Two Strategies You Must Use in 2009 to Protect Your Wealth
There are two strategies you MUST use in 2009 to protect your wealth.
First: Protect. Protect your income and cash from too much tax. Protect your business and assets from judgments and unscrupulous people. A lot of other people have lost this past year. And unfortunately, some of them have decided you’re the one who should pay for the losses they had. Protect what you have.
Second: Stay flexible. The way you do business and make investments is changing quickly. You’re likely to see some sweeping tax changes in the next few years. It’s never been more important to be flexible in how you do business and in how you set up your business structures.
Your most important strategies in 2009 will be to have maximum flexibility and maximum protection. It might mean that you need to change up the business structures that you use in 2009. But I can also bet that you don’t want to pay a lot of money to do that. One of the new Business Structures for 2009 & Beyond is the Series LLC. But it’s not just because the Series LLC lets you set up new entities in less than 2 hours, by yourself, without thousands of dollars in legal fee. And it’s not just that you can do it easily in your own home.
The Series LLC will revolutionize how your businesses work. It can save you thousands of dollars in state filing fees, give you maximum protection for your investments, and combined with the Trust Sandwich™, allow you to shift nexus (that state in which you pay tax.)
A couple of weeks ago, I announced the new Business Structures for 2009 & Beyond Home Study Course. You’ll discover that it’s jam-packed with the information you need to make smart decisions about layered structuring for maximum asset protection and why you should always have an LLC as your first barrier of protection. We also talked about the Series LLC and the Trust Sandwich™ in the only place you’ll ever hear about it.
Since then, I’ve been interviewed dozens of times about the Series LLC and Trust Sandwich™ combination. Megan and I have brainstormed new uses that will ASTOUND you. This past week, we did a special tele-seminar for all the people who had already invested in the Business Structures for 2009 & Beyond Home Study Course.
I want to give you one more chance to learn about brand new, cutting edge strategies that will allow you to protect what you build and be more flexible then even before in reacting to changes in your business and financial life and the tax world in which you live.
So, for just a few days more, when you invest in Business Structures for 2009 & Beyond Home Study Course, you’ll also be able to download the tele seminar “New Strategies for Your Series LLC.” It’s FREE! as part of your new Business Structures plan.
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Question; This concept of a Series LLC and the Trust Sandwich™ sounds interesting, but we’ve tried to get our properties (7 of them) dropped into our LLC but the mortgage company won’t allow it based on the wording of the mortgage which specifies that the loan is due and payable if the property is deeded to the LLC. How does your “sandwich” get around this issue?
Great question! I know that Megan will be back online tomorrow. I’m sure she’ll answer this much more clearly than I can. But that is EXACTLY why the Trust Sandwich(tm) was invented.
You can listen in on the free teleseminar I did on the Trust Sandwich at www.TrustSandwich.com.
Hi TimH
The Trust Sandwich works because we aren’t trying to transfer the properties into an LLC. We’re moving them into a trust instead - something that banks don’t generally have an issue with. There’s federal law specifically permitting the transfer of a family residence into a trust, and its generally accepted business practice for other properties to be transferred as well. The Trust operates the properties, rather than the LLC, and you manage the Trust by being named as the Trustee.
The LLC backs up behind the Trust as a way to give you asset protection. If something goes wrong on the property, the grantor of the trust may be sued - and the grantor in this case is the LLC. You manage the LLC to remain in control - if the LLC needs to move the property out of the trust, refinance, etc., you have the right to do that.
Behind the LLC is your family trust. This is the last link and ensures that the LLC (and all assets within) become part of your estate and are transferred to whomever you want them transferred to, without the need for probate.
By remaining as a Manager of the LLC, and as the Trustee of the two trusts, you stay in control of the assets. Transfers in and out of trusts don’t generally matter as far as refinancing and title are concerned, so when it’s time to refinance you don’t run afoul of the new 6-month titling rules for Freddie/Fannie.
