Introducing The Anonymous Trust LLC

One day you're living life, enjoying the profits from your real estate investments. The next day you're trying to figure out how you got sued. That's life.

And that's why creating an anonymous LLC for your business is so important.

One in Four Americans Will Be Sued

According to a Clements Worldwide study, Americans face the greatest risk for being sued. The risk is even higher if you own real estate. Are you willing to roll the dice on your future? Investing in real estate without asset protection is like betting against the house. You might come out on top, but you're more likely to lose everything.

Asset protection was a tool of the rich for generations. Regular folk usually weren't aware of strategies to protect wealth (such as the anonymous trust LLC), or they were unable to afford it. Today these techniques are accessible to everyone, thanks in large part to the introduction of two new legal structures.

The Series LLC Structure

In the past, investors held companies under their name or a single entity. This created a jackpot scenario, where successful litigators could access the person's entire wealth. Savvy investors would spread assets between multiple entities, but creating and maintaining a host of businesses proved too expensive for most.

The series LLC changed the way assets are held. It makes it possible to spread assets across multiple holding companies, but reduces the filing and management expense to that comparable with a single LLC. For more information, learn the basics of the LLC structure.

The Anonymous Trust LLC Structure

The problem with a series LLC is that you can still be sued one property at a time. It doesn’t make you invisible. This is where an Anonymous Trust LLC comes into play.

Using a trust in this manner allows you to hide the ownership information of your company, including its assets. As a result, plaintiffs are unable to identify you or target you based on whatever juicy assets may be ripe for the picking. That information is invisible.

A Lawsuit Can Affect More Than One Property

Just because your assets are wrapped up in a traditional LLC doesn’t mean you’re protected. Unlike the series LLC, where your assets are spread out individually, a traditional LLC groups assets into one basket. While there are some legal benefits to a traditional LLC, it still leaves you vulnerable to attack.
In any case, here's a short list of what you should and shouldn't do.

Asset Protection "Do"s and "Don't"s

1. Don't Hold Property Under Your Name

Individuals have the least protection of any entity. Maintaining ownership status as yourself is the worst possible scenario and leaves you open to the maximum level of risk. A simple mishap, such as someone slipping while on your property and being denied insurance coverage, could result in a devastating legal battle and even wipe out your life savings.

It’s essential to create a company structure to hold your assets separate. This will make your legal person litigation bullet proof.

2. Don't Hold All Property in a Traditional LLC

While this is a much better scenario than personal ownership, it still leaves you exposed to losing everything under the LLC’s ownership. Which means you could lose all your assets, not just one.

A series LLC, on the other hand will offer twice as much protection.

3. Don't Leave Yourself Exposed Because You’re A “Good Person”

Lawsuits have nothing to do with whether you mean well. Instead, most lawsuits are based on accidents and misunderstandings, not fraud or malicious intent. The purpose of asset protection is to provide coverage when things don’t go as planned. Ask yourself: “Would I be comfortable giving them access to my bank account or credit card?”

4. Do Get Professional Legal Advice

It's hard to tell if your LLC was filed correctly, but there are some common areas that account for the majority of mistakes:

Was the LLC properly formed and maintained (requires an operating agreement and yearly state filings)?
Did you properly sign for all the contracts and business dealings?
Have you filed the appropriate franchise taxes to maintain good standing?
Are all records, including accounting and banking information, current and accurate?

A single technicality can invalidate your protection, which is why we always recommend consulting a specialist in the field.

Insurance Won’t Protect Your Investments

Insurance companies are in the business of collecting premiums, not protecting their clients. They routinely look for ways to deny coverage as a way of lowering their costs.

It’s always a good idea to have an insurance plan, but you shouldn't assume they will pay by default. There are a variety of ways your coverage can be reduced or denied. These range from state and local policies to your payment status or specific instances surrounding your claim.

Are You Sure You Can Count On Your Insurance Company?

Successful investors are experts and managing risk. Purchasing insurance is a good example of this, but having a Plan B takes things to the next level.

Let’s go through a fictional scenario. Imagine one of your newly acquired properties has a rotting staircase and someone accidentally trips and breaks their toe.

Most people would expect the insurance company to cover this unfortunate incident, but this time the insurance company fights back. They claim you exhibited gross negligence and are individually responsible for your guest’s injury.

This lands you in a tricky situation. The best case scenario is to endure a series of stressful negotiations and come out on top. Unfortunately, this doesn't always occur and you could be left holding the bag, exposing your life savings and assets in the process.

Smart risk management requires good up front decision making, such as purchasing a solid insurance plan. But it also includes having a plan for when tragedy and the unexpected strikes. In this case, it means not only carrying insurance, but protecting yourself from potential failure of your insurance.

You Can Be Fully Protected Within A Week

Did you know it's possible to create a scalable company plan in as little as a week? This plan includes both the company setup and the transfer of properties to the new legal structure, and the benefits are legion.

Compared to traditional structures, our asset protection plan provides a layered defense against lawsuits. Not only do we split your assets across various holding companies, but we veil your wealth in anonymity. This strategy makes you unappealing to most would-be plaintiffs and makes your assets inaccessible to the rest.

Most people struggle to pay the upfront costs of a lawsuit and agree to split the winnings with their attorneys. An asset protection plan for Royal Legal Solutions costs less than the typical attorney fees for a single lawsuit and lasts for a lifetime.

Lawsuit prevention is important, but cobbling together a complex network of business entities can be difficult and expensive. Each LLC requires its own filing expenses and management. It adds up fast and the maintenance doesn't scale. Compare that to our custom solution, which provides no hidden costs and comprehensive service. If you want to learn more, contact us today.

Asset Protection for Financial Freedom

Whether you are an experienced real estate investor or building a new real estate business, asset protection & financial freedom have to be on your mind. Scott Smith, Royal Legal’s founder, and lead attorney, recently sat down with real estate investor Whitney Sewell to discuss Asset Protection for Financial Freedom.

This informative discussion covered the importance of protecting your assets and why a real estate investor should not solely rely on insurance policies for protection against lawsuits.

#1 Insurance doesn’t provide asset protection from lawsuits

As a real estate investor, you have to know that you can’t hold assets in your name and rely on insurance to protect you. The amount of coverage insurance is insufficient, and you may find yourself on the wrong end of a lawsuit.

Scott provides a personal anecdote about a friend who got sued for breach of contract and lost. Because his friend relied only on insurance and held his assets in his name, he lost $3 million in real estate.

That’s not to say that you shouldn’t have insurance. It would be best to get insured, but you must realize that insurance does not completely protect your assets. Insurance covers you from things like negligence. However, it does not protect you from things like breach of contract, fraud, and gross negligence claims.

Breach of contract, fraud and gross negligence claims have the potential to derail your real estate investment business. To get 100% bullet-proof protection, you have to think and conduct business like a wealthy person.

#2 Think like a wealthy person

We live in a litigious society, and having assets may make you a target for lawsuits. To protect yourself, adopt the same strategies that wealthy people use. That means:

Don’t own anything in your name.
Create asset holding companies.
Secure your anonymity.

Think about it like this: Wealthy people don’t own things. Instead, they have companies that own stuff for them. When someone sues a wealthy person, there isn’t anything to get. The asset holding company protects wealth and ensures privacy from litigation. That’s why asset protection for financial freedom is such a critical step in wealth generation.

#3 What is the most cost-effective way to achieve asset protection for financial freedom?

The Series LLC is the most cost-effective way to protect your assets. With a Series LLC, you can isolate your investments from one another.

If the worst happens and you get hit with a lawsuit, the plaintiff cannot get to your other investments, nor can they get to your assets. The Series LLC helps you think and do business like a wealthy person because:

You don’t own anything. Your LLC owns your assets.
The trust holds your assets and companies.
The trust is anonymous.

These layers of a Series LLC work together for maximum protection of your assets and investments. Savvy investors use the anonymity of the LLC to prevent people from locking onto them as a target to sue, and it allows them to keep their investing strategy private from competitors.

#4 How does the Series LLC provide asset protection?

The Series LLC efficiently and affordably protects your assets from lawsuits by using a “parent-child” structure. The process goes like this:

Create “parent” LLC.
Create individual “child” Series LLCs with no additional filing.
Each “child” LLC minimizes your liability.

Each of the “child” LLCs protects assets and isolates them from the rest. If you did not have a Series LLC, you would have to pay to establish an individual LLC for each of your assets to create separation.

The best protection from lawsuits is anonymity. When people think that you have nothing of value, they have no motivation to sue you. A Series LLC shields your assets from the public and makes it an unprofitable decision to sue you.

If a plaintiff sues you, the Series LLC “parent-child” structure makes it so that only one of your assets is at risk.

Do you have a plan in place already? If not, let us show you how to achieve asset protection for financial freedom and build generational wealth through the use of a Series LLC.

Read this article to decide if it is the right way to get bullet-proof protection for your assets, Series LLC For Real Estate Investors.

