California Specific Real Estate Asset Protection Strategies
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- เผยแพร่เมื่อ 30 ต.ค. 2016
- In this video, real estate asset protection attorney Clint Coons covers how to protect California real estate investments through the use of land trusts and limited liability companies. Some of these strategies involve the use of Wyoming LLCs to avoid the dreaded California State Franchise Tax on all business entities.
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ABOUT CLINT COONS
Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
Learn about Real Estate & Asset Protection at our next all-day free live stream. Our attorneys and specialists will answer ALL questions: 👉 Save Your Seat: aba.link/lw7
Thank you so much for your generosity to give your knowledge
This info is great! The way you explain things is so easy to understand. I have some good understanding about what I need to know... Before hand. Thanks so very much!!! You teach really really well. I appreciate you for sharing generously!! Love to hear you speak and the wealth o
f information to bring.
Awesome! Love learning from you 😊
Now I know what I have to do, call your team. Thanks for info.
Thanks for the info! I learn so much from your videos. One question, with the example of a CA resident owning Indiana property, you created an IN LLC to hold the property and a WY holding LLC to own the IN LLC. Do either of these entities have to register in CA and pay the $800 franchise tax because of the CA resident owner?
I have the same question. Please advise thanks.
I would love an answer to this question.
I wish Clint would chime in. However, based on what I've learned from Clint's videos so far, why would either the WY LLC or the IN LLC need to register in CA when neither one is doing business in CA? This is no different than not needing to register in AZ, MI, or any other state.
Hi Clint how this this tax, lets say income is 600k can 8 people file to keep tax rate low ? can a 2 yr old file ?
Thank you for this video! One question I have is what if someone tried to come after the California LLC that collects all the rental payments? Is that plausible?
Yes and this would occur if you were sued personally and judgement is entered against you. Alternatively if the land trust is sued then the lawsuit will drop down to the LLC that owns the land trust.
Question referencing time stamp 31:41. If the LLC(s) are holding commercial property , what would be the ideal taxation ? Would the WY stay disregarded or also elect a different taxation ? Thanks so much love the channel !
I prefer to have the entity holding the commercial real estate be treated as an S-Coproration or partnership (not necessarily in this order) if you plan to sell the property. The key is to file a tax return to pick up the income and expenses associated with the property so a future lender can easily evaluate the property.
Very good info, thank you. One question in your scenario: who does the tenant enter into lease agreement with (usually needs to be signed by owner) in those WY LLC california properties? The WY LLC or the CA management LLC? If the WY LLC, doesn't it need to register to do business in CA (otherwise if sued, it would be found to be operating illegally?)
Must enter into the lease agreement with a CA entity not the WY.
Clint always good work. Question in this CA structure owned by the WY llC or members direct? And the rental dispursements are they passed direct to the members or paid to the WY LLC, which flow down to the members. I ask because if funds flow via WY won't CA then want frachise tax from the WY LLC when it files a 1065 and issues K1?
Yes the WY LLC will be the beneficiary and the holding LLC will pay the $800 franchise tax. The funds will flow to the holding LLC from the CA property management entity.
@@ClintCoons so does the holding company foreign file or wait to be charged. and when they ask for the $800 does it require you to foreign file
34:51 Clint, I know this video is 5 years old but do you still recommend using WY LLCs as the Beneficiaries of these various Land Trusts as you've mentioned in this part of the video? In your newer videos, you suggest creating in-state LLCs for Beneficiaries of these Land Trusts. Thanks.
Depends on the strategy. I prefer to use a WST in California versus a land trust and LLC combo
Does the structure you mention at 32:20 still hold water in 2022? I own two free and clear properties and have been interested in some asset protection. I do like the structure in one of your videos where you use a limited partnership and an LLC as the GP. Seems less cumbersome and simpler. Can that be used with a single person? I’m assuming not since the word here is “partnership”. How can this work if say you use an adult son as a partner? If at all possible.
Yes that is possible.
what if i don't live in Calif but I own property in Calif
Two questions about transferring title in CA. 1) If we transfer title to a land trust with a nominee trustee, will it trigger a transfer tax? 2) Will it trigger a property tax reassessment? The key being that my name will no longer be attached to the property as trustee, so they may not view this title transfer to be under same ownership. Thanks in advance!
IT will not provided the beneficiary of the trust remains the same as the grantor on the deed. For example, if you are the owner (grantor) then you will be listed as the beneficiary of the land trust.
Hi Clint is it true that in CA creditor with a judgement will be able to go back to the last transaction that was not title insured to attach liens?
I am not aware of this possibility. Maybe contact a title company. I would like to know the answer.
Is there an update on this concern? Inquiring minds want to know.
If I created a CA LLC already, but haven't transferred property title or really used it yet, is there a way to give it anonymity? Or should I just dissolve that one and create a new one?
You could use a land trust or watch the video I shared in your other comment about using a statutory trust.
Who signs the WY LLC Annual Reports? Won't they ultimately find out who the manager is that way?
We file them on behalf of our clients.
