All Forum Posts by: Sean Morrison

First thing to keep in mind when thinking about pricing is that any of these options will be a small fraction of what the land is actually worth. In other words, don't screw up your $1.5m piece of property trying to save $1,000. 

Trusts are great for transferring property, LLCs are great for managing it. A combo could probably do you a lot of good, especially if you all agree to keep it and pass on to the next generation. 

On trusts - the reason to get a revocable trust is to avoid probate. Anything not in trust will go through probate on death (with a few exceptions, like the death deed). An irrevocable trust can provide some asset protection, as can an LLC.

As of right now, estate taxes do not kick in for a married couple unless their estate is worth more than $22.8 million.

But first things first - get a written lease!

@Bill Hampton is right. You should have an LLC for the state in which the real estate is located. First, you'd have to file as a foreign LLC in GA anyway so you're still paying. Second, many states will recognize the LLC, but apply local law to it anyway for purposes of liability when real estate is involved. That could break your WY LLC depending on how it was set up.

An LLC for house hacking can be a problem for two reasons. First, you may have more trouble getting a loan. Second, you won't be able to get a homestead exemption on your property taxes, if that's something your area offers.

While you can own RE in a different state than your LLC, it's not really a great idea. You should typically have a local LLC hold your RE, and then you can have any other LLC over that. There are three main reasons. First, real estate law is state specific, and courts will generally ignore the laws of your LLC's state, and use the local LLC laws instead. So you don't get an advantage and you may lose some provisions of your operating agreement in the translation. Second, you will still need to register as a foreign LLC in the RE state, so you're paying twice. Third, for estate planning purposes, you may need to probate the RE in the local state if you're just using a single-member LLC (that's going to change state by state). May be easier to have a local LLC owned by the out-of-state LLC.

Can't speak for your CPA, but there are often concerns about administrative costs involved with series LLCs. In terms of filing fees, it's a great tool. However, you still have to treat each one in the series as a separate company, withe separate bank accounts, record keeping, etc. If you're putting each property into a separate LLC and keeping each one separate, then the series LLC will streamline it a bit. But most of that cost isn't in filing fees, but admin.

No gray areas here. Local governments have trademarks in their seals. If you use their seal in your logo, you won't be able to trademark it. And there's a high likelihood that you will confuse people into thinking you are a government agency, or affiliated with one. Maybe consider a key symbol from the seal (county bird, or color or something) and implement that instead.

There is no advantage I can see to having two LLCs. The problem you face is not the number of entities, but the business relationship between you and your brother. If you had two LLCs, you would still need a partnership or joint venture agreement, which is where the real cost is. There will be a default law on how your LLC will operate in whatever state you register. If you're happy with the default, then no problem. If you want to decide for yourself how to manage your business, you'll probably want an attorney's help with an operating agreement.

The fact that your brother is in California raises another wrinkle. That is a community property state, which means by law his wife will have an ownership share in his side of the partnership and any assets it holds, unless you plan ahead. That can cause all kinds of problems in case of divorce or death. Definitely talk to an attorney about that aspect.

Lots of lenders will work with an LLC, but they'll probably require a personal guarantee as well. You'd have to do that anyway if you're buying it in your name. As for the family situation, it's probably cleaner to start a new LLC rather than risk messing up paperwork removing members.

It sounds like this group are not attorneys if they're giving you access to their tax/legal people. The price seems pretty high for non-professionals to create LLCs. Also, tax and legal people should work for you, not some group.

Appreciate that @Scott Smith. There are so many issues, I'm just trying to narrow it down to something people would find useful.