Assume a client owns several real estate
properties or one or more businesses, is concerned about potential lawsuits and wants a
business and investment structure that maximizes estate planning and gifting opportunities
as well as provides for centralized management and continuity in the event of the client's
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1. Place each real estate property or business in a separate LLC ("Operating
2. Form a Delaware LLC called ("Holding, LLC") to own Client's membership
interest in each Operating LLC.
3. Form another Delaware LLC ("Management LLC") to manage the Holding Company
and to act as manager of each Operating LLC.
4. The owners of Holding LLC will be Client as to 90% to 95% and a trust for Client's
children as to the remaining 5% to 10% ("Children's Trust").
5. Management LLC is owned by the Children's Trust. The manager of Management LLC will
be the Client.
Holding LLC will be the owner of the real estate or businesses for
ownership and financing purposes -- the Operating LLCs that hold legal title to the actual
asset are disregarded for this purpose --
NOTE: The balance of this article has been incorporated into the Tax Prophet's Action Guide entitled, "Wealth Preservation
" described below:
This Action Guide discusses domestic asset protection and the use of legally permitted entities such as limited liability companies and trusts, to preserve assets in today's hostile litigation environment. The approaches suggested are conservative, safe, practical and legal -- a far cry from most asset-protection schemes touted on the web. This Action Guide is a must read for small business owners or investors concerned about potential litigation and their advisors.
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All contents copyright ? 2008 Robert L. Sommers, attorney-at-law. All rights reserved. This internet site provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet(TM) is a trademark of Robert L. Sommers.