Asset Protection for Financial Freedom Wrap-Up

And there you have it! An explanation about how to achieve asset protection for financial freedom.

We started by discussing the shortcomings of focusing solely on insurance for liability protection, noting that insurance provides some, but not all, of the asset protection you need.

We’ve also talked about the tips and tricks that wealthy people use to protect their wealth. Then, we went over what a Series LLC is and how it provides the most cost-effective way to protect your investments.

Ready to take your education to the next level? Get FREE Access to the Asset Protection Vault. This contains access to our top 5 video Masterclasses and ebooks for real estate investors.

The Rental Property Asset Protection Checklist

Keep potential lawsuits at bay by viewing the rental property asset protection checklist we have prepared for you. By doing so, you’ll be able to protect your assets without worry or distraction.

The following checklist recommends some protective measures you can take for your real estate investments, cash, other assets, and financial future:

Anonymous Land Trust
Setting up a Traditional LLC
Benefits of a Series LLC
Everyday situations to avoid ending up in court

The bottom line is that the best asset protection strategies stop lawsuits from happening. This list will help you decide how best to protect your assets.

Anonymous Land Trust for Rental Property Asset Protection

Anonymous Land Trusts are highly effective but lesser-known instruments that protect your privacy as a real estate investor.

One vital benefit that anonymous land trusts provide is that unknown ownership makes it harder to file a lawsuit against you.

Here are some frequently asked questions about a Land Trust:

What are the parts of a land trust?
They are vehicles to help savvy investors hold properties anonymously. An anonymous land trust has three components: a grantor, a trustee, and a beneficiary.

How does a land trust work?
When you decide to form a land trust with Royal Legal Solutions, we serve as your trustee and manage the trust. You are the beneficiary which means you (1) are not publicly identified and (2) can enjoy the profits from your property.

Read “Anonymous Land Trust for Real Estate Investors” and get more details to help you decide if this sound legal strategy is the right solution.

Setting Up a Traditional LLC

Limited Liability Companies (LLCs) legally separate you from your business.

Benefits of an LLC:

Guarantee of personal security
Simple to create, simple to manage
Relatively inexpensive

We want to provide accurate information so you can make a sound decision. To that end, here are the most common drawbacks to using a Limited Liability Company:

Puts “all your eggs in one basket”
Expensive tax preparation
Not replicable on its own

Read “Texas LLC for Real Estate Investors” for more information. Ultimately, LLCs are okay for one asset, but a Series LLC is better for multiple assets.

Benefits of Setting Up a Series LLC for Rental Property Asset Protection

Series LLCs, a “parent-child” structure that ensures protection for your assets. Here are the steps of the structure:

Set up a Series LLC (this is the parent)
Create individual LLCs (these are the “child”)

Benefits of a Series LLC:

“Child” LLCs have no additional filing
Further minimizes your liability
Ideal for investors with multiple properties or types of assets

You might be having questions about a Series LLC. Here are the most common questions we encounter about this legal structure.

How does the Series LLC protect my assets?
Each asset is isolated from others.

How can I minimize my losses in a critical case?
The Series LLC structures your business in such a way that only one asset is at risk in any given lawsuit.

Why would I need anonymity?
If people think you own nothing, they have no motivation to sue you. Thus, the anonymity of the Series LLC shields you from lawsuits.

Read “Series LLC for Real Estate investors” to get a detailed account of how a Series LLC might benefit you. Overall, Series LLCs primarily help real estate investors with multiple properties or types of assets.

Avoid These Common Situations to Stay Out of Court

When you sign a lease with a tenant, you begin a legally enforceable contract that covers the terms of their tenancy.

Your tenant pays rent, and you conduct repairs and maintenance in exchange. When your tenant feels like they have no options, they might seek to sue you.

You don’t want to end up in a lawsuit, so make sure to:

Keep the living environment habitable
Refund security deposits when the tenant has fulfilled their obligation
Keep the property safe and injury-free
Respect your tenants’ privacy
Follow eviction laws
Adhere to the Federal Fair Housing Act
Keep following state tenant laws
Avoid credit abuse

Use this checklist as a guide to help you decide what type of asset protection is right for you. No matter what level of real estate investor you are, you need to protect your assets. Make sure to apply the lessons from this checklist today.

Bottom Line: Protect Your Assets

As you continue along your real estate investing journey, ensure that you protect your assets with the right financial strategies and business structures in place. Learn how to get bullet-proof asset protection with our FREE, 5-part educational series for savvy real estate investors.

Request your access to the Royal Academy Asset Protection Vault today!

Starting Your Real Estate Investing Journey

Are you currently considering starting a real estate investing journey?

Real estate investing makes people wealthy. Of the 400 richest Americans, 24 made their money on real estate investments. At one time, they were like you--starting as a novice real estate investing professional. Below we have compiled some of the opportunities and challenges you may encounter so that you can hit the ground running.

Here are the things that you should know as a beginner on your real estate investing journey.

The First Step Is Forming A Series LLC

Real estate investing is not without risk. As a result, before you take this monumental step towards securing your financial freedom, you need to have rock-solid legal and financial structures in place. One way to ensure that you have the proper legal and economic systems is to create a Series LLC.

Take a moment to discover how Royal Legal Solutions can protect you with a Series LLC. This business structure will safeguard your investment and livelihood.

Real Estate Investing Journey Fundamentals

You must be financially prepared to start investing in real estate. Read on for six tips to start on a solid foundation.

1. Reduce Your Debt for Maximum Advantage

As a new real estate investor, carrying debt is not ideal. Adding to your current expenses such as student loans, medical bills, or paying for essentials may put you in a challenging position. Ideally, you will want to have some money in savings to use as a safety net.

2. How to Use a Simple Method For Increased Profit

Depending on your investing goals, you will have to decide whether it would be better to purchase with cash or finance your real estate investment.

One benefit of a cash purchase is that you start accruing positive monthly cash flow. On the other hand, financing may generate a higher return on your investment.

For instance, you use cash to buy a property for $100,000. After collecting rent, deducting taxes, and other operating costs, you might see about a 10% return on your investment. A 10% return equates to a cash flow of $10,000 per year.

Another option is to finance the property with a 20% ($20,000) down payment and an annual 3.5% mortgage rate. After paying taxes, operating costs, and additional interest, your earnings will be about $6500 per year.

The cash flow is lower with financing, but the return on investment is much higher at 32.5%

3. The Bottom Line on Mortgages

Primary residence mortgages and rental property mortgages are similar. However, there are some critical differences.

First, people default much more often on rental property loans. That makes sense because a borrower who runs into financial trouble is more likely to focus on their primary home mortgage first.

In general, the additional risk associated with rental property loans results in lenders charging higher interest rates.

Second, rental property mortgages come with more stringent underwriting standards. The lenders closely inspect your credit score, down payment, debt-to-income ratio, and cash on hand.

4. Beware High-Interest Rates

In 2021, the interest rate is relatively low for a conventional mortgage. You should know that the interest rate on investment properties is higher than a traditional loan.

When you decide to become a professional real estate investor, you need to secure a low monthly mortgage payment so that your monthly payment does not disproportionately eat into your profits.

5. Seek Real Opportunities to Generate Wealth

You should set a goal of a 10% return on your investment. When developing your expectations, you need to consider the following factors:

Regular maintenance and repairs will cost about 1% of the property value annually.
Property taxes are, on average, 1.1% of the home value.
If you must pay HOA fees, they can range anywhere between $100 and $1,000 per month, depending on geography.
Unexpected costs like roof damage or significant plumbing issues require you to set aside around 25% of rental income for timely repairs.

An easy way to estimate your monthly operating expenses is to follow the 50% rule. Simply put, you need to figure that about 50% of your operating income will go to operating expenses.

For instance, if you charge $1500 rent, you should expect to pay $750 in total expenses.

6. Landlord Insurance: Important and Useful Security

It would be best if you protected yourself with landlord insurance. Landlord insurance covers property damage, lost rental income, and liability protection from a tenant or visitor injury on your property.

Profitable Tips to Give You the Edge

Surging Locations Are Key To Success

You will want to avoid making a real estate investment in a dying area that may become a burden to you.

Instead, find a city or location where the population is growing or where a community revitalization plan is in place. A revitalization plan in a community increases the likelihood of employment, living wage jobs, and tenants.

Here are some things to look out for in profitable rental properties:

Low property tax
Good school district
Growing job market
Local restaurants
Public transportation
Shopping

Each of these factors will likely contribute to a healthy set of potential renters.

Be Shrewd With Rental Properties

Remember, the more expensive the home means higher operating expenses. An excellent place to start your real estate investing is finding a $150,000 to $200,000 home in a growing neighborhood.

You want to follow the Goldilocks Rule, "You are looking for something just right." Don't buy the best house in the neighborhood for sale, nor should you invest in the worst.

Beginners Should Avoid Distressed Properties

Part of finding a home that is just right is avoiding a fixer-upper. You might think you are getting a bargain and can flip a distressed property into a cash cow. If you are only beginning your real estate investing journey, that's a monumentally bad idea.

