All Forum Posts by: Savannah Wallace

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. 

Hi Rodrigo, 

If the property is still in your name, collecting rent directly through the LLC without a formal agreement could create complications. It's crucial to establish a clear separation between your personal finances and the LLC's operations.

Ideally, transferring ownership of the property to the LLC offers the most robust asset protection. This strategy shields your personal assets from potential lawsuits or claims arising from the property.

If you decide to keep the property in your name, utilizing the LLC as a management company provides a layer of separation and professionalism. This approach involves creating a management agreement between you and the LLC, with the tenants paying rent directly to the LLC. From there, the LLC can handle property-related expenses and can retain a management fee for its services.

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 Diego,

When it comes to estate planning, I recommend a living trust to my clients. This can be a valuable tool for avoiding probate, which can be a lengthy and costly process, for any assets that are not held within a trust.

In your case, you could establish a living trust and then reassign the membership of your LLCs from you and your wife to the trust. This would mean that upon your death, the assets held within the LLCs would pass directly to the trust's beneficiaries without having to go through probate. It's important to note that a living trust typically only works for U.S.-based assets. If you have assets located in other countries, you may need to explore additional estate planning strategies to address those assets.

A living trust offers several other benefits beyond avoiding probate. It can help maintain privacy, as probate proceedings are public record, while the distributions from a living trust remain private. It can also provide for incapacity, allowing a successor trustee to manage the trust's assets if you become unable to do so.

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 Sam, 

I usually direct my clients to IRA Club (https://www.iraclub.com/). A little more explanation on the investment you're looking at getting into would be helpful. IRA Club can assist with a number of alternative investments. 

*This is not a direct referral, nor do I receive any compensation for my recommendation

 Great insight, Heather! 

Robert, I'll add that if you do set up an LLC under your IRA, you do not use generic Operating Agreement language. The Operating Agreement needs to be crafted with special language to avoid engaging in a prohibited transaction. I recommend working with an attorney who is familiar with this type of LLC to assist you with drafting.

 Hi Joseph, 

That's awesome! Operating a sober living home is a great way not only to generate income for yourself but to provide stability and security for individuals who may be going through a vulnerable time in their lives.

Connecting with the National Alliance for Recovery Residences (NARR) is a good start. I’d also recommend finding local nonprofits that may be providing this service. Additionally, identifying local nonprofit organizations engaged in this activity may provide you with a connection as well. Many clients I assist establish nonprofits for this specific purpose, yet frequently encounter difficulties in securing suitable housing or face budgetary constraints in purchasing property, often opting to lease instead. A simple internet search for local or NY based sober living nonprofits would likey provide you with some good connections. 

You’ll want to ensure that whoever you end up leasing to has house rules drafted and requires each resident to comply with them. These rules are there not only to protect the residents and assist them on their road to recovery but also to make sure that your house is maintained.

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 Robert,

I have a lot of clients who utilize this very strategy and this is generally the advice I provide when they are first starting out.

I recommend setting up an LLC under your SDIRA—often called a "checkbook control" LLC. This structure offers several advantages, including asset protection, privacy (your IRA isn't listed on the deed as the owner), and faster transactions as you don't have to wait for custodian approval. Note that the SDIRA must own 100% of the LLC. You cannot personally own or benefit from the LLC, and all income/expenses must go through the SDIRA.

If your SDIRA invests in real estate using a loan, be aware that this can generate UBIT as a result of UDFI (Unrelated debt-financed income). If you want to avoid UBIT on leveraged real estate, consider using a Solo 401(k) instead of an IRA, as Solo 401(k)s are generally exempt from UDFI on real estate investments. Or use only non-recourse loans.

We know that the IRS has strict rules regarding prohibited transactions and self-dealing. You cannot buy, sell, or lease the property to or from your SDIRA, nor can you personally use the property. You cannot take a salary, directly handle negotiations, or provide services (like repairs or management) to the property. All work must be performed by third parties, and all payments must come from the SDIRA. All income generated by the property must go back into the SDIRA, and all expenses must be paid from the SDIRA

Good luck with this new investing 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.

Hi Victor, 

For any investment of real estate, I'm going to recommend placing each property into an LLC for asset protection.

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 the could only go after the assets in the LLC and not anything else (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. Wyoming is one of the few states that provides strong privacy protections for entities filed there. When a Wyoming LLC is listed as the member of an LLC holding real estate, the owner's name is kept off public records. If someone searches the Secretary of State (SOS) website, they will only see the Wyoming LLC listed, not the individual owner's name. Furthermore, Wyoming does not require disclosure of member or manager information in its filings, making it difficult for anyone to determine ownership without extensive legal efforts. This anonymity can deter frivolous lawsuits or claims, as litigants may be less inclined to pursue action if they cannot easily identify the owner

If you do not purchase the property in the name of the LLC and/or have a loan on the property, then you may need to utilize a land trust to move the property out of your name and into the name of the LLC. 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 you can set up entities on your own, I do encourage individuals to utilize professionals to assist with forming them. First, they will be able to draft a comprehensive operating agreement, tailored to your needs. Second, instead of your name being listed as the organizer on the LLC's registration, the attorney or firm that you've hired to assist you will be listed instead. This will help keep your name off the public record in relation to the entity and property. 

Good luck with your investments! 


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 Marc, 
My clients sometimes encounter issues obtaining insurance for their properties when they are held in a trust or LLC. Apart from shopping around for a new insurance company that will be easier to work with, you can also add the entity as an "additional insured," leaving yourself as the named insured or vice versa.