Selling an Inherited House With Siblings? Here's What To Know

Are you selling an inherited house with your siblings?

Dealing with the death of a parent or guardian is already tough, but the administrative and legal tasks that go hand-in-hand with settling their estate can make it tougher. If you're inheriting a house with siblings, there are also financial and sentimental challenges to navigate—especially if your brother or sister refuses to sell or has other ideas for the property.

What your loved one intended to be a gift can become a burden if this process isn't handled properly. That's why families opt for selling an inherited home as-is to minimize the timeline and see the financial returns as soon as possible.

Types of Home Inheritances

Inheriting a home may seem pretty straightforward. However, different types of inheritances can impact how you handle the sale of the property: deed inheritance, will inheritance, and trust inheritance.

A deed inheritance works similarly to a life insurance policy. Also known as a "Title by Contract," this applies to mortgages that have a beneficiary or beneficiaries listed to receive the property in the event of the contract holder's death. The beneficiary is listed as a "remainderman." A remainderman is a person who inherits or is entitled to inherit the principle of a trust once it is dissolved.

A will inheritance is a bit more complicated to manage. This type of home inheritance is what most people envision when they consider an inheritance. The property owner leaves the house to you and your siblings in the will. However, as the will is not a part of the original ownership contract, you must use the will to go through probate proceedings to secure the property. This process delays the sale of the home by months.

Finally, a trust inheritance indicates that you and your siblings are entitled to the home after a certain age. This type of inheritance typically doesn't apply to adult children or siblings.

Determining the type of inheritance you've received will help you understand the timelines and legalities involved. It's worth hiring an attorney to navigate these processes.

Selling an Inherited House? Understanding Inherited Ownership

When you inherit a house with your siblings, state law dictates that you share ownership equally. In addition to sharing the asset, you're also equally responsible for any outstanding liabilities and debts (i.e., the mortgage and property taxes) and for claiming income from the property.

This means that you and your siblings will be equally responsible for paying debts— especially if there's no life insurance to cover the outstanding mortgage— even if you have different income levels. Additionally, you'll all have taxable income from the sale to navigate with the IRS. It's worth getting professional legal and accounting advice as individuals when navigating the process.

It's also important to note that selling an inherited house can't take place without agreement from all of the listed beneficiaries. If a sibling is pushing back, you may require legal intervention before listing the home.

It should be no surprise that handling the administration of dividing debts and income and listing the home is a significant undertaking. If one sibling handles the majority of the work, they are legally entitled to additional compensation for their time from the estate. Again, having legal counsel in place to assist is beneficial.

Dealing with an Outstanding Mortgage

Getting mortgage insurance is one of the best things a homeowner can do to protect their family should death occur— unfortunately, many opt out of this coverage. When mortgage protection is in place, the costs are covered, and the beneficiaries don't have to worry about paying it off.

So what about those cases when the parent didn't have mortgage insurance or life insurance, and a mortgage is still outstanding?

Rest assured that under federal law, a mortgage lender cannot demand the entire mortgage in a lump sum from the beneficiaries of inheritance. In some states, there are even protections in place to give beneficiaries the right to walk away from an inheritance with a mortgage without the bank being able to go after their personal assets.

The process of transferring a mortgage after death is contingent on each lender's policies and procedures. Generally, it's a lot of tedious paperwork, but not too difficult. Inheriting a mortgage does mean you'll be required to make those payments until the house is sold. When the home sells, the profits will be applied to paying off the mortgage before being divided between the beneficiaries.

Home Inheritance Taxes

When you inherit a home, a policy called "stepped-up basis" comes into effect. This policy ensures you only pay gains on the selling profit versus the home's value today rather than the original value. Suppose your parents bought the home for $50,000, and it's now worth $200,000. You sell it as-is for $220,000. You and your siblings would be taxed on the gains of $20,000 rather than $170,000.

It's important to understand this concept, as many parents mistakenly "gift" the home to their children before their death. In that case, you would be taxed for the $170,000 gain.

Selling a House As-Is

Selling an inherited house as-is means that you're listing the property in its current state with the understanding among buyers that you won't be making any repairs. Buyers still retain the right to have an inspection completed, negotiate the price, and access a full property disclosure from the sellers.