The price of building materials and a labor shortage make the house flipping industry an expensive and dangerous endeavor--ask Zillow.

The Hidden Benefits of Property Managers

Should you hire a manager or go at it alone?

Using a property manager is a significant consideration for you as an investor. As a landlord, you would be involved with vetting tenants, coordinating maintenance, collecting rents, and resolving disputes. You may prefer to offload those duties to someone else so you can focus on activities that grow your business.

Hiring a property manager can be a tough decision because it will cost a portion of your operating income. The cost can be a considerable chunk of your profits, typically between 8% and 12%.

That said, an experienced property manager might still be worth it to you. Realistically, a property manager eases the burden of being a landlord and brings lots of experience and expertise to the table.

Most property managers:

Collect rent
Contract maintenance and repairs
Handle complaints, late rents, and evictions
Market your property
Pay property tax, utilities, and insurance on your behalf
Price the rent
Show tenants your property
Screen potential tenants

Consider the following to determine if a property manager is worth the cost:

Am I willing to deal with tenants?
Do I have time to manage this property?
Do I have to have complete control?
How far away is this rental property from me?

Pros v. Cons of Starting a Real Estate Investing Journey

As with any financial decision, you must decide if the benefits outweigh the costs. Real estate investing is a great way to increase your wealth, but it is not without risk.

See the table below to help you decide whether starting a real estate investing journey is right for you.

Real Estate Investing Journey Recap

First, one way to mitigate some of the risks you will encounter in real estate investing involves forming an LLC. Read more to learn about the benefits of using a Series LLC to protect your assets.

Second, make sure your finances are in order before you embark on your real estate investing journey. You can reduce your debt which will help lower your debt-to-income ratio and improve your credit score. A higher credit score means better rates and terms and more cash in your pocket.

Third, find affordable housing in growing areas. Remember, the key is to get affordable housing without buying a money pit that needs a lot of work.

Fourth, consider hiring a property manager--the hassle and time saved might be worth it to you!

Before you decide to begin real estate investing, ensure that you have the appropriate asset protection and business structures in place. To discover how you can achieve bulletproof asset protection, check out our FREE, 5-part educational series for real estate investors. Request your access to the Royal Academy Asset Protection Vault today!

How to Avoid Getting Sued When You’re a Real Estate Investor

Getting sued is every real estate investor’s worst nightmare.

Running your own real estate business can be rewarding, but it’s also inherently risky. You put your money, time, and dreams on the line to make it a success, but sometimes things don’t go as planned.

Any number of things can happen, and it’s nearly impossible to prepare for all of them. Still, if your portfolio isn’t protected from some of the most common pitfalls, everything from your real estate assets to your personal belongings could be on the line.

Getting sued can wipe out everything you’ve worked hard to create. So what can you do to protect your business from the inevitable lawsuit?

In this article, we lay out some basic asset protection tips: from getting flood insurance to setting up Series LLCs to more advanced incorporation strategies. It’s important to plan for the worst before it happens because almost every experienced real estate investor will -- at some point in their careers -- deal with some sort of legal issue.

Key Points About Basic Asset Protection

In this podcast with BiggerPockets, Royal Legal Solutions’ own Scott Smith outlined some of the most important steps you need to take in order to avoid getting sued.

Talk to Your Lawyer

This one may seem obvious, but one of the first and most important things that Scott says in the show is this: There’s “no one blanket piece of advice that applies to everybody… Everybody’s business is different. Everybody’s situation is different.” If you don’t invest your time and money into some sort of individual asset protection -- beyond reading an article on the internet -- you’re definitely not doing all you could to avoid a lawsuit. While we might be able to give you some tips that likely apply to your business, it’s still important to get a more personal look.

It’s Just Like Flood and Fire Insurance (If You Don’t Have Those, Get Them)

Obviously, floods don’t happen all the time. There’s no guarantee that your property will have a flood, even if it’s in a flood zone. Still, that danger exists -- and you likely have some form of insurance to protect against it (if you don’t, get it). The same thing is true for fire insurance: fires might happen, but there’s no guarantee. In case that they do, you know you want to be protected. Finally, lawsuits work the same way. A lawsuit might happen—or it might not—but you still want to be protected in the off-chance that it does.

When You Get Sued, You’re on Your Own

What happens if someone sues your LLC?

“You don’t really have any friends once you start getting sued,” Scott says in the podcast. When your friends and associates hear that you’re getting sued, it’s very likely that they’ll consult their attorneys for advice on what to do, and it’s very likely their attorneys will tell them to distance themselves from the situation as much as possible to avoid any additional scrutiny.

More Strategies and Tips on How to Protect Your Assets

Avoid putting your properties in your own name. When it comes to asset protection, this is a big deal. In fact, Scott said it’s one of the first things he’ll ask real estate investors at conferences and business events. He puts it this way: “what rich people do is rich people don’t own things. What rich people do is they control things.” You don’t have to keep the property in your name, because that indicates ownership to any outsider who might be interested in pursuing a lawsuit just because they know that you have a lot of money.

Use a Series LLC to isolate your assets. This falls under a similar category as the point above. It’s possible to separate your real estate assets from your personal assets, creating an additional layer of security and making lawsuits very difficult. One way you can do this is by holding the properties in individual LLCs and then setting up those LLCs in one legal entity. This strategy is only specific to certain states, however, like Texas. You’ll have to do your due diligence to find out if it’s an option where you live. If it is, it offers an additional layer of protection and makes doing your taxes that much easier.

Use advanced strategies. When you’re setting up an LLC, you can actually put the name of a trust as the registered manager. Since the trust doesn’t have to be publicly filed with the state, every aspect of your business is essentially anonymous as long as you don’t attach your name to any of your properties or LLCs.

Conclusion: How to Avoid Getting Sued When You’re a Real Estate Investor

Getting sued is probably one of the scariest things that can happen to a real estate investor. In this article, we laid out some basic strategies on how to avoid it.

One of the first things you should do is consult with your lawyer. While some of the strategies in this article are nearly universal, laws do vary from state to state, so it’s important to make sure the advice that you receive is personalized and actually applicable for your specific situation.

Beyond that, make sure that you have more than an umbrella insurance policy, don’t put your real estate assets under your own name, use a Series LLC to isolate your assets, and possibly even utilize some advanced strategies.

Want to make sure your real estate investing business is protected? Start with our investor quiz and we'll help you find ways to protect your assets.

Articles of Incorporation Vs. Operating Agreement: What's The Difference?

When you're starting a business, you have to think about the boring stuff.

There are legal decisions to make. There are forms to complete. Although the paperwork can seem overwhelming, these documents are essential to keeping your operation running smoothly.

One of the common questions new small business owners have concerns articles of information vs. operating agreements. What’s the difference?

Articles of incorporation and operating agreements both outline the structure of a business and define its ownership. But each of these documents serves a unique purpose, and small business owners and real estate investors often mix them up or think they are the same thing.

To help you understand which document you need for your business—or if you need both—we'll examine the characteristics of each one, including their similarities and their differences. Don't be bored ... Getting this right on the first try will increase your chance of success down the road.

articles of incorporation vs operating agreement cat

Bored? Don't be. A profitable business is exciting!

What are articles of incorporation?

Articles of incorporation (also called a corporate charter or a certificate of incorporation) is a set of legal documents that establishes a corporation in the eyes of the state. These documents, which are typically filed with the secretary of state, give the business owner asset protection by separating personal assets from the business assets.

The information included in your articles of incorporation can vary according to the nature of your business and your state's requirements. However, these documents generally include the following elements:

Legal name and address of the business
Date business was established
Business purpose
Business bylaws
Names of the business owners
Name and address of the registered agent
What share of ownership can be held by investors
What restrictions are placed on business activities

If you are filing for incorporation as an LLC, you are not legally required to have articles of incorporation. However, if your business is an S or C corporation, you must file these documents with your state.

What is an operating agreement?

An operating agreement is a legal document that establishes internal operating procedures and defines the business relationship between the members (owners) of a limited liability company (LLC). All LLCs with two or more members should have an operating agreement to protect the business' LLC status, clarify verbal agreements in writing, and legally protect the agreement in the eyes of your state.

An LLC operating agreement should include the following elements:

Description of the business operations
The succession plan if an owner exits or an unexpected issue occurs with an owner
How managers are appointed, their responsibilities, and obligations
How members vote on important issues
How the transfer of ownership occurs
How profits, losses, and distributions are handled
How records are maintained
Other information members feel is necessary

Although not all states require Series LLC operating agreements, legal experts recommend having a written agreement (or bylaws) that outlines your business operations. In addition to helping your business run more smoothly, some financial institutions will require corporate bylaws before you can open an account or get a loan.

How do articles of incorporation and operating agreements differ?

One way to look at the difference between these two legal documents is that articles of incorporation define a business as a corporation with the state, while an operating agreement defines how the business owners relate to each other. Therefore, the first one is a public document, while the second is more for internal use.