I hope that all makes sense! There’s more material on the website, in the Forum and blog posts, and there’s the audio file Diane mentioned at www.trustsandwich.com. We’ve also got a new product on the Trust Sandwich - a 90 minute audio I did recently, along with a 30-odd page Special Report explaining the process in more detail.
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Megan Hughes
www.businessfirstformations.com
Last week, my business had its best month ever.
If the property is owned by the trust and the beneficiary interest is appointed to the LLC. How do you manage the income and expenses of the property? From an accounting perspective, are the income and expense entries againts the Trust account or the Business LLC account. Does it matter? I initially setup the LLC to hold and manage the property with the advantage that I was able to deduct large expenses such mortgage payments from the income generated. Is this still possible?
What type of trust?
I was hypothetically speaking of the sandwich trust that was expained above. This would be the trust holding the title to the property and beneficiary interest is assigned to the LLC.
Hi gatesdawn
The accounting is done through the trust, rather than the LLC - rents are paid to the trust, the trust pays the bills, etc. The LLC’s account exists really only for the profits to pass through (for the audit trail) on their way to you.
Everything functions the same as it would without a trust, vis-a-vis interest, etc. You are just moving through the trust instead.
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Megan Hughes
www.businessfirstformations.com
Last week, my business had its best month ever.
Hi Megan, I have multiple rental properties in a state and have one management company collecting rent and paying for expenses. I want to put each property into a separate cell for asset protection. Since rents are paid in one lump some at the middle of the month, I don’t think I can get the manager to pay for each separately. Can I continue as we have been or must I separate them all out. This will mean the manager will have to have 9 separate accounts and 9 separate checks paid to us?
Hey there,
Common wisdom (and some state’s laws) say that if you want the separate asset protection to be upheld, you have to operate each cell as a distinct and separate entity - so a separate EIN and bank account.
However, what you could do is set up one cell as your own property management company, and have your 3rd party company pay the lump sum to that company. You could make the disbursements internally that way. Yes, you’d still be writing 9 checks, but wouldn’t be paying for your 3rd party property management company to do it.
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Megan Hughes
www.businessfirstformations.com
Last week, my business had its best month ever.
Ok. So, to clarify a bit more, if I do a Series LLC in Nevada should I get separate EIN’s for each cell? Or, can I just make the one cell the management company and have the “parent LLC” have the EIN? Does it cost a lot more for the separate EIN’s?
Hi Diane, You inspire me! I have a question regarding the Nevada Series Trust Sandwich. We are in the process of selling a single family property. We were about to put that property into it’s own separate cell. The Series LLC has already been formed, but not all deeds have recorded yet. When we sell this home can we have a check cut in the name of the LLC even though we have not recorded the deed or must we record the deed in the trust name first? Can this be done at the time of escrow closing?
Thanks, Betty
Hi bfdesign,
It’s very important to keep each cell separate and distinct from the others. That means separate EIN, separate accounting records, separate bank account, etc.
Even though the cells may all be reported on the main LLC’s tax return (depending on how you set it up), you need the separation down below. In fact, this separation is written into Nevada law as one of the factors in providing inter-cell liability protection.
It doesn’t cost anything to obtain an EIN. You can do it online through the IRS and have a number instantly for the main LLC. Same goes for each of the cells. At least that’s how my company does it - one charge covers them all. Other agents may be different.
If you’d like a quote and to talk through your options, feel free to email me at info@businessfirstformations.com.
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Megan Hughes
www.businessfirstformations.com
Last week, my business had its best month ever.
Hi Megan:
Would this strategy apply to ones primary residence? If so how does one go about it? So there seems to be two Trusts that needs to be created. Is that correct? Thank you.
Sandy
Hi Sandy,
You can absolutely put your family home into a Series Cell. Typically I like to have the cell owned by a Family Trust. If you set up the taxation right, you won’t lose your mortgage interest deduction (which can happen if you don’t set things up right). So the transaction will be completely transparent to the IRS (which is good), AND you will get some personal asset protection over your home (which is great).
Check out the Forum for more information on using a Series LLC and the Trust Sandwich concept.
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Megan Hughes
www.businessfirstformations.com
Last week, my business had its best month ever.