Form an LLC for each property?

[Redwing384]

what are you trying to accomplish by creating an LLC for each property?

[mtnwizard]

Redwing,

I assume when you say own nothing, control everything that you are referring to land trusts.  Believe me, you are not the only asset protection specialist on this forum. To find information they need only read this forum.

As to the question, all you have to do is place each property in a land trust and it's protected, then take title in your LLC.  If there are two unrelated beneficiaries of the trust, EVERYTHING is protected, you are home free.

Da Wiz

[Redwing384]

mtnwizard,
I use land trusts myself, but I also use the privacy of NV for bulletproof protection.  

when I say own nothing and control everyhting, it does not suggest the sole use of land trusts as you assume.  How do you control the use of your vehicle without owning it and utilizing a land trust as your means to do it?  I thought a land trust can only hold real estate.  Does that make sense?  I may be incorrect and please let me know if I am so that I may correct myself.  You seem to be very knoweldeable on Land trusts.  I appreciate your insight.

Yes, people can read the forums, but each situation is unique to itself and we specialize in the state of Nevada.  There are a lot of questions about Nevada and depending on the situation, a land trust would be appropriate.  Sometimes, Nevada is not the best choice (ie...if you have
a company you want to take public) but in some other situations Nevada is the only State that offers total Privacy.  This Privacy is the foundation of Asset Protection.  A land trust is a great choice until a federal judge is involved.  A trustee can be deposed and given a court order to release the names of the beneficiaries of the land trust.  Privacy is now lost and your interests are vulnerable.  

There are many ways to get from point "a" to point "b"  what I am suggesting is that you must investigate each route to be taken.  Some routes may have road blocks and speed traps, others may have construction to slow you down.  some routes are open and clear for you to effortlessly get to your destination.  It would depend on which route you would choose and how comfortable you are with your choice.  
remember, they all reach the same end result.

[mtnwizard]

Redwing,

My LLC is Nevada-based and I agree with almost everything you have said with the exception of the federal judge part.  A creditor may reach the corpus of a land trust, unless the trust is irrevocable, or there would be MORE THAN ONE UNRELATED BENEFICIARY (as with the Equity Holding Trust System that I use). This concept appears to be based upon the idea that a co-beneficiary in a land trust can be seen as a “partner,” and a claim (or charging order) effected against a co-beneficiary would be impossible without a dissolution of the entity (the trust) and since an unrelated co-beneficiary is not responsible for the actions of the other: such dissolution would not be allowed.

Henry H. Keno on Land Trusts, IICLE, Springfield, Illinois (1989)
Smith v. B of A; Houghton v. Pacific Southwest Trust and Savings Bank: 111 CA 509, 295 p. 1079,
The CA. Code of Civil Procedures §697.510]

Da Wiz

[jc06]

so back to the example of if someone had say 40 properties, 40 separate LLCs, is it best to create another LLC to manage the 40 LLCs?

then you would only have one bank acct, but wouldn't that be co-mingling of funds?

[mcwagner]

nope.  

LLC #41 has entered into a management agreement with LLCs # 1-40.  

LLC #41 deposits 40 rent checks, pays 40 mortgages and writes 40 checks to LLCs #1-40 to disburse remaining funds.

or something like that.

comingling would be LLC #1 paying bills for LLC#1 and LLC#2 paying bills for LLC#2 from the same account without such a management agreement.

IBM and Microsoft can form a joint venture, or even enter into a management agreement for rents, but you won't catch IBM writing checks out of Microsoft's account.

[jc06]

Ok, going by that example, if LLC #41 writes 40 bucks to LLCs 1-40, that would require the LLCs #1-40 to have bank accounts?

[mcwagner]

well, yes.

part of forming an entity is "funding" it.  Hard to do if it doesn't have a bank account.  Also, when LLC #26 buys or sells property, the bank might expect the funding to go to/from LLC#26.

LLC #41 can manage all of the assets of the others, including cash, but they will still need to possess bank accounts.  They don't have to necessarily have activity, mind you, but they should exist.

[meg526]

Thanks for the great information on this thread.  

Now, does each land trust also require a separate bank account, separate accounting, and separate tax return like a LLC does?

I have a Nevada corporation and just bought a property in NY.  It seems to me that setting up a land trust and having the NV Corp as the beneficiary would achieve my liability protection goal.  If I do it this way, does the NV corp still have to register in NY as a foreign corp and pay the franchise tax  >

[mtnwizard]

No.  Each trust does not need a separate bank account.  In fact, you don't need a bank account for your land trust.

Da Wiz

[NoMoneyDown]

most of my clients have 3 to 5 per

Mark -

I was under the impression that there is a cut-off for LLC's in Texas, whereby, if they crossover the monetary threshold ($150k in assets? profits? revenue?), they will incur a franchise tax.  I've also heard that this whole school finance debacle in Texas is pushing legislation to further tax businesses (not sure if that's ALL or just certain enitities).  Any comment from your end?

[mcwagner]

$150k was the old law.  

new law ( try to keep up).

tax is 1% of "taxable margin" (1.5% for retailers and wholesalers)
"taxable margin" is  the lesser of:
        1)        70% of total revenue minus bad debts, dividends and distributions (including S-corp and LLC distributions) or
        2)        total revenue minus cost of goods, bad debts, dividends and distributions.

companies with revenue below $300,000 are exempt.
LP's are no longer exempt.

[meg526]

No.  Each trust does not need a separate bank account.  In fact, you don't need a bank account for your land trust.

Da Wiz

Da Wiz, does that mean the rent income and expenses still go to the beneficiary's bank account (my NV corp account in this case) directly?  This seems to me that the NV corp will have to register in NY as it receive income from NY although the title is hold by the trustee and not the NV corp  ???  This is the part I am still confused..

Also where do people usually find an unrelated beneficiary?  

Thanks!