Another difference is operating agreements are often less formal than articles of incorporation and therefore are usually easier to update and adjust as the organization changes and grows.

How are articles of incorporation and operating agreements similar?

Articles of incorporation and operating agreements both outline your business structure and share some similar features. Both documents contain basic business information, such as its name, purpose, management structure, and how it will operate.

Another thing the documents have in common is that they both can contribute to the successful operation of a small business.

How do you write articles of incorporation or an operating agreement?

Both articles of incorporation and operating agreements require wording that is specific to your business, your state's requirements, and your type of operation. Vague or general verbiage can create problems down the road.

For example, here are some problems to guard against in your legal documents:

Not defining decision-making powers. Be sure to specify what decisions need to be unanimous among the members and which ones can be made by a majority. Also, clarify what constitutes a majority.
Not being specific on manager selection. Use precise language on how managers are elected or removed. If voting occurs, spell out who is eligible to vote on managers.
Not keeping the manager's powers in check. Spell out the exact duties of the manager to prevent possible abuse of power. Clearly state how and when company assets may be sold, including when a vote is needed on these decisions.

An experienced legal professional can answer questions and provide help with operating agreements or articles of incorporation. The bottom line is that while these documents can be a headache to prepare when you are launching your new business, you will be glad later that you took the time to do them right.

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Image by Sandy Müller from Pixabay

What Is Passthrough LLC Income for Tax Purposes?

There are two short answers to the title question: yes, and hell yes.

But don't just take our word for it. Passthrough LLC income is a hot topic in the investment community. If you're not sure what that means, you're not alone. Read on to learn about what exactly passthrough income is, how it impacts your LLC, and what benefits you will reap from it.

What is 'Passthrough' Income?

Passthrough LLCs allow you to collect the profits from your business as part of your personal income tax. The LLC itself is not taxed, but its owners are. This allows you to save substantially, simplify filing, and enjoy more of your hard-earned profits.

Businesses love this feature so much that at the time of this writing, roughly 90% of entities take advantage of passthrough income. While this access used to be primarily the domain of giant corporations, even the smallest business can also take advantage.

How Does a Passthrough LLC Benefit Me?

The most obvious benefit of passthrough entities is that it saves you tremendously on taxes. Opting out of passthrough benefits would mean you would essentially have to pay taxes on your income twice--both on your personal and your business tax returns. Few among us have the means or desire to pay the taxman twice. Fortunately, businesses don't have to if they take advantage of passthrough taxation. This is available for any type of LLC, including our personal favorite, the Series LLC.

What About the Taxman?

While passthrough has always had the benefits discussed above, there are even more perks you can take advantage of when Tax Season rolls around. Below are some of our favorite perks, along with a little update about the 2018 Tax Bill.

Taxes Are Assessed At Your Individual Rate. This is much cheaper for the average investor than paying corporate taxes, especially if you're in the early stages of developing your real estate empire.
New Law Allows For Deductions. The 2018 Tax Bill shows even more love to small businesses and investors by allowing for additional deductions for passthrough entities. Business owners (that means you, even if you're the sole owner of an LLC) can now deduct up to 23% of the business's income on their personal returns, allowing for even greater savings.
Taxes are Streamlined and Simplified. One return means a lot less math for you. But of course, if you're struggling, are new to investing, or have a brand new entity, seek the help of a qualified attorney and CPA to ensure you're on the up and up.

Can I Get Passthrough Treatment for Other Entities?

You bet! S-Corps, Limited Partnerships, and many other types of entities are eligible for passthrough taxation. Of course, we recommend the Series LLC for real estate investors. All of the information above applies to the Series LLC the same as it would to its Traditional counterpart.

That's all for our discussion of passthrough income for LLCs and Series LLCs. That wasn't too painful now, was it? You learned the basics in under ten minutes, but please feel free to reach out for personalized recommendations by taking our Tax Discovery Quiz below.

Keep more of your money with a Royal Tax Review

Find out about the tax savings strategies that you can implement as a real estate investor or entrepreneur by taking our Tax Discovery quiz. We'll use this information to prepare to have a productive conversation. At the end of the quiz, you'll have an opportunity to schedule your consultation. TAKE THE TAX DISCOVERY QUIZ

Series LLC For Real Estate Investors In West Virginia

Aside from getting to live in “almost heaven,” West Virginia investors really do have something special. And we’re not just talking about the local real estate markets. From an asset protection standpoint, West Virginia investors also have more options. For instance, did you know that you can use an in-state Series LLC as a component of your asset protection plan? You can also use one from a different state if you choose. So yes, West Virginia investors can have it all when it comes to Series LLCs and asset protection. Learn more now.

Is There a West Virginia Series LLC?

West Virginia joined the club of states permitting Series LLCs fairly early on. They’ve offered an in-state option that’s a decent investment vehicle. At the very least, it’s better for investors with multiple properties or those who intend to acquire more than one property. The West Virginia Series LLC is one way you can compartmentalize assets in-state. But it’s far from your only option.

You Said West Virginia Investors Can Shop in Other States. How Does That Work?

That’s correct, you can. And it’s pretty easy. Basically, all you do is a little bit of research. You can use some of our favorite states as a starting point

Texas. Zero state income tax, strong asset protection laws, ultra-cheap formation fees.
Delaware. The state that originated the Series LLC craze is still popular for it’s famously pro-business legal system and simply being the pioneer in this area of asset protection.
Arizona. Arizona’s benefits are similar to Texas’, though at the time of this writing, slightly more expensive to form.
Wyoming. This new kid on the Series LLC block is proving effective and cheap, with low fees attracting investors from around the country.

The reality is that you can form your Series LLC anywhere, and it doesn’t have to have anything to do with West Virginia. If you love your state’s offering, go ahead and take it. But don’t forget to also research these other options thoroughly if you’re really trying to establish long-term lawsuit prevention strategies and effective asset protection.

What Else Should West Virginia Investors Know About Series LLCs?

Aside from your freedom of choice, West Virginia real estate investors should know that the Series LLC is great regardless of where you form it. It allows you to scale up easily, add new “child” Series from the comfort of home, and simplify your real estate business’s books and taxes. You can also learn more about how to strengthen your Series LLC with other legal protections such as Anonymous Land Trusts. The strength of this entity make shock you, but when used correctly, you can also count on it to cover your assets and keep you out of court

Series LLC For Real Estate Investors In Washington

Whether you’re in the big city of Seattle, overlooking the Puget sound, enjoying the highest quality-of-life in America on Bainbridge Island, walking past the wildflowers of Burien, or somewhere else amidst the greenery, there’s no shortage of beautiful views and beautiful homes in Washington State. So the Washington investor is often a sophisticated, intelligent one--the kind of investor who not only knows they need asset protection, but is pretty sure they need a Series LLC. It’s safe to say you’re highly intelligent folks, and we’ll address you as such. So Washington investors, please enjoy your personal guide to using the Series LLC for real estate investing.

Does Washington State Have a Series LLC?

Washington is not yet among the states to adopt Series LLC legislation. That means there’s no such thing as a Washington Series LLC. The state does, of course, have Traditional LLCs available if you’re determined to get a local entity. But if you want to get a Series LLC, you’ll have to play by the laws of a different state. But don’t worry, we’ll show you how.

How Should Washingtonian Investors Defend Real Estate Assets?

No matter where you live, asset protection strategy stays the same. You need to compartmentalize your assets and maintain your anonymity, and you can use a variety of legal tools as a means to this end. The ideal asset protection plan accomplishes both of these goals.

The Series LLC is a critical component of such a plan because it allows the investor to compartmentalize and grow without extra expense. The good news, Washington investor, is that you get to take your pick of any of these great states for forming LLCs:

Texas. Come on down to Texas for low formation fees, no state income tax, and rock solid asset protection laws.
Delaware. If you’re committed to staying in the North, Delaware did originate the Series LLC. It’s pricier than TX to maintain, but you do have advantages like the special Chancery courts, which are presided over by business law expert judges. It’s a pro-business state, for sure.
Wyoming. As of Summer 2019, Wyoming’s one of the newest Series LLCs that just happens to be among the cheapest. Its laws are modeled after other states with strong asset protection legislation.

Really, you can pick any state. But we recommend Texas above the rest, because that’s the place to go if you want to send this message: don’t mess with my assets. The Texas Series LLC is a great solution for the Washington investor with multiple properties, or even aspirations of owning multiple valuable assets. Other businesses may also be placed within your Series LLC structure to protect you from liability issues.

How Do Washington Investors Pick a Series LLC?

You can establish your Series LLC easily. Get in touch with an attorney who has experience forming these entities, let them know exactly what you want, and a competent attorney can lead the way from there. Welcome to the club of real estate investors who can sleep easier at night, never worrying about bogus lawsuits threatening their assets.