The advantage of selling a house as-is is that you won't have to put any time and money into the property before selling. This streamlines the process of paying off the mortgage, potentially getting extra money, and moving on with your lives.

As inheriting a home with siblings can be complex, it's important to hire a professional attorney and consult with a skilled accountant.

Key Takeaway

Spare loved ones the pain of probate and ensure that your assets are distributed exactly according to your wishes by having a professional estate plan put in place. This can be accomplished through a 3-part strategy that involves a Living Trust, Pour Over Will, and power of attornies for making medical, financial, and managerial decisions. By not having a proper estate plan, you are at extreme risk of losing up to 1/3 or more of your estate to probate court and attorney fees. To learn more about Royal Legal Solution's rock-solid estate plan service, visit Estate Planning for Real Estate Investors.

The Fractional Family Office: Your Financial ‘Dream Team’

Like life itself, the most important thing in financial management is who you trust enough to accompany you on your journey.

That’s why a great team makes all the difference. But finding the right people can seem like an impossible task.

Who can help you save money with advanced tax strategies?

Who can help you grow your money with elite investments?

Who can help you keep your money safe using the legal structures it takes to protect everything you’ve worked for?

And even if you’re fortunate enough to find these unicorns, how do you know if they have your best interests at heart?

Billionaires do this by hiring a "Family Office,” a staff dedicated to building and protecting their wealth. They have attorneys, CPAs, coaches and a host of other specialized services watching their back at every turn.

Now here’s the good news: In 2025, the Family Office concept is available to those of us who aren’t billionaires. This means you can have vetted professionals on staff and a network of providers vetted to handle all of your tax and investing needs no matter who you are, where you're located, or what investing you're doing.

Let’s take a closer look.

Start With Your Executive Team

You need proactive guidance to achieve your financial goals. Chances are you’ve worked with financial advisors and accountants before, but the likelihood of them being truly proactive in their approach is low.

In cases like these, you are the one doing the research, looking into tax strategies, reading articles about estate planning ….

A good fractional Family Office will take this work off your shoulders.

You’ll start by putting a strategic level Certified Public Accountant (CPA) on your team, someone who has the skills to take your tax burden as low as 0-10%. This partnership will be key for your wealth plan to be successful. The right CPA is someone who can implement the right tax strategies for you and give you proactive advice about saving money by improving your tax strategy.

Next, you’re going to grow your money with elite investments. This means hiring a Chief Financial Officer (CFO) and plugging into a deal network. To achieve a target 20-30% ROI, first you're going to hire the CFO to help you model investments.

You also need access to a deal network of high performing investments. The CFO is going to talk to you about blended ROI. This isn't just normal ROI like your financial advisor would talk to you about. And it's not just tax savings like a regular CPA would talk to you about. This is both of those combined.

The CFO is also going to guide you on how to protect your income through tax shelters or tax advantaged investments.

Finally, your executive team will be rounded out with a chief legal officer, basically an asset protection attorney. This will help you keep your money through legal structures that protect your wealth. This person will identify all the risk factors that you might be exposed to and help you mitigate them. They do this by creating the right entity structure and by providing ongoing estate planning and maintenance.

A Fractional Family Office Can Keep You Compliant

It's important that you get the right structure in place before you make investments in non-traditional assets. For example, Royal Legal Solutions helps investors use an LLC that is 100% owned by your IRA to incorporate cryptocurrency into their retirement accounts. This gives your crypto investments you the same tax-advantaged status as the IRA.

If you don't have a LLC (limited liability company) and a Self-Directed IRA structure set up already, your Family Office team can help.

They will also review your investment options and business structures to ensure they are up-to-date, compliant, and bulletproof against whatever the future holds. The right team will help you to ensure ongoing compliance with your state and local laws and tax requirements.

Your ‘Dream Team’ should give you actionable steps to take, making sure your asset protection plans are up-to-date and your financial dreams are closer to becoming a reality.

How Assumed Names Disguise Your Ownership (And Help Make You Lawsuit-Proof)

Your business may operate under an Assumed Name (also called a fictitious name, trade name, or doing business as (DBA).

An Assumed Name is simply any name other than your or your business's legal name.

Value of a DBA/Assumed Name

An "Assumed Name" can help you avoid potential legal pitfalls by giving you a "Doing Business As" name that is different from your company’s official name or personal legal name. It also allows you to have a business bank account even if you're a sole proprietor.

