Comments for Asset Protection and Asset Management

Comment on S Corporations Dodge the Bullet by Dan

Dan — Fri, 15 Apr 2011 14:26:13 +0000

Although the IRS lists factors in determining what is “reasonable,” the range of compensation for any particular job can be astonishingly wide. Would it be prudent to use national or state-specific averages for job titles? And if so, where can we obtain such data? Thanks Lee!

Comment on Real Estate Management With Trusts & LLCs by Pam Ciolkosz

Pam Ciolkosz — Fri, 08 Apr 2011 13:28:35 +0000

I have become interested in a self directed Roth IRA. I understand the tax advantages of one but what are the asset protection capabilities of a self directed Roth IRA? Is there a seasoning period from the time the IRA is opened and the time withdrawals can be made? How do I go about setting one up? To your knowledge, are the online setups reliable?

My CPA is of the opinion that an LLC has better tax advantages taxed as a partnership rather than an S corp. Your LLC wizzard course says to have it taxed as an S corp. Will you explain the difference?

Comment on Q & A February 2010, Creditor Liens, Living Trusts, Protect your Home, LLCs by Planner

Planner — Sun, 06 Feb 2011 18:38:50 +0000

I’m a new physician beginning practice as an independent contractor. Should I form a PLLC and have the contractor pay my PLLC? Should I form a PLLC but have the contract between the staffing company and me contain my name? Should the house be in my wife’s name or the PLLC (given that the mortgage will be a small or nonexistent one).

All this is making my head spin. I’m acutely aware of the need to structure my affairs in such a way as to protect, but am not sure how.

Comment on Asset Protection Program: Free Asset Protection Webinar Q & A by Yvonne

Yvonne — Thu, 09 Dec 2010 07:47:48 +0000

Awesome information, wish I knew some of this stuff before. Revealed things I should have done and things done incorrectly. Listened to too many people (gurus) with the wrong information. Thank you Mr. Phillips for sharing your wealth of information. I now know how to move forward and do it right. Thank you.

Comment on Single Member LLC Follow Up–LLC Florida Court Challenge Revisited by Doug

Doug — Thu, 14 Oct 2010 21:05:15 +0000

Does it matter if my LLC is in Nevada, but my Company is here in FL ? Thanks

Comment on Single Member LLC Follow Up–LLC Florida Court Challenge Revisited by admin

admin — Fri, 10 Sep 2010 20:29:39 +0000

If the percentage doesn’t matter, 5% or whatever, should that be the managinging member for the LLC, and if an LP should the 5% or whatever be general manager for the LP?

The percentage doesn’t make the manager. In an LLC, the manager can be the majority owner or a minority owner. The issue hinges on if it is a member managed LLC or a manager managed LLC. If it is member managed, then the manager (president) has to be a member. If it is manager managed the manager does not have to be a member (owner) and the company has “centralized management.” In an LLC, you get to choose two of the four elements of a corporation. The four elements are 1. limited liability (you want that one) 2. centralized management (the management doesn’t also have to be owners) 3. Continuity of life (the company will continue on past the death of a member) and 3. transferability of interest ( the members can freely transfer their membership interests (stock). You only get two of the four. Liability shielding will always be one of the choices. The others are up to you. You write them into your operating agreement. It’s a funny thing, but a lot of people think the operating agreement is no big deal. It is a big deal, and you can’t just use a stock form. If somebody gets cute and writes all four elements into the agreement, when you get into court you don’t have an LLC.

In the LP (limited partnership) the general partner is the person designated as the general partner. They are personally liable for the acts of the LP. Some say have an LLC or corporation be the general partner. That works, but maybe you should consider an LLC only and bag the LP, because you’re probably not gaining a lot.

Also, from a tax point of view, its better to have the spouse be the limited member with 95%, no control, but the distributions do not have self employment tax. Is this a good set up?

I am not sure I follow the spouse being the “limited member portion of the question” I assume you are talking about a limited partnership. Distributions (dividends) paid out of the LLC or limited partnership are not subject to self employment tax. They come on a K1 tax form. You do have to pay “reasonable salaries” out before you start making distributions. Congress appears to be working hard to take this away from us and make all income subject to the self employment type taxes. Obama proposed a 13% tax on all distributions, so plans are in the works to gouge the little business guy once more.

What happens to the person holding the charging order if distributions are not made for a year or several years?

In theory the guy gets nothing if the LLC or limited partnership doesn’t make distributions. There are claims that a minority member can make to force distributions, if there is profit. As a practical matter, my litigator in the office would say the judge is going to figure a way to get the charging order holder some money. Charging orders are not a total shield, but they are a great asset protection tool, because they muddy the water and put you on the high ground to negotiate a good settlement to your problem. You need to look at asset protection as not a total shield, but a chance to choose the ground you want to fight on and what size club you get to use.

Comment on Single Member LLC Follow Up–LLC Florida Court Challenge Revisited by Daniel Hewko

Daniel Hewko — Fri, 10 Sep 2010 00:49:31 +0000

Hello Lee,

If the percentage doesn’t matter, 5% or whatever, should that be the managinging member for the LLC, and if an LP should the 5% or whatever be general manager for the LP?
Also, from a tax point of view, its better to have the spouse be the limited member with 95%,no control, bit the distributions do not have self employment tax. Is this a good set up?

What happens to the person holding the charging order if distributions are not made for a year or several years?

Thank you,

Danirl

Comment on A Pain in the Tooth by Bill Sanderson

Bill Sanderson — Fri, 06 Aug 2010 20:44:43 +0000

My daughter had a root canal and shortly there after contracted
Wegners Granularmolatosis a disease that at the time was known to have been seen in 3000 patients in the world. The prognosis was only (at that time) 3 months to live. After many long weeks, over 5 different times and a minimum of 2 (that we are aware of)
death experiences, she was able to get it going in the right direction and has had a kidney transplant. ROOT CANALS can be dangerous. Bill Sanderson

Comment on Corporate Shield Single Member LLCs Under Attack by Betty Ann

Betty Ann — Fri, 06 Aug 2010 18:36:17 +0000

All my LLC’s were set up as single member with me as Managing Member. However, when I formed a Living Trust, I made that an additional member. Would this be enough protection in Florida and other hostile states? I am concerned because the Living Trust has the same SSN# that I do, so it may be seen by the courts as an extension of me.

Thank you for your prompt response.

Comment on Corporate Shield Single Member LLCs Under Attack by Dan Ripley

Dan Ripley — Fri, 06 Aug 2010 15:10:14 +0000

Thanks Lee, I had heard about this case, but not with the detail you provided. I appreciate your updates. Do you have any comments you’d like to share with all of us about the idea of having 5% of the LLC owned by a C corp we control, and the other 95% in a life estate?