Series LLC For Real Estate Investors In Utah

Utah has scenery that we can confidently call serenity embodied. Whether you reside (or invest) in the bigger cities, near the brilliant Great Salt Lake, or in one of the state’s many tranquil rural areas, we absolutely understand the appeal of the Beehive State. Investors in Utah have multiple options when it comes to protecting their real estate assets, including their in-state Series LLC. Those of you who want a Series LLC often want to know if the Utah Series LLC is always best for Utah investors. The answer is “not necessarily,” because it depends on the investor. Utah investors aren’t forced to use Utah Series LLCs. Learn all about picking Series LLCs for Utah investors in this quick explainer.

How Does Utah’s Series LLC Compare to Other States?

The Series LLC is an entity you can form in over a dozen places, including Utah. What nobody tells you is that you have the freedom to travel wherever you like to form a company. And you don’t even have to physically travel to your destination state, so long as your signature on paperwork does. It can help to seek legal counsel with a presence in your state-of-formation--but an attorney in Utah may still help you form Series LLCs in other states. If one lawyer won’t or can’t, another can and will.

You can even ask your attorney their opinion on our favorite states for forming the Series LLC. In order, we’re big fans of:

Texas.
Delaware.
Wyoming.
Arizona.

These are our top four picks as of Summer 2019, although investors should recognize that the law is always evolving. Changes in law can add more states to the pool of selections, change how a state’s Series LLC works, and cause many other rapid developments that change the legal landscape. It’s always best to check with someone qualified and aware of your personal situation before establishing any company for asset protection. Even if you don’t have a lawyer, you can get a consultation with one.

How Can Investors Pick the Best Series LLC?

Picking the best series LLC will depend on you doing several basic things:

Performing good research. Of the above four options, can you think of your personal pros and cons for each? If not, keep digging for more information about these Series LLC choices.
Getting professional help. Only a lawyer can establish a Series LLC for asest protection, assist you with the necessary paperwork and property transfers, and give you personalized advice. If you want your Series LLC to do its job, an attorney’s your best bet.
Making good judgments. What does your business need most? If you save loads by skipping on state income taxes, focus on states like Texas that lack it. Strong asset protection laws are also found in Texas and the other states above, but of course they vary. Which protections matter most, and where do you think your business should be based out of? Essentially, you’re going to pick which rules you’d like to follow.

If you do those three things, you are ready to move on to establishing your Series LLC. The same is true if your attorney says it is, because above all, that’s your point person on Series LLCs for real estate asset protection. When in doubt, ask for help. Until then, enjoy your new Series LLC and the freedom from worry about lawsuits. Life is calmer once you’re protected.

Series LLC For Real Estate Investors In Maryland

Maryland is a lovely and lush state full of natural beauty and honest, hard-working people. Our Mariyland investor friends often write in with their questions about their best real estate asset protection options. Perhaps they already know that most REIs can benefits from the Series LLC, or they’re trying to figure out whether Maryland offers a Series LLC.

Is There a Maryland Series LLC Option for Investors?

Unfortunately, Maryland investors cannot yet use a Maryland Series LLC for the simple reason that it doesn’t exist. Just under 20 states currently permit the Series LLC, and Maryland isn’t on the list. But you’ve got no reason to fret: you can still have your Series LLC.

Which Series LLC is Best for Maryland Real Estate Investors?

Fortunately, the Maryland investor isn’t bound to playing by Maryland’s rules. One of the beautiful things about the American real estate industry is that you can choose which state’s “rules” you don’t mind playing by. We’ve gathered up a few of our top choices for Series LLCs for your convenience. Here are some of the states whose rulebooks we like:

Texas. Easy, cheap formation. No state-level income taxes on your business. Some save thousands by picking states with this feature.
Arizona. Their Series LLC has operational perks that help some investors.
Delaware. They pioneered the Series LLC.
Wyoming. A recent addition to states offering Series LLCs, and dirt-cheap in mid-2019.

Any of these states will deliver a fine Series LLC, and then it’s your responsibility to use it correctly.

How Do I Know if I Need a Series LLC?

It’s pretty simple: if you have real estate assets in your own name, you should consider transferring them immediately into your Series LLC structure. This removes the property from your name, and if you have an anonymous trust, the trust will hold title while the Series LLC defends the property by sticking it in a child series, by itself, protected with liability benefits and literally inside of its own company. All this company does is hold assets--and it should never interface with members of the public. If you have assets you value, you want them in a company rather than your own name. That’s one simple way to decide if you need a Series LLC.

The quickest way to figure out if you need a Series LLC over a Traditional LLC is easy. Just count up your properties. If you have more than one or plan to have more than one in the future, the Series LLC is the more economical option. File it once, and add child Series indefinitely as you acquire assets. You can easily create new Series at home or work within minutes, print it, fax it to your lawyer, and ask to transfer your new property into it. This way you can grow and defend your assets simultaneously.

Series LLC for Real Estate Investors in Connecticut

There’s now denying that citizens of Connecticut are innovators, with nearly 400 years of history dating all the way back to Colonial times. While most Americans are aware the state is deeply interwoven with early American history, the actual achievements of the Constitution State are not always recognized. After all, Connecticut is both one of our original 13 colonies and home to both the world’s first telephone book and the world’s first nuclear submarine. So we know not to underestimate the sheer brainpower and drive of our Connecticut REIs.

If you’ve wondered how you can get a Series LLC, we’ve got answers. Here’s the real skinny on the Series LLC for Connecticut real estate investors.

Is There a Connecticut Series LLC?

Connecticut has yet to join the club and adopt the Series LLC. They've held out on this issue while 17 other states and Puerto Rico adopted their own. We're not surprised to see the state that Colt Firearms calls home resisting, but you can still have your entity.

Fortunately, neither your hands or finances are bound by your state’s borders. You can form your Series LLC in any state that permits one.

What’s the Connecticut Investor Who Wants the Series LLC to do?

Recall the state motto of Connecticut: "He who is transplanted still sustains." Well, in the case of real estate investing, the individual who willingly transplants their real estate company to another state. Just because you live or own property in Connecticut does not mean that you are stuck there legally. You're a United States Citizen, so enjoy that freedom and wander into a better jurisdiction for real estate investors business owners.

You, like any investor, can actually select the Series LLC of your choosing based on the benefits that are available in your chosen state of formation. Studying some of the Series LLC options can be helpful in making this decision.

What Are The Connecticut Investor’s Series LLC Choices?

So of our current Series LLC choices, which ones are the best for you?

At the time of this writing, we consider these states to some of those we advise investors to consider for their Series LLC formation include:

Texas. State-level income taxes are common, but Texas doesn’t. From an asset protection view, it’s a strong choice. Enjoy the savings and the other pro-business legislation the Lone Star State has to offer.
Wyoming. Though a newer kid on the Series LLC block, Wyoming boasts strong asset protection laws. You’ve got added anonymity too, as there is no requirement to record names of members or managers on the public record.
Nevada. The state has fewer legal requirements for LLC owners generally, and like Texas also doesn’t charge income or franchise taxes. The state offers investors flexibility in operations and strong laws modeled after our final state, Delaware’s Chancery Courts.
Delaware. The grandaddy of all Series LLCs. Delaware was the first U.S. state to codify the Series LLC into the ordinary LLC legislation we’d find in every state. Not only did Delaware pioneer the Series LLC, but they also have business-specific courts (where judges are all business law experts) called Chancery Courts. They have a reputation for being friendly, but not biased towards, business owners.

Research these states, and compare their benefits and drawbacks. Of course, a legal professional familiar with asset protection will be best suited to help you, but coming in with ideas can save time and money. We hope Connecticut investors now have a better grasp of their true choices for Series LLCs.

Series LLC for Real Estate Investors in Wyoming

We love hearing from our fellow investor friends in Wyoming for a few reasons. Not only do citizens of the Cowboy State tend to be good, honest salt-of-the-earth folk, but also sharp real estate investors. So it’s no small wonder we get tons of questions about the Series LLC for Wyoming investors. It is a mighty entity. Wyomingites, here’s your quick and dirty guide.

Does Wyoming Have a Series LLC?

Wyoming is actually one of the newest adoptees of the Series LLC. They became the 18th state to legislate the entity into their existing LLC law in 2018. Big Wyoming has long been known for the powerful protections the state offers Traditional LLCs, and they extend to the Series.

That said, you need not assume that living in Wyoming means a Wyoming Series LLC is your only or best option. You can form your Series LLC in any state that permits one.

How Effective is Wyoming’s Series LLC?

We will admit that here at Royal Legal Solutions we have said we believe some states have better Series LLCs. That said, we haven’t always given Wyoming a completely fair shake. People usually ask for our top three picks, and Wyoming being such a new kid on the block has meant this is our first occasion to write in depth about the state’s entity. Generally, when folks ask us which three states we like, these are our go-to responses and reasons:

Texas. Low-cost to form with no state tax.
Delaware. This state invented the first Series LLC, and well, everyone loves the original. Local protections are strong and investors have stronger chances of being treated by their unique and notoriously pro-business Chancery Courts. Such courts are composed of judges who are experts in business law, presiding solely over business law affairs. Rulings tend to be favorable to investors.
Nevada. It’s also cheap to form in Nevada.