In Texas, we refer to DBA registration as filing an Assumed Name Certificate. Any type of entity structure can file an Assumed Name, whether you are operating as a sole proprietor, a partnership, a corporation, or an LLC.

Public Interest in Disclosure

Public interest in disclosure is the legal principle that a court should have access to relevant information, and that an opposing party (a litigant) should have access to all relevant information to make their case.

Legally speaking, your DBA is the public disclosure associated with the identity of the true party in interest (you) and the location where the party may be served with process (if suit is filed). Public interest in disclosure was created from the belief that is in the public interest to be able to ascertain whom to sue and where exactly the service of process can be performed.

What This Means If You Are Sued

What if your real estate business is taken to court? The potential plaintiffs will be able to benefit from your DBA filing requirements. Each and every day suits are filed against Assumed-Name defendants.

An attorney is probably going to be able to dismiss a suit that is filed against the Assumed Name (usually associated with a corporation or LLC that has a liability barrier). To have a better chance of winning the suit, the plaintiff should refile the case against the true party behind the DBA.

Note: It is not mandatory for a legal entity to have its business headquarters where you conduct business. In fact, requesting an out-of-county service of process gives your legal opponents additional delay and expense. However, this is when many plaintiffs will certainly give up.

What Laws Apply To Assumed Names?

An individual or company may possess as many DBAs as they desire, at the state or county level. A period of ten years can be covered with a single filing. A filing of a particular form may be used to terminate or abandon a DBA.

You should verity the county clerk's website within the county where you have your main headquarters or where you perform your services. Texans can visit the Secretary of State website and fill Form 503 for a state-level filing.

You are required to mention the counties where an Assumed Name will be used in this form. You need to check the box for “All” in case the entity will potentially use its Assumed Name in all counties in Texas.

A notarized DBA filing for people, companies and others is required by the Texas Business and Commerce Code chapter 71. You are required to state the psychical address (location) of your business. In case the county where the company has its main headquarter is different from the proposed county of business, you must file a DBA in both counties.

Let's imagine that you have a California LLC and wish to conduct business under an Assumed Name in Miami. Should you file an Assumed Name certificate in both counties? The answer is YES. Both the domestic and foreign entities within the scope of your business are included in the statute.

State vs. County Filing of DBAs

After you have formed an LLC, you need to get a DBA. However, where should the filing be performed, at the county clerk's office or with the Secretary of State?

The DBA needs to be filed as at both levels, according to the Business and Commerce Code:

"The corporation, limited partnership, limited liability partnership, limited liability Company, or foreign filing entity shall file the certificate in the office of the Secretary of State and in the office or offices of each county clerk as specified by Subsection (b) or (c)."

Even though filing with the Secretary of State is usually neglected by smaller entities who often file just in their local county, you need to consider that the statute says “and” when referring to state and county filings.

The county clerk needs to discover if a proposed DBA is available at the county level. The main thing to consider is that your proposed name should be different from another entity's filed Assumed Name that operates in that county. It is not mandatory to ascertain if a particular name is available, considering the fact that the DBA filing is essentially a notice filing. Simply file Form 503.

There are 254 counties in Texas. Is it important to file in the county where you live when you are obtaining a county-level Assumed Name for daily usage and banking purposes? The answer is no.

You can file for a DBA from El Paso County and the bank will still accept it, regardless if your are operating in Houston.

You should also consider the fact that there is no central data base connecting the Assumed Name records of Texas's 254 counties. You might want to get your company's DBA far from its true base of operations and in a county whose DBA database hasn't entered the online world yet, if asset protection/anonymity is your goal.

What About A Series LLC Doing Business through One of Its Series

Series are viewed as sub-companies, so an individual series has the power to sue and be sued; to contract; and to hold title to real and personal property, according to Business Organizations Code section 101.605.

However, the series has to function or hold title under its own name to fulfill these functions at the series level. This in turn demands that the series obtain an Assumed Name Certificate.

Are there any causes for this situation? Yes there are! First of all, technically speaking, the series is not an independent legal entity. And since it is running under an Assumed Name, is should possess a DBA on file. Additionally, the DBA filing should be conducted both at the state and county levels.

