This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
October 18, 2006
Webinar“Asset Protection Strategies that Actually Work”
Disclaimer- Although the information contained in this Presentation may be extremely useful and helpful, please understand that the presentation of this information does not constitute an attorney-client relationship. Moreover, the information contained in this Presentation is for general guidance only. It is strongly recommended that each individual or entity obtain their own legal advice, particularly applied to their own set of circumstances, facts and specific situation. Kyler Kohler & Ostermiller, LLP is not responsible or liable for any advice that is taken and applied in a situation without direct consultation and representation specific to that individual’s or company’s needs.
1) Must treat each series as a separate entity. -Hold property and contract in name of the series (e.g, Series 1 of Jones Real Estate, LLC).-Maintain separate accounts and records for each series.
2) States where the Series LLC is recognized. More and more states are considering adopting the Series LLC statute. -Delaware, Illinois, Nevada, Iowa, Oklahoma, Tennessee, and Utah.
• Careful consideration should be used before using the Series LLC in states that do not have a Series LLC statute.
• This is a new area of the law and there is no specific guidance from the IRS on whether one tax return for the mater LLC will be required or whether a separate tax return will be required for each Series within the LLC. The practical approach seems to be to treat each series of the LLC as a wholly owned subsidiary company and thus only do a single LLC tax return for the multiple entities.
• Caution in California. The Franchise Tax Board Revenue Ruling requires that each Series of the LLC pay the minimum $800 franchise tax.
Benefits
• Avoid the problem of having “all of your eggs in one basket”. Each series is treated as a separate entity from the other series so that when a lawsuit occurs in one series the creditor plaintiff can only attack the assets in the series being sued. For example, if you had a lawsuit regarding a property in Series 1, then only the assets in Series 1 would be available to a creditor. The assets in Series 2-5 would be protected from the liability created in Series 1.
• Reduce costs and expenses from setting up multiple entities. Traditional approach to obtain separate treatment is to set up multiple entities.
IRA’s: Invest $4,000 of new money every year, IRA’s: Invest $4,000 of new money every year, $5,000 if you are 50 or older.$5,000 if you are 50 or older.
401(k)’s: Employee Max $15,000 (up to 100% of income) 401(k)’s: Employee Max $15,000 (up to 100% of income) $20,000 if you are 50 or older.$20,000 if you are 50 or older.
401(k)’s: Employer may match up to 100%, limited to401(k)’s: Employer may match up to 100%, limited to 25% of income. 25% of income.
SEPs: $44,000, or 25% of your income, whichever is less.SEPs: $44,000, or 25% of your income, whichever is less.