But Wyoming actually offers a very strong Series LLC. State-level asset protection laws are rather investor-generous, meaning it can be considered a top contender for some investors.

What’s the Best Series LLC for the Wyoming Investor?

We believe your Series LLC should be formed wherever serves you best personally. Wyoming investors cannot be generalized. The drawbacks and benefits of a Wyoming Series LLC vs. the alternatives we discussed above will actually vary heavily from individual to individual. What’s good for the REI goose seeking judicial protections isn’t necessarily great for the REI gander who’s content to rely on Wyoming’s strong asset protection laws.

The two best things you can do are study up on these structures and seek the advice of a qualified asset protection professional. We try to help out with regular educational materials on this badass structure for real estate investors--because we’re big believers that all REIs should at least be aware of what this entity’s capabilities are. So please feel free to get your fill of our educational resources. For example, if you haven’t yet, you should catch our short piece breaking down the biggest benefits the Series LLC gives REIs.

Series LLC for Real Estate Investors in Virginia

Where you live certainly can influence your Series LLC options, and which states you should consider forming your company in. If you plan to use a Series LLC holding company, you may have in-state options--but whether these are worthwhile, let alone your best, is a decision that must be made with the help of an attorney.

Yet time and again we get questions about what asset protection looks like in a given state. The truth in Virginia is the same as everywhere else. In reality, the Series LLC for Virginia investors offers many benefits and can take many forms.

Is the Series LLC Offered in Virginia?

The Series LLC isn’t ubiquitous by any stretch. Not all U.S. states have legislation defining this entity, therefore many investors will necessarily form beyond their state’s borders. This is a common, valid, and safe strategy.

For Virginia investors, the first question is typically whether there is a Virginia Series LLC. In short: no. But you need not be confined simply because your state’s business legislature has yet to get with the program.

Which Series LLC Structures Are Great for Virginia Real Estate Investors?

Let’s just begin with the assumption that the Series LLC will be helpful to you, either now or in the future. It is for essentially any investor who has multiple assets or plans to scale up over time. You still have some choices to make.

You can choose which state’s “rules” you’d like to play by. We have some pretty well-known opinions on the best states for forming LLCs, but will elaborate a bit here wtih the Virginia real estate investor in mind.

Texas Series LLCs are highly useful entities for investors in most states, including Virginia. Some basic benefits include no state income tax, a single low, one-time filing fee, and the availability of legal support services for this structure.
There is no particular benefit to forming an entity within Virginia unless you only intend to hold a single asset within it or use it as a shell company. In these cases, speak to a lawyer about your plans to ensure your goals will be met. A chat with a CPA may also be prudent.
Take a look at the options in other states to compare. California, for instance, will be far more expensive than say Texas, Nevada, or Wyoming. But understand that Series LLCs are not universal. Delaware is a state that has a strong, legally protected option as well. Formation anywhere is possible but you may have to pay registered agent fees. Given how affordable these are, most investors don’t mind for the peace of mind of not having to worry about lawsuits. An in-state registered agent can be accomplished for a low monthly or annual fee.

Weigh your options, and above all, get the opinions of the experts you trust most.

Virginia Investors: Get the Series LLC that is Right for You

Your Series LLC should above all be tailored to you and formed with the assistance of a qualified real estate asset protection attorney. If asset protection is even a partial motive in setting up your company, it’s best to work with an expert. In the meantime, you can always educate yourself. We like educated clients, and find investors who are more informed about the structure advocate better for themselves as well. Feel free to use our free resources to bone up on the benefits of the Series LLC.

Series LLC For Real Estate Investors In Texas

The Lone Star State is a great place to live, love, and work. In fact, we like this state so much that our firm is based deep in the heart of Texas in Austin. If you’ve lived in Texas long enough, someone has inevitably told you about how everything is bigger here. It just so happens that the same is true of Series LLC benefits.

Texas Series LLCs Are Among the Strongest

The Series LLC isn’t universally structured. The entity is defined and legally controlled at the state level. In fact, not all states have Series LLCs. But Texans are fortunate to have a local option for the Series LLC. If you live in Texas, you won’t need to pay any additional fees that non-Texan investors would expect.

How Does the Texas Series LLC Benefit Real Estate Investors?

We at Royal Legal think this entity kicks ass for a few reasons. Here are just a few of our favorites:

Texas Series LLCs are protected by strong state laws. You can’t be held liable for the actions of your LLC and vice versa.
Forms the core of your asset protection plan by limiting liability and compartmentalizing your assets into Series.
Stops lawsuits dead in their tracks. You don’t own assets. The entity you control, your Series LLC in this case, does.
Streamlines business dramatically. Organizing and bookkeeping is simple, too. You can normally keep doing whatever you were before.
No special requirements for meetings, minutes, or other red tape.
No state income taxes--at all! You’ll have to let the Comptroller know once a year that you have “no taxes due.” Our staff can even help you out with this task.

But the benefits hardly stop there. Learn more about how the Series LLC protects your assets now.

Get Your Texas Series LLC Sooner Rather Than Later

If all of this sounds fantastic to you, we advise proactivity. So even if you’re brand new to investing, it’s not too early to start constructing your asset protection plan. We’ve said it before and we’ll say it again: the law truly favors the proactive. If you wait for a lawsuit threat to strike, it’ll be too late to get your assets into the safety of the Series LLC structure. If you’re ready to learn more about how this entity can help you in particular, consult with one of our experts.

Series LLC For Real Estate Investors In Massachusetts

For the uninitiated, the Series LLC boasts many benefits, ranging in uses from streamlining your business to simplifying taxes. But if you’re here, you’ve likely heard about the structure’s unique asset protection benefits. Believe the hype. This structure is a powerful entity that is suitable for the vast majority of investors we speak with. But there’s always confusion around location, which we hope to clear up a bit today.

Real estate investors in Massachusetts always want to know whether their state offers the Series LLC first. Well, your wish is our command. We’ll answer that question first, and go into greater depth about the best ways for you to form your Series LLC as a Massachusetts real estate investor.

Can I Get a Massachusetts Series LLC?

Massachusetts currently has no Series LLC legislation. An understanding of how a state adopts a Series LLC may be helpful. Like all LLCs, the Series LLC is controlled at the state level. All fifty states, including the Commonwealth of Massachusetts, offer a Traditional LLC. So typically, when a state adds a Series option, all they need to do is incorporate the Series LLC and the rules it must follow into their existing LLC legislation.

Massachusetts hasn’t, but that’s okay. One of the beautiful things about the Series LLC is that if your state doesn’t offer it, or you don’t like your state’s rules, you can play by a different state’s rules instead. Let’s dive into that a little more.

The Texas Series LLC: The Smart Solution For the Massachusetts Investor

No matter where you live, you always have the option to form a Series LLC elsewhere. A Series LLC is as strong as the state it’s formed in, precisely because the state laws discussed above determine how well the entity protects your assets. Fortunately, we’ve gone ahead and done the research on all fifty states, and of course, their pros and cons.

This research and our years of experience forming and implementing the Series LLC in a real estate context have shown us that the Texas Series LLC is generally the best option for Massachusetts investors. Considering you have your pick from the entire country, why not go with the best?

The Texas Series LLC is dirt-cheap, with one filing fee of $300 and no state income tax. Texas has some of the mightiest asset protection laws in America and strong charging order protection. All that’s on top of the fact that it’s the last asset-holding entity you’ll need to buy, since you can add assets and grow indefinitely. It’s convenient, too. Our firm offers end-to-end service where we assist with everything you need, from formation and filing through property transfers.

Royal Legal Solutions is Here For Your Series LLC Needs

The Series LLC experts at Royal Legal Solutions are among the best in the asset protection field. Our attorneys, advisors, and other team members work hard to bring you the latest and most accurate information. We also know how to take your whole situation into account and reject the ideas of cookie-cutter entities or asset protection plans. Personal details and your level of exposure will dictate whether you may need additional tools or special attention to certain legal details to become truly judgment-proof. If you’re ready to put fear of lawsuits in the rearview and learn what the Series LLC can do for you, schedule your consultation now.

Series LLC For Real Estate Investors In Nevada

The Series LLC is a flexible structure that is fortunately accessible to real estate investors all over the nation. If you aren’t yet familiar with the Series LLC’s many perks , they’re well worth getting to know. While the option is not yet available in every state, investors may choose to form Series LLCs out-of-state. Of course, it’s natural to wonder whether your state offers setting up an in-state Series LLC as a Nevada investor. We will go over in-state and out-of-state options, while answering some frequently asked questions and providing tips for how you can get the help you need from your paid professionals.

Does Nevada Offer a Series LLC?

Nevada is indeed among the states that offer a Series LLC. The state began offering the Series LLC with changes to its LLC legislation in 2005. Nevada is a great state for forming a Traditional LLC as well, as it has strong protections for Traditional LLCs that we have written about in greater detail before.

