ASSET PROTECTION FOR REAL ESTATE OWNERS
James C. Mulder
attorney at law
Transition of Management
As stated previously, it is vital that you treat your new asset protection entities as real businesses. Accordingly, you should make sure that the tenants are aware by an amendment to the lease agreement to make their checks out to the owner series LLC or a series LLC that you have set up to be the property manager. If you have several series LLCs that own individual properties, I suggest you have a management series LLC to collect all rents and handle all aspects of property management. There should be a property management contract between all the LLC owners and the LLC property management company to do this. In this way, only one bank account needs to be opened to handle all rents and property management transactions. Again, if the property management LLC is only owned by one person or entity, it does not have to file a separate income tax return.
Cumbersome and Increased Annual Cost
What I have presented here might seem cumbersome and it will increase your annual accounting fees to your CPA or tax preparer and may increase your casualty and liability insurance premiums. That is the price for sleeping well at night. It shouldn’t cost you significantly more than before the planning and implementation and will ensure that your plan if ever challenged will stand up.
What other issues are presented?
- What will be the income tax consequences of implementing an asset protection plan?
- What are the additional expenses that will be incurred in the planning and implementation?
- What are the ongoing costs of implementation?
For more information on the basics of asset protection for your business or family, contact WealthKeepers today at 713.461.9699 or info@WealthKeepers.net