The name of the entity conducting business as an individual series will contain the basic Assumed Name for a Series LLC. As an example: “ABC LLC conducting business as ABD LLC-Series A.” Section 71.103 requires an Assumed Name filing both at the office of the Secretary of State and the county where Series A does business.

Can My Husband and I Own Our Business Together as a Sole Proprietorship?

There are some cases where a couple who run a business together wouldn’t be interested in creating a formal business entity.

The question then becomes: can that business, being run by a married couple, be considered a sole proprietorship?

The answer is yes. The IRS allows a lone exemption for married couples who want to structure their business as a sole proprietorship.

Before going into details on that, there are typically four different kinds of business structures that the IRS recognizes. Those include:

Sole proprietorships
Partnerships
Limited Liability Companies
Corporations

In order for the business you run with your spouse to qualify as a sole proprietorship, the following conditions must be met:

There must be no other employees actively engaged with the business. This includes children or other relatives.
Both spouses must materially participate in the running the business.

With those requirements met, each spouse would be required to file their own Schedule C, reporting their individual share (usually an even split) of the business’s income. Each spouse in the husband-and-wife business (sole proprietor or partnership or other) would also need to file a separate self-employment tax form.

Should My Spouse and I Run Our Business as a Sole Proprietorship?

This, of course, is a separate issue entirely. The big advantage of a sole proprietorship is that it’s one of the easiest business structures to establish. The major disadvantage of this structure is that you and your spouse are 100% liable if the business fails. Sole proprietorships offer no protection from creditors.

Another option that many married couples employ is a partnership. For tax purposes, it can be easier to file since there is only one form involved. On the other hand, the business will be required to obtain a tax identification number. Partnerships might also be subject to state and federal regulations. The major upside, however, is that partnerships offer more opportunities for growth.

There are no regulations that state that if you start a business as a joint venture LLC, which for tax purposes is considered a sole proprietorship, you cannot later change the structure of the business to a partnership, LLC, or anything else. For many married couples, having the option to start as a sole proprietorship affords them the opportunity to hit the ground running. It’s a simple and effective means of getting their business started without needing to file numerous petitions with state and federal agencies.

What makes sense for your business in the early days, however, may not make sense down the road.

Is The Owner Of An LLC Public Record? Which States Allow Anonymous LLCs, Anyway?

Real estate investors love the liability and asset protection offered by a Limited Liability Company (LLC). Do you know what makes an LLC even better? When it's completely anonymous. Fortunately, some states offer you the chance to escape from unnecessary legal liability in the form of an “anonymous” LLC.

An anonymous LLC protects your privacy and keeps your ownership of the company out of the public record, which gives you more flexibility and security in managing your real estate investments.

If you're intrigued, keep reading. We'll explain everything you need to know about how to hide ownership of a company using an anonymous LLC.

Is the Owner of an LLC Public Record?

Whenever you start a new LLC, you have to file formation documents with a state government entity, often the Secretary of State. In most states, you have to provide the name of the person or entity forming the LLC and a registered agent. The registered agent is the person or entity responsible for receiving legal service and other essential notices on behalf of the LLC. Some states will also require you to list the LLC's manager on the formation documents.

When you file your LLCs formation documents, they become part of the public record, and anyone can access this information. If you'd prefer to keep this information private, there are several methods you can use to form an anonymous LLC.

Benefits Of Anonymity

With an anonymous LLC, sometimes referred to as a private LLC, the company's owners are not publicly listed in state records, as they would be with a regular LLC. Keeping things anonymous offers a variety of benefits to you and your company. We've listed some of the most valuable advantages of LLC anonymity below.

Maintaining Confidentiality

Starting an anonymous LLC to hold your real estate investments can help you keep your properties and financial status out of the public eye.

Protecting Privacy

Forming an anonymous LLC allows you to protect your privacy by keeping your name and address off the internet.

Preventing Harassment

If you keep your identity and address anonymous, you can avoid unwanted harassment from salespeople, competitors, or anyone else who is interested in you or the properties you own.

Frivolous Lawsuit Prevention

The world is full of "professional plaintiffs" and other opportunists who are looking to make a quick buck. Keeping your name off the ownership records for your LLC can help you avoid frivolous lawsuits.