Series LLC Alternatives for Nevada Investors: Texas and Delaware

While Nevada has its own option for Series LLCs, it is important for investors to recognize that the Series LLC can be stronger or weaker based on the jurisdiction it is formed in. For this reason, it is smart for investors from Nevada or anywhere else to fully examine out-of-state options as well.

While it is true that Nevada’s LLC options are certainly better than average for the United States, it can be enlightening to compare it to another pro-business state’s offering. We have found in our professional experience that the Texas Series LLC is a great option for investors nationwide. This entity is freely available to any investor, including Nevada real estate investors, to use.

The Texas Series LLC may offer these and other advantages:

Cost savings. Texas requires only a single filing fee of $300.
Fewer fees. Our firm arranges Texas Series LLCs so you won’t even pay foreign registration fees by using trusts.
No state-level income tax.

Delaware can also make a great choice. If you study the Series LLC, you will quickly learn it has a strong history in the state. Delaware also makes use of Chancery Courts, which are overseen by judges who specialize in business law. The judicial benefits of Delaware Series LLCs make it a popular, and smart choice.

When deciding where to form your entity, always ask about taxes and fees you may owe. A wise investor can easily make a pro and con list about their desired state of formation to aid in decision making. As a bonus, this is also a great way to come up with questions to ask your attorney.

Nevada Investors Can Count on Royal Legal Solutions For Series LLCs

The asset protection experts at Royal Legal Solutions are always happy to guide you through the Series LLC formation process. If you’re ready to start experiencing this entity’s perks, schedule your personal consultation now.

Series LLC For Real Estate Investors in Ohio

Whether you’re set on forming a Series LLC or interested in the Series LLC’s benefits for real estate investors, this article will give you the very basics on what you need to know about setting up a Series LLC as an Ohio investor. We will go over in-state and out-of-state options, while answering some frequently asked questions and providing tips for how you can get the help you need from your paid professionals.

Is There an Ohio Series LLC?

Each State has its definitions about which entities may be formed within its borders. Ohio is not yet among these forward-looking States. Whether this will be the best entity for you will depend on a variety of circumstances, both personal and business. There are good reasons for the Ohio investor to form a Series LLC out-of-state.

Sometimes these reasons are obvious, such as cost. Ohio investors may want to form out-of-state is to take advantage of the stronger asset protection laws in other states or to make use of certain types of trusts not allowed by Ohio law. To help you understand your option, below we will compare the Ohio Traditional LLC with its counterparts from other states with forgiving LLC laws for investors.

Series LLC Options for Ohio Investors: Texas and Delaware

Although Ohio is a great state for forming a Traditional LLC, we recommend the Series LLC for asset protection. There’s a danger to “pooling” multiple assets into one Ohio LLC. If that LLC is ever sued, everything in it is vulnerable to seizure.

The Texas Series LLC is an ideal solution for many investors. You don’t have to own property, nor ever even travel to Texas to use a Texas Series LLC. While we all know that the Series LLC is inherently beneficial, here are some perks that are special to Texas’s Series LLC.

Cost savings. You pay the state once to file, but have the luxury of having as many Series as you like. Texas’s $300 filing fee is on the very lowest end of the price spread for the country at the time of this writing.
Tax advantages. Texas has no income tax, so your only duty for Tax Season will be filing “no taxes due” with the State Comptroller. At Royal Legal Solutions, we offer a subscription service where we take care of this part for you.
Use of Anonymous trusts in conjunction with your Series LLC is possible for greater asset protection.

Delaware offers similar benefits, but is more expensive.

Royal Legal Solutions Can Assist Ohio Investors With Series LLCs and More

The asset protection experts at Royal Legal Solutions can help you establish your Series LLC, whether you’re in Ohio for now or forever. To truly know which option will be best for you, one of our experts will need to review your situation with you. You really are unique, as is your real estate business. Which structures will be best is something that you can hash out quickly with a seasoned pro, but we need to know your circumstances. Let our team of legal professionals help you. Schedule your personalized asset protection consultation now.

Series LLC For Investors in Florida

Real estate investors get excited when learning about the benefits of a Series LLC for real estate investors. Florida investors are no different, and often first want to know whether there is a Florida Series LLC. Continue reading to learn more information about the best way to establish a Series LLC as an investor in Florida, which entity structures may be most useful to the Florida-based real estate investor, and more details about protecting your rental properties with a Series LLC.

Is There Such a Thing as a Florida Series LLC?

Whether a State offers a Series LLC will depend on that State’s laws for establishing Limited Liability Companies. At the time of this writing, Florida does not currently offer a Series LLC. But this does not mean you are forced to pick from Florida’s entity offerings. Investors can actually pick which State’s “rules” they’d like to play by when the select which state to form their entity in. Naturally, this leaves many of you wondering which State is best for the Florida investor.

Out-of-State Series LLCs Offer Solutions for Florida Investors

If you know the Series LLC is likely to be the best entity for you, take heart in the fact that you can form one outside of Florida. Why limit yourself to in-state details when forming elsewhere could save you thousands?

Cost savings. Your fees are limited to a single filing fee with a low rate of $300, which is among the cheapest in the country.
Tax savings. Everything is bigger in Texas, except our state income tax. That’s because the State of Texas does not have a state income tax. Moreover, Texas does not tax your Child Series, or even your business annually as other states may with a Traditional LLC. Come business tax time, your main job is to file “no taxes due” with the State’s Comptroller, which is about as easy as taxes get.
Operational perks. If you’re using a traditional bookkeeping system, you can carry on business essentially as usual. We’ve had clients run their records with a simple Excel sheet and attention to detail.

While the Texas Series LLC is our first choice for Florida investors, you may also take the time to research the Delaware model. It is similar in protections, albeit a bit more expensive for many investors as the state does have an income tax.

Royal Legal Solutions Can Help Establish Your Series LLC and Other Asset Protection Structures

The real estate lawyers at Royal Legal Solutions can help you establish your Series LLC, whether you’re in the Sunshine State or elsewhere. We help real estate investors from all over the country set up the best entities for them and their business goals. Schedule your personalized asset protection consultation today to find out more about the best asset protection tools for you.

Series LLC For Investors in New York

If you are a real estate investor in New York, you may already be familiar with some of the benefits of Series LLCs for real estate investors. Read on to learn more about whether there is an in-state Series LLC option for New Yorkers, which Series LLC options will likely be best for the New York investor, and how Royal Legal Solutions can help you set up this critical component of your asset protection strategy.

Is There a New York Series LLC Option?

State law will provide whether a certain state has a Series LLC option. While all states have some form of Traditional LLC that you can form within its borders, the State of New York does not have a Series LLC offering. However, this does not mean that New York investors are limited only to the New York LLC. Investors in New York may still take advantage of a Series LLC. All they must do is select one formed in a different state.

Out-of-State Series LLCs for the New York Investor

Fortunately for the New York investor, there is nothing stopping you from forming a Series LLC in a state that does permit one. This entity offers separation of assets, flexibility with tax treatment, creditor protection, and more. But not all Series LLCs are created equally. You want a Series LLC that is cost-effective with strong legislation to back it up.

We have written in the past about which are the best states for forming a Limited Liability Company, and the information in that article holds true for the Series LLC as well. Of the states that do offer Series LLCs, we tend to recommend the Texas Series LLC for investors all over the country. You need not own property, nor ever even have been to Texas to take advantage of this entity. Some benefits specific to the Texas include:

A low, one-time filing fee. Regardless of how many Series entities you have, your Texas Series LLC will only cost $300 to file.
No state income tax. Series LLCs formed in other states may be subject to franchise and other in-state taxes. This is not the case with Texas. Your only obligation is to file “no taxes due with the State’s Comptroller once annually for your business--you don’t actually pay anything in taxes.
Operational perks. The Texas Series LLC works effectively with the traditional bookkeeping methods you are likely already using.

For those who want a second Series LLC option, the Delaware Series LLC offers similar benefits and some others. Although the State does have an income tax, this tax is fairly low at only $300 per year and the Delaware Series LLC also confers some judicial benefits.

How Royal Legal Solutions Can Help Establish Your Series LLC and Other Asset Protection Structures

The real estate lawyers at Royal Legal Solutions can help you establish your Series LLC, no matter where you reside. Schedule your personalized asset protection consultation today so you don’t have to worry about losing your assets in a lawsuit in the future.

Series LLC For Investors in Delaware

Investors in the state of Delaware are fortunate to live in one of the best states for forming a Series LLC. This famously pro-business state is a wonderful place to form a Traditional LLC or Series LLC. For real estate investors in Delaware, the Delaware Series LLC provides more protection while also boasting some benefits that Series LLCs formed in other jurisdictions do not.

