All Forum Posts by: Trevor Levine

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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Hi Lee. I'm considering hiring Anderson Advisors and stumbled upon this old conversation. You said that a WY LLC won't protect me if a tenant slips and falls. But if the member/manager of my CA LLCs is a WY LLC, won't that give me charging order protection... even if someone gets a judgement against me? Thanks!

Originally posted by @Lee G.:

Ken - I haven't hired those guys but I'd argue a couple things:

1) Too many attorneys in the REI space $ell fear that you need this or that structure in order to protect your assets.

2) Too many investors get scared off by what appears to be something complex -- forming a holding company (whether LLC, LLP, C or S-corp). It's not that complex.

3) Too many investors are under-insured and fail to frequently review their insurance policies.

Bottom line is this:

1) Find a competent attorney that will give you the holding company structure of your choice (talk to your CPA, not your attorney about what is best for you) documents in a word format. It's all broiler plate anyway. You should be able to reuse your docs for each deal you do without having to go back to the attorney for a new op agreement etc.

2) Forming a LLC etc is easy. Don't get scared by the legalese or the crazy attorneys trying to sell something. A LLC is just a bucket for carrying something around. In our case, it's a piece of property. At the same time, USE your holding companies. Make sure you shift an asset into it. I'm frequently shocked by the number of people who maintain rentals in their personal name. Don't forget to run separate books and bank accounts for your holding companies and have an annual meeting.

3) Review your insurance policies frequently. Make sure you have enough insurance personally (umbrella plus good underlying liability in relationship to your net worth) and corporately (same thing - umbrella plus underlying coverage). This is your first line of defense. Your Wyoming/Nevada/Delaware LLC won't do crap for you if a tenant slips and falls. It just hides the fact that you are the owner.

Anyway, final disclaimer: I'm not an attorney or a CPA. I don't pretend to be one even on the internet. This is my advice based on what's worked for me. Don't get scared off by some attorney. Get out there, write offers and do deals.

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Hi Chris. I'm considering hiring Anderson Advisors and stumbled on this old conversation. You said that if a lawsuit has merit, having a NV or WY holding company won't protect you. But if the member/manager of my CA LLCs is a WY LLC, won't that give me charging order protection? Even if someone gets a judgement against me? Thank.

Originally posted by @Chris Schu:

@Karen H.

"Does this sound like a good idea?"

Unless you have a very specific reason to do this - no. Otherwise you will continue to restructure like a hamster wheel spins - and waste $$.

Beware that a holding company or LLC in NV will not deter local (out-of-state) statutes unless whomever you contracted with signed away their local rights favoring NV law. Many states require you register your company with their SOS (or equivalent) for that very reason.

"They'll all be held by another WI LLC (by transferring my NV holding LLC to WI)."

Looks like a mutation and continuation of the original shell game (NV holding with CA LLCs). Again, what is your s-p-e-c-i-f-i-c reason for doing this? "The attorney said so..." is NOT a reason.

Although your structure will buy you some time, if the "frivolous" lawsuit has some merit and possible $$$ behind it, an aggressive attorney WILL force you to respond. In layman's terms, you can run for awhile but not "hide" as we commonly think the word means.

Source:

https://www.keytlaw.com/azllclaw/forming-llcs/nevada-incorporation-scam/

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Thanks @Basit Siddiqi. According to a Nolo press article, "The creditor can also require that you bring certain types of documents to the debtor's examination, such as tax returns".

You can find that by searching for "Nolo how-do-judgment-creditors-find-your-property"

Originally posted by @Basit Siddiqi:

@Trevor Levine

A plaintiff asking to see your tax return?
Looks like you need to speak with actual professionals and not ones who want to scare you to buy into their services.

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Thanks @Katie Lepore:

! You said "if you are managing the business from CA". Yes I understand that if I am "doing business in CA", I must have a CA LLC.

But as I said, I'm a passive investor. I do nothing except receive quarterly distributions. So does that still apply? Is that considered "doing business"?

Originally posted by @Katie L.:

@Trevor Levine

California is a sort of beastly state when it comes to taxes and filings. Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes. California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k. So, if you create an LLC in another state, you will likely need to register it as a foreign LLC in California. Though, this process will be the same for the other state (if you created a CA LLC you may need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will need to pay registration and filing fees in at least 2 states if you don't buy CA property.

Since the property is in CA, it is likely that most lawsuits would be in CA.

You will want to be careful too if there is a mortgage on the property so as to not trigger any due on sale or due on transfer clauses.

*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.

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Thanks Katie Lepore! You said "if you are managing the business from CA". Yes I understand that if I am "doing business in CA", I must have a CA LLC.

But as I said, I'm a passive investor. I do nothing except receive quarterly distributions. So is that considered "doing business in CA"?

Originally posted by @Katie L.:

@Trevor Levine

Since the property is in CA, it is likely that most lawsuits would be in CA.

You will want to be careful too if there is a mortgage on the property so as to not trigger any due on sale or due on transfer clauses.

*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.

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Thanks a lot Basit. I just googled it. A Nolo Press article says "The creditor can also require that you bring certain types of documents to the debtor's examination, such as tax returns".

If you think this is incorrect, I'd love links to any websites or articles contradicting this, I'd love to get them.
To find it google "Nolo how-do-judgment-creditors-find-your-property.html"

"
Originally posted by @Basit Siddiqi:

@Trevor Levine

A plaintiff asking to see your tax return?
Looks like you need to speak with actual professionals and not ones who want to scare you to buy into their services.

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Thanks Katie Lepore! You said "if you are managing the business from CA". Yes I understand that if I am "doing business in CA", I must have a CA LLC. But as I said, I'm a passive investor. I do nothing except receive quarterly distributions. So does that still apply? Is that considered "doing business"?

Steve Smith and Aaron K, 80% of the property is owned by my partner's LLC. 20% is currently owned by my living trust, but that offers no asset protection. We had to name each party separately on title (as TIC partners) because I 1031 exchanged into this property. I understand the benefits of a land trust. But if a lawyer figures out I'm the beneficiary, the trust won't protect me (or my other assets) like a WY LLC.

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I own 20% of a CA investment property. I'm a T.I.C. partner and passive investor. Meaning, the 80% partner is doing everything from renovations and repairs to property management. I do nothing except receive quarterly distributions.

I want to deed my 20% into an LLC. Can it be a WY LLC? Or must it be a CA LLC?

I'd prefer a WY LLC for two reasons. First, the annual renewal fee is lower. Second, it offers charging order protection.

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To answer your question Basit, Clint Coons from Anderson Advisors said that if someone wins a judgement against me, I will have to disclose my tax return. Now to clarify your answer, are you saying I can just call one of my properties "Main St" on Schedule E? I don't have to included the number like this?..."123 Main St".

Originally posted by @Basit Siddiqi:

@Trevor Levine

Who told you that you will have to disclose your tax return in a lawsuit?

You are required to show the street, city, state and zip code of your property.

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All Forum Posts by: Trevor Levine

Trevor Levine has started 9 posts and replied 22 times.

Post: Land trusts or LLCs? (For lawsuit protection & anonymity)

Post: Anderson Business Advisors

Post: Anderson Business Advisors

Post: Anonymize rental property addresses on Schedule E?

Post: Can a WY LCC own a % of a CA property if it's a passive investor?

Post: Can a WY LCC own a % of a CA property if it's a passive investor?

Post: Anonymize rental property addresses on Schedule E?

Post: Can a WY LCC own a % of a CA property if it's a passive investor?

Post: Can a WY LCC own a % of a CA property if it's a passive investor?

Post: Anonymize rental property addresses on Schedule E?