Asset Protection

Holding your real estate investments in an anonymous LLC can help you shield them from lawsuits and your personal creditors.

How Does An Anonymous LLC Work?

There are a handful of methods you can use to create an anonymous LLC. The easiest way to do it is to select a state that allows you to incorporate anonymously.

The following states will let you create an LLC without making your name public record:

Delaware
Nevada
New Mexico
Wyoming

Establishing an anonymous LLC in any of these states lets you keep your name off the LLC's records. Which state you should choose for your LLC depends on what benefit is most important to you.

We've listed the most significant small business benefits offered by three of the most popular states below.

New Mexico

New Mexico is the only state that allows you to form an LLC without disclosing the members' names to the government, making it the option that offers the most privacy.

Delaware

Delaware is well known for its business-friendly laws and doesn't require corporate income tax. You'll only have to pay a $300 franchise tax each year.

Wyoming

Wyoming is one of the most tax-friendly states for anonymous LLCs, with no corporate income tax and annual fees as low as $50.

Forming An Anonymous LLC In Other States

If you want to create an anonymous LLC but don't want to start it in Delaware, Nevada, New Mexico, or Wyoming, you're not out of luck. Property owners can form an anonymous LLC in other states; there are just a few extra steps involved.

First, start an anonymous "holding company" in Delaware, Nevada, New Mexico, or Wyoming. A holding company is a business entity that is created to own other businesses and hold assets. Holding companies usually don't conduct independent business operations; they just profit from the companies and investments they own.

Once you've created your anonymous holding company, you can start an anonymous LLC in any state by simply listing the holding company as the owner. Since no records tie you to the LLC and no records connect you to the anonymous holding company, your ownership interest in the LLC remains private.

Should I Form My LLC Anonymously?

If you're looking to protect your privacy and keep your ownership information out of the public record, the answer is a resounding “YES!” Forming an anonymous LLC will allow you to guard your personal information while shielding your investments from creditors, lawsuits, and harassers.

Find Out if a Land Trust is Legal in Your State

For years now, I’ve been telling people to use land trusts for their real estate investments. Not only does it provide protection from creditors but it also prevents them from using the Uniform Fraudulent Conveyance Act to access your assets. It’s also a great way to discourage would-be litigators from suing you since your name never appears on record that you own anything.

I’ve been talking about the importance of using land trusts for years now. One of the questions I keep getting is: Which "land trust states" will recognize this legal entity?

What States Allow Land Trusts?

Only six states have a land trust statute on the books. These states include:

Indiana
South Dakota
Florida
Hawaii
Virginia
Illinois

This doesn’t mean that you can’t form a land trust if you don’t live in these states. Most states without the legal structures in place defer to the Illinois Land Trust statutes to determine validity and case law. Apart from Louisiana, you can hold land in trust in any of the other 49 states and the District of Columbia. This has to be done in accordance with the law of any of the foregoing states given that the beneficiary, trustee, or the property is based there. The states of California, Colorado, Missouri, and Nevada have trust laws that allow trustees to hold title to property for a NAMED TRUST (note that it’s just a trust, not a land trust).

With the guidance of a knowledgeable lawyer, you can actually form a land trust in most states, even in Louisiana. The state still has the old French Civil Laws that will need an expert to navigate. One of the hurdles you might have is getting a good attorney in your state who’s well versed in land trust matters.

How to Go About Setting Up the Land Trust

To start setting up your land trust, deed the piece of property you’re buying to a friendly nominee. Should you run into problems down the road where the title company rejects your land trust, they will be able to recognize the last person in the title – the nominee. Thereafter, direct your nominee to sign a deed directly to your new purchaser. But there’s a catch to this approach – you need to be certain that your nominee will be around for the long haul. This is why you might want to consider a appointing close friend of family member as the nominee.

To avoid problems in future, you might want to have the grantor execute two deeds – one for the land trust (using trust deed language) and the other directly to the grantee. The deed to the grantee is a failsafe to be used if the land trust is found to be defective by your state law.

Interested in learning more? Check out our article The Benefit of Using a Power of Attorney With a Land Trust.

Personal Property Trust Vs Living Trusts & Land Trusts: Discover An Overlooked Asset Protection Tool

land trust vs living trust

personal property trust

Asset protection is a crucial component of financial planning for any real estate investor.