Hi Clint,
For rental property in California if I want to create an entity for only manage my rental properties as a single member without holding any real estate, which entities are the best? Also DBA name with myself behind it work?
I usually recommend a disregarded LLC as the management entity. Yes you can use a DBA for the LLC.
Fantastic video. One question and pushback: that CA LLC or Corp tasked with property managing all your real estate will not be able to do so unless you are a licensed CA RE broker. Please correct me if I'm wrong on this. Because the law states that you cannot manage any property but your own unless you have an active broker's license. The exception in CA , of course, is if you are managing your own property. If push came to shove, it seems you would be placed in an awkward position of either admitting you are the "owner" of all this real estate (thus piercing your own corporate veil), or admitting you are not properly licensed to conduct property management services in the state of California.
You would need to admit you are the owner. Also think about the intent of the law - to protect the property owner from unlicensed managers. Basically, you would need to sue yourself for mismanagement. Sadly, the case would probably work in CA.
@@ClintCoons Ha! You're probably right. Thanks.
If we would ultimately be forced to admit we are the owner, does it defeat the purpose of doing it this way? Wouldn't it be better to do it the more streamlined way and just give up anonymity from the get go, so at least the corporate veil is preserved?
@@seeyouthere Not necessarily because anonymity is about discouraging shakedown lawsuits.
Great Job even 4 years latter. One question, using the Land Trust for the real property with Wyoming LLC as the beneficiary and a WY Holding LLC for these LLCs and a California corporation to be the property manager. The statement of information (the annual report) must name the officers and directors in the California Corporation. How do I not loose privacy?
You must disclose with a CA corporation. You can only obtain anonymity by using a LLC taxed as a corporation
@@ClintCoons - Even with the LLC, the statement of information asks for the name of the manager or all the members. I wouldn't want to place the WY LLC in this location to prevent the franchise tax on this form, my guess is I would need to be listed.
@@blane5143 You have to if you want anonymity
@@ClintCoons Clint, so you're saying that we have to be willing to pay the additional $800 franchise tax for the WY Holding LLC if we want to preserve the anonymity for the CA LLC that collects rent? Does that CA LLC have to be taxed as a corp? It can't be a disregarded entity? Lastly, will we also have to pay franchise tax on the WY LLC in between the Land Trust and the Holding LLC?
@@seeyouthere The LLC collecting rents can be set up any way you like. Depending on the revenue, "C" status might be preferable. The franchise tax on the WY LLC to the holding LLC will depend on how it is held. Typically investors will place a trust between the WY LLC and the holding LLCs.
I'm still wondering why not use a disregarded entity for an apartment building?
It needs to file a tax return to make selling easier. The buyers lender will ask for it.
I have a trucking company formed as an LLC is it still possible to create a holding company for protection
Yes but you will not have anonymity for the trucking company,
@@ClintCoons thank you. I have a real estate question. So say I have my structure set in place but I get into a partner for a large unit with investors. Do I create another lp or llc then attach it to the holding company?
yes
Clint, Is it true that my WY own real estate in CA that worth more than 50k then it considered “doing business in CA” which means the $800/LLC/year will kick in ?
Is the real estate income producing?
Real Estate Asset Protection
No income producing, only holding real estate
@@foreverwealth6845 That would depend. If using income-producing then you would want to structure it different to keep the active portion of the activity in CA
39.05 ownership by living trust: I live in CA, can my living trust own my WY llc Clint?
Do I have to register that WY llc in CA ? Will that llc lose anonymity or charged order protection?
Yes, your living trust should own your CA LLC. Unless the LLC is conducting business in CA it will not have to register. If you register it in CA you will lose anonymity and WY protections.
@@ClintCoons I meant should my living trust own my WY holding LLC ?
@@foreverwealth6845 Absolutely
@@ClintCoons are there any drawbacks when my WY LLC owned by a living trust instead of owned by me?
@@foreverwealth6845 None - only benefits
I just have one CA rental and plan to stop investing in CA. Do I still need a Land Trust if I did this in order? WY Holding LLC > PPT > CA LLC
Check out this video: th-cam.com/video/pIBkhnqr8nc/w-d-xo.html
@@ClintCoons Thanks. I saw that one, but not comfortable with all of the unknowns that come with those options. So a land trust would only really be needed for anonymity? Otherwise, WY Holding LLC > PPT > CA LLC gives me asset protection and only one $800 franchise tax? Thanks!
Wont California Secretary of State want to know who owns the LLC? And then when you say the Wyoming Holding Co, owns the LLC, wont they ask who owns the Holding company?
They do not because the holding LLC is not registered in California. The holding LLC is not conducting business in CA so it is not required to register with the secretary of state.
@@ClintCoons This is such great information. I was advised by another company that I need to register the WY Holding LLC with California because it is doing business in CA because it owns the CA LLC. Are you saying that it does not need to be registered?
@@advakkg It does not need to register with the secretary of state but it will need to register with the FTB.
Land Trusts are illegal in California.
Who told you that. Here is a CA Board of Equalization opinion on land trusts www.boe.ca.gov/proptaxes/pdf/220_0814.pdf