About the Delaware Series LLC

Delaware was the very first state to enact Series LLC legislation back in 1996. Since Delaware pioneered the Series LLC, other states have looked to Delaware’s legislation when creating their own Series LLC options. The entity has stood the test of time, and today the Delaware Series LLC remains one of the strongest asset protection tools available to investors nationwide.

Advantages of the Delaware Series LLC

The Delaware Series LLC confers the many benefits that characterize Series LLCs generally. All Series LLCs offer a unique way to limit liability, protect the equity of your assets, separation of assets, flexibility with tax treatment, and a mechanism for concealing your assets from prying eyes. You can learn more details from our previous piece on the benefits of Series LLCs for real estate investors.

There are, however, certain benefits that are specific to the Delaware Series LLC. Some of these benefits include:

Low-cost single filing fee. Filing a Series LLC in Delaware costs only $300 at the time of this writing. This fee does not change based on the number of Series within the entity.
Lower tax costs. The Delaware Series LLC must pay a franchise tax annually. However, at only $300, this is a relatively inexpensive in-state tax. While states like Texas may have no in-state tax at all, states like California would require $800 per Series. The Delaware Series LLC will pay the same $300 regardless of number of Series, just like its filing fee.
Judicial benefits. Delaware uses a Chancery Court. The Chancery Court’s judges are specifically experts in business law. The Court has a reputation for providing fair rulings in keeping with the state’s pro-business reputation.
Clear legislation. State law in Delaware specifies the Delaware LLC’s asset protection benefits--including the insulation of assets and liabilities within and between Series. Similarly, Delaware law has clarified that Series may sue or be sued, enter into contracts, and hold title to real estate assets without exposing the entire structure.

How Royal Legal Solutions Can Help With Your Delaware Series LLC

The asset protection professionals at Royal Legal Solutions can help you establish your Delaware Series LLC. We can also assist with property transfers into the structure, If you happen to be reading this from another state, you should know that you may be able to take advantage of the Delaware Series LLC--and we can help you, too. Protect the real estate investments that you have worked hard for. Schedule your personalized consultation today.

Series LLC: The FAQs

Since the Series LLC is a lesser-known entity compared to its Traditional LLC counterpart, it is only natural that real estate investors have questions about the structure. So you can better understand the Series LLC, we have collected some of the FAQs here.

Is There a Cost Advantage to Using the Series LLC?

Absolutely, particularly if you compare the Series LLC with an equivalent amount of Traditional LLCs. Optimal asset protection is achieved by maintaining a single asset per LLC. For owners of multiple properties, the Series LLC is a no-brainer. The Series LLC requires only a single filing fee, and you receive a single EIN to make matters easier come Tax Season. Traditional LLCs, on the other hand, require a fee for each LLC created. When you can simply create a Series for free with a Series LLC, it makes no sense to fumble around with multiple LLCs and all of the record-keeping required to maintain them.

Will I Need to Do Complicated Banking or Change My Bookkeeping?

Fortunately, the answer to both of these questions is “no.” But allow us to elaborate on why. Contrary to some of the misinformation out there about the Series LLC, there are ways to bank effectively with a Series LLC that will only require a single bank account and card. Similarly, the Series LLC is an entity that easily lends itself to traditional bookkeeping. If you are already using traditional bookkeeping methods, fantastic! You won’t have to change anything. We have seen clients effectively keep records for their Series LLC by using an Excel sheet with multiple tabs--one for each Series.

Is the Series LLC The Only Asset Protection Tool I Need?

The answer to this question depends on the level of protection you want. Some investors are comfortable using the Series LLC as an asset-holding company alone, then doing any business that requires contact with the outside world personally. Examples of business that involves the public include collecting rental payments, hiring contractors, etc.

Investors seeking a higher level of protection may opt to use a shell company. A shell company is typically a Traditional LLC. This company would be responsible for any operations, but would not actually own anything. In fact, if someone does decide to sue you, this is the company we want them to sue. You can think of it as the “fall guy.” If a lawyer researches your shell company, he or she will realize suing you is a waste of time because it does not own any assets to seize upon judgment.

For an even greater level of protection, you have the option of incorporating Anonymous Land Trusts. Learn more about the Land Trust and Series LLC asset protection strategy from this previous article on the subject.

Do I Need to Take Any Special Considerations With Naming My Series LLC?

One of the main benefits of the Series LLC is that it makes maintaining your anonymity much easier. Anonymity is crucial to preventing lawsuits. Anyone looking to sue you will hire a lawyer pretty much immediately. The first thing that attorney will do is look to see who owns the property. By having the name of an entity like a Series LLC recorded as the owner of your property rather than using your own name personally, you become a much less attractive target.

But that benefit can be undermined if you fail to name your Series LLC in such a way that preserves your anonymity. To best preserve your anonymity, we suggest that you avoid using any version of your first and last name, business names already well associated with your name, or any other information that clearly links you to the property. To foil the business end of the lawsuit industry, we want an entity that is difficult to tie to you personally. The only other naming concern to take into consideration is whether the name you want is already in use by another business. We have found that a little bit of internet research and creativity can address this concern, as can having your attorney check for you when you form your entity.

Royal Legal Solutions Can Help With Series LLCs

The Series LLC is our bread and butter, and we have been known to sing its praises here and in other corners of the internet. If you are ready to learn firsthand how the Series LLC can protect your real estate investments, contact Royal Legal Solutions with any questions you may have. If you believe the Series LLC may be the entity for you, feel free to schedule your personalized asset protection consultation today. Our experts will review your personal situation and make recommendations about the best legal tools for defending your real estate investments, allowing you to focus on growing your business.

Series LLC: Benefits of The Structure

Those of you who read our blog regularly know we often wax poetic about Series LLC Benefits.

You may be wondering what has us so fired up. To quench your curiosity, we have collected some of our favorite benefits of the Series LLC from our perspectives as both legal professionals and real estate investors.

Series LLC Benefits Mean You Easily Grow Your Business

Wouldn’t it be nice if you could form as many companies as you liked, while only paying once? The Series LLC makes this possible thanks to its parent-child structure. When you establish a Series LLC, you will get a parent company that can have as many “children” as you have real estate properties.

This aspect of the Series LLC allows you to incorporate as many assets as you like into the structure while also following the one asset per LLC asset protection recommendation. Each series has the same liability protections as its own mini-LLC, ensuring your assets are separate from each other (and from you!) in the event you are ever targeted by one of the more, shall we say, litigious members of our society.

This guy is coming after your assets. Are you ready?

Growing your business with the Series LLC is easy. To create a new child series, all you need is an item called a Series Document, then an Operating Agreement for your new series.

At Royal Legal Solutions, we are happy to create these for you, but we also hope to empower you by allowing you to use the documents we create for you as templates for your own. That way, when you acquire a new asset, you will be able to add a new series to your Series LLC from the comfort of your home or office. We can always assist you with any concerns you have regarding creating these documents or transferring property, but we also want you to know the joy of easily scaling up your real estate business. Most importantly, there is no cost based on the amount of series in your structure. Whether you have 2 investment properties or 2,000, the Series LLC can work for you.

Does My State Allow the Series LLC?

Maybe. The types of Limited Liability Companies offered within a state is a matter set forth by state law. However, you do not need to live in a state with an in-state Series LLC option to create a series LLC. In many cases, an out-of-state Series LLC may prove better than any in-state solution. Ideally, you should form a Series LLC in a state with strong legal protections for the structure. We have found that the Texas Series LLC and Delaware Series LLC have these strong protections and work well for real estate investors all across the country--with the exception of our friends in California, who are often better off with a Delaware Statutory Trust.

Is the Series LLC The Best Choice for A Real Estate Business?

The Series LLC is an extremely flexible entity. We find it works well for a broad range of businesses but is especially useful for real estate investors.

The Series LLC Is The Foundation for Your Asset Protection Plan

The Series LLC has several benefits from an asset protection standpoint:

Each series has the liability protections of a traditional LLC. The series LLC offers the protection of an infinite about of traditional LLCs, but at a fraction of the cost. You will only pay a one-time filing fee, and the taxes required by the state you form in (which you have some control over).
The structure separates assets. Not only does each series hold its own asset, thus conferring the liability benefits discussed above, but each is legally separate from the other. Creating additional series is simple, making the one asset per LLC strategy easy for the real estate investor. The structure also separates assets from you personally.
In the event of a judgment against one series, your other assets are safe. If the worst-case scenario of a judgment against one of your series’ occurs, you don’t have to worry about the other assets in your series LLC structure. They are protected by the fact that they are legally separate entities.

There are other benefits to the structure as well, but those are the very basics in terms of how this entity easily defends your assets from lawsuits.

Let Royal Legal Solutions Help You Establish Your Series LLC

If you still have any questions about what the benefits the Series LLC can offer you, reach out and contact Royal Legal Solutions. We are happy to take a look at your personal investing situation and help you determine if the entity meets your real estate investing goals. Start with our investor quiz and we'll make sure you are using the best asset protection strategies for your current situation and ambitions. Protect your investments by scheduling your personalized asset protection consultation today.