I've written again and again and again and again about the many tools you can use to keep your property out of the clutches of creditors and would-be-litigants (and new clients are always asking about the difference between land trusts and living trusts and personal property trusts).

While Land Trusts, Series LLCs, and anonymous trusts are some of my favorite tried-and-true asset protection methods, a financial planning tool that doesn’t get as much attention as it should is the personal property trust.

With this article, we're going to change that!

What Is A Personal Property Trust?

In general, a trust is a type of legal arrangement where a trustee holds title to specific property and manages it for the benefit of the trust’s beneficiaries. Trusts can be revocable, which means the trust can be altered or canceled at any time while the person establishing the trust is still alive. They can also be irrevocable, which means they cannot be modified or revoked.

Like a Land Trust or living trust, a personal property trust is a type of revocable trust. Whereas the Land Trust is used to hold real property, the personal property trust is used to hold title to personal property assets such as vehicles, boats and mobile homes.

Whenever an asset needs to be registered and included in public records, you can use a personal property trust to keep your ownership information private.

Since trustees must manage the trust assets as directed by the trust instrument, you can use a trust to transfer legal ownership and protect your identity while essentially maintaining complete control over the trust property. Generally, the sale of trust property requires approval from the beneficial owner, and the trustee cannot make the decision alone. Naming yourself as the beneficiary of a personal property trust can keep you in control of your assets.

What Are The Benefits Of Putting Your Property In A Trust?

The primary benefit of using a personal property trust is privacy. When you place your assets in a personal property trust, public record registrations will show the trust as the owner instead of listing your name. If you choose a privacy-protecting name for your trust, there will be no indications in the public record that you own the property.

A few additional benefits of using a personal property trust include:

Protecting your assets from lawsuits and other creditors
Avoiding the expensive probate process when leaving assets to trust beneficiaries
Flexibility in the types of personal property that can be placed in a personal property trust
The ability to retain control over trust property
The option to add and remove property from the trust

When Should You Use a Personal Property Trust?

As a real estate investor, there are several ways you can take advantage of the protections offered by a personal property trust. Here are a few of the most beneficial ways to use personal property trusts to help keep your real estate investments safe and private.

Mortgages

One of the most common uses of personal property trusts is to hold mortgages, since the ownership information for this type of asset can be found through a public records search. As a real estate investor, you may want to consider creating a separate personal property trust for each property for which you have a mortgage. This strategy will allow you to keep your ownership information private and avoid links between your various properties.

LLCs

Savvy real estate investors often use an LLC to own real estate directly or name an LLC as the beneficiary of a Land Trust. To add another layer of separation and anonymity to your asset protection strategy, you can use a personal property trust to hold your membership interest in the LLC.

If you use an LLC as part of your real estate asset protection plan, it’s important to remember that, in most states, LLC membership is included as part of the public record. One way to keep your LLC interests private is to list a personal property trust as the LLC member and name yourself as the trust beneficiary.

Vehicles

Any vehicle—including cars, trucks, and motor homes—that must be registered with the Department of Motor Vehicles is generally part of the public record, which can make your personal data open to public search.

You can avoid this by titling your automobiles to a personal property trust.

Given its various uses, a personal property trust can be a valuable tool for real estate investors, as well as people who haven’t caught the real estate bug (yet). No matter how you use your personal property trust, it is a practical but often-overlooked component of a successful asset protection plan. When deciding what financial planning tools are best for your real estate investment plan, it’s vital that you seek the input of an experienced asset protection attorney.

Tax, Investing, and Legal Strategies for Medical Professionals

High-earning medical professionals eventually learn a hard lesson:

The more they earn, the more they pay in income taxes.

And since physicians and other medical professionals rank among some of the highest-paid individuals in the United States, they need tax planning and investment strategies that will protect their assets and build real generational wealth they can pass to their children and grandchildren.

Hard-working doctors and other healthcare pros can take advantage of all the tax deductions, tax credits and tax exemptions that Congress and the Internal Revenue Service (IRS) make possible to reduce their taxable income.

But there are also lesser-known strategies which, when leveraged correctly, can reduce your tax burden and deliver a sound financial plan that gives you what we call “time freedom.”

These include:

✅️ Setting up an S-Corporation and a Solo 401(K)
✅️ Setting up a 501(C)3 Non-Profit Private Foundation and investing in cash flow deals
✅️ Investing your tax savings in Short-Term Rentals or syndication deals that offer bonus depreciation

Here I’ll introduce some of the tax, investing and legal strategies our medical professional clients use.

Tax Strategies for Medical Professionals

As a busy healthcare professional, you work hard to provide quality care to your patients, juggle administrative work, and balance your work with life and demands at home.

That’s why working to optimize your tax situation is probably not at the top of your priorities.

Deep down, however, you know that tax planning should be a key component of your wealth management strategy.

If you are employed by a hospital, a private practice, or a government healthcare department, you’re probably a W2 worker. W2 employees are taxed on gross income first, meaning the IRS takes their cut before you receive your paycheck.

But if you’re a business owner or investor (with the correct structures in place), you can pay the IRS quarterly on your net income after expenses.

To put it another way, when investing through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes.

If you’re like most of our clients, you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs.

This simply isn’t true.

That’s why finding the right CPA to work with is so crucial. You need someone who knows what they’re talking about. It's important to understand there are different tiers of CPAs:

Many CPAs don’t understand that it's possible to save outside the standard deductions. A high-level CPA is someone who earns a high income themselves, someone who has personally found a way to pay nearly $0 in tax by leveraging advanced strategies.

The right CPA helps our medical professional clients achieve and maintain tax rates in the 0-10% range. This accelerates your overall cash flow and net worth.

If you find a CPA with an MBA and who can perform Chief Financial Officer functions, even better— these folks will be able to help you navigate complex tax decisions and make it seem easy.

When you work with that level of CPA, you'll start to find creative (but completely legal) ways to save taxes, even if you're a medical professional with zero investment experience. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For Medical Professionals

The median wage for medical professionals (everything from dental hygienists, physicians and surgeons, to registered nurses) was $80,820 in 2023—much higher than the median annual wage (for all occupations) of $48,060. (Source)

However, at a certain point these high-salary professionals realize they need to take steps to shelter their income from overtaxation. And while saving money on tax is important, but the real magic happens once our medical professionals start re-investing those tax savings into tax advantaged deals.

These include:

Private Foundations

A Private Foundation is a self-funded nonprofit organization that shelters income, allowing you to bypass traditional capital gains tax and take advantage of a much lower excise tax rate.

When using the Private Foundation for income sheltering and high-performance investments, the compounding effect can lead to much better returns than traditional investing.

The Private Foundation can even replace your W2 income with a director’s salary for managing the Foundation.

Depreciation Deals

Bonus depreciation is a tax incentive designed to stimulate business investment by allowing investors to accelerate the depreciation of qualifying assets, such as equipment, rather than write them off over the useful life of the asset. This strategy can reduce a company's income tax, which in turn reduces its tax liability.

Medical professionals can claim accelerated bonus depreciation as a limited partner when investing passively into a real estate syndication. As a limited partner (LP) passive investor, you get a share of the returns based on how much you invest.

Similarly, you get a share of the tax benefits as well, as documented by the Schedule K-1 you would receive each year. The K-1 shows your income for a particular asset. In many cases, particularly in the first year of the investment, that K-1 can show a loss instead of an income.

The magic of the K-1 is that it includes accelerated and bonus depreciation. In other words, even while you’re receiving cash flow distributions, the K-1 can show a paper loss, which in most cases means you can defer or reduce taxes owed on the cash flow you’ve received.

Cash Flow Deals

These deals don't offer tax benefits, but can generate so much income that they outperform potential tax savings. Investments in this category include things like algorithmic trading. You can invest in cash flow deals through a tax shelter, such as your Private Foundation, to get the initial tax savings as well as tax advantaged portfolio growth.

Legal Strategies For Medical Professionals

Estate planning is something everybody needs to do at some point. Lawsuits can happen to anyone, and high-net-worth medical professionals are especially at risk. All it takes is a car accident, an injury on your property, a contractual disagreement—and once somebody knows what you own, they can hire a good attorney to force you to settle out of court.

The way you protect yourself is to set up asset protection. Holding companies can shield anything of value, such as real estate properties and investments. Operating companies can be established for business activities like collecting rent, paying contractors, and signing contracts.

Trusts are a way to guarantee anonymity across all of your entities