Should You Move Your Investment Property into an LLC?
Being a small real estate investor can put you on an intimidating path. Lots of rules and statutes to keep track of, certain exploits to take advantage of or avoid, certain ways to perform a sequence of actions, etc.
One of the biggest concerns for real estate investors is if they’ll be protected in the case of someone coming after them or their assets.
… and for good reason.
With the united States being dubbed the “lawsuit capital of the world,” it’s no secret that people are more than willing to pull the trigger on aggressive legal action.
In a previous video I talked about “disregarded entities” and how they relate to tax and asset protection, but I’m going to go a little more in depth on what a complete structure might look like. Keep in mind, the details of every structure are going to differ from client to client due to circumstances like income, risk exposure, state laws, etc.
Wyoming LLC
The concept of Owning an entity with another entity is one of the most crucial points to a proper estate plan. For this reason, it’s highly encouraged to *not* own an LLC in your own name. If you’ve heard myself or others bring up “Wyoming LLCs” before, there is a very good reason and involving it is by no means overkill. Wyoming laws pose a few benefits, but the most important one is that it is one of a few states that doesn’t collect information on the owners of the LLC. You can select a “registered agent” which in our case, will not be your personal name and address, but instead either the lawyer / firm you’re working with… or another Wyoming LLC.
Just make sure it’s not a complete dead end though, because the registered agent will still be responsible for receiving legal documents and notices, among other things. In the case of your lawyer, they can simply forward whatever they need to without making a public paper trail.
Having a Wyoming LLC serve as a holding company is a powerful tool for this reason, and it allows you to have your assets protected in an LLC, while also being owned by an LLC in which your name is not public. I touched briefly on this topic when it came to S-Corps, and it’s a major reason why they aren’t recommended in most structures due to the fact they cannot be owned by an LLC.
There’s more to this topic that will be covered in the future, such as how it holds up compared to insurance. It’s an interesting and very common debate so stay tuned for that and other topics. If you have any more questions or are looking to get a proper estate plan in place check out our website or contact the email found in my about section. We use a team of both attorneys AND CPAs to make sure all bases are covered in an efficient manner. Thanks for reading.
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ALL INFO GIVEN IS FROM EXTERNAL STUDY AND CONTRIBUTIONS FROM LICENSED ATTORNEYS, CPAs, AND PREVIOUS IRS EMPLOYEES.
I AM NOT A LICENSED ATTORNEY OR CPA.
