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multi member LLC may provide a little better asset protection. If someone should sue you they would only get a charging order which should not allow them to get at your company monies they only get money if you make a distrubution so therefore you wont be making any distributions as stated in your operating agreement. why would the judgement holder not get money this is because there is what is known as the innocent party rule because of the other person who is a member of the llc would be adversely affected and they had nothing to do with someone getting a judgement against you.
Single members LLCs are good for owning property which is then owned by another entity, known a stacking, the tax benefits will pass through depending on which tax class you selected when setting up, multi llc use the partnership tax return
Joe
I’ll make sure we get a clarification the next time I call Jack for the ASK JACK questions.
Jackie
Jean good to hear your tenant tipped you off better to be prepared then being blind sided by a lawsuit, i often hear from my tenant “my friend told me, my brother in law said, my lawyer says” yikes. sounds like youre taking all the right steps, yes your multi member LLC could be the member of the single LLC which could be the beneficiary of your land trust, land trusts are great for privacy to keep your name off the public records only trustees name shows, but land trusts dont offer asset protection thats why its a good idea to use some type of entity as the beneficary of the land trust. The benefical interest is personal property and can be easily assinged to another person or entity if need be without changing the info in the public records.
Joe
Thank you for all that information. When you say that single member LLC’s ae good for owning property which if then owned by another entity, could the other entity be a Multiple Member LLC? I don’t have a corporation yet.I have a tenant who told me that a friend told her that there is a book out about “How to Stick it to your Landlord. That made me feel real secure since I have this property in my name but it is going into a Land Trust this week and then into a single member LLC .
Thx for your help.
Northern Residential
If I put my property in a Land Trust and make the single member LLC the beneficiary then do I put it in my multi member LLC? If I do that do I put at risk any other proprty I have in the multiple LLC–Actually I only have one in there at this point. Also, does the single LLC then become the trustee and the multiple LLC become the beneficiary?
draw 4 boxes on a piece of paper from left to right in the first box write “123 main st, john smith as trustee” then draw an arrow to the 2nd box in that box write single member LLC then draw an arrow to the third box in that box write multi member LLC then draw an arrow to the fourth box, you and partner or spouse are in the fourth box
the arrows are how a lawsuit would flow first it would have to go through the trust then through the first LLC then to your multi if it should go that far then to you and partner. your multi LLC is protected by the first llc. very costly and time consuming for the other side to pierce as long as you follow proper business formalities.
best to have a completly seperate trustee, another person you trust, someone elses corp or lawyer this will give a true seperation from you so no one could say it was just set up as a sham.
now lets look at it in reverse you and partner own the multi LLC, the multi owns the single LLC, and the single LLC is the beneficiary of the trust.
insurance should be your first line of defense
and having a home equity line on the property makes it look mortgaged to the max so it appears to have no equity, predators will look for easier prayi am not a lawyer or accountant so you might run this strategy by a professional first
hope this helps
Joe M
you should be in good shape as long as good business practices are followed
there is another way to go about it if the house is owned personally and a person didnt want to transfer it into an LLC or trust because in some states they would have to pay transfer taxes and recording fees they could master lease it to there LLC and then the LLC would lease it to the tenents.
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