2. Protect Your Assets from Outside Attacks by Anyone Else
3. Flexible Management Structure, Estate Planning and Gifting Opportunities Available Depending upon your specific situation, an LLC may provide the flexible management structure you need. There are two management structures associated with an LLC. First, the LLC can be managed exclusively by its members (or owners). Real estate investors who want to have more control in the LLC may prefer this structure. Second, the LLC can be managed by some of the owners or by an outside manager or a group of managers. This structure is ideal where investors prefer a more passive role in the LLC’s affairs. We prefer manager management to better clarify and separate the roles between ownership and management, which can help solidify the corporate veil of protection. Additionally, LLCs are flexible in terms of the number of members they may have. Many states allow only one person to form an LLC. This can come in handy if one investor decides to invest on their own. Why bring in extra owners if you don’t need to? LLCs also offer estate planning and gifting opportunities. Investors who include their children in deals may take advantage of these.
As our chart illustrates, the inside attack is where a tenant sues the LLC itself for a problem on the property. The outside attack comes after a car wreck, for example, where the claim has nothing to do with the real estate. The car wreck victim has a judgment and would like to get at your real estate to satisfy their claim. By having a Wyoming LLC (which features very strong protections), you can prevent the victim from trying to get the properties inside the two title holding LLCs. Both California and Utah are weak states and would allow the car wreck victim the right to barge in and force a sale of the real estate. The Wyoming LLC serves to block that from happening.
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