope this helps and good luck! 



Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hi Zach, 

1. A Series LLC can be a useful tool if you plan to invest in multiple properties within a single state that recognizes this structure. Essentially, a Series LLC allows you to create multiple "series" or cells under one master LLC, each with its own assets and liabilities. This means that if one property faces a lawsuit or debt, the other properties within different series are generally protected. However, not all states recognize Series LLCs, and even among those that do, the level of liability protection and privacy can vary. If a state doesn't offer series LLCs, or my client won't be holding multiple properties in that state, or it requires listing their names publicly as member/managers, I usually recommend that my clients form a separate LLC for each property. This approach provides clearer asset protection by isolating liabilities property by property and helps ensure that your personal assets remain shielded.

2. Trusts generally do not offer the same level of liability protection that LLCs provide. If you hold a property solely in a trust, you may still be personally exposed to lawsuits or creditor claims related to that property. LLCs, on the other hand, are designed to protect your personal assets by separating your ownership interests from the property’s liabilities. That said, trusts can be helpful in certain situations, such as when a property has a mortgage and you want to avoid triggering the lender’s “due on sale” clause while transferring ownership interests to your LLC.

3. When it comes to choosing a state to form your LLCs, the best practice is usually to form the LLC in the state where the property is physically located. This approach simplifies compliance with local laws and avoids the additional costs and paperwork associated with registering as a foreign LLC in that state. To add a layer of privacy and enhanced asset protection, I often recommend that the member of each property-specific LLC be a Wyoming LLC. Wyoming offers strong privacy protections, does not require public disclosure of members, and provides favorable charging order protections, which help shield your ownership interests from creditors. 

4. No, you will need to set up US-based entities for investment in the US.



Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hi Luis, 

Like Ryan, I've had the opportunity to review a number of templates from these companies and others similar and have found that they often lack the necessary detail and thoroughness required for effective business management. Important sections are frequently omitted, which can create challenges in day-to-day operations and long-term planning.

This lack of comprehensive documentation becomes especially problematic if you ever consider bringing in partners or expanding your team. In my experience, the materials provided by these companies rarely offer sufficient guidance or clarity to support such transitions smoothly.

I would also recommend working with a local attorney to help craft contracts that address all your needs and allow for long-term growth and expansion or, like Ryan suggested, have an attorney review the ones you are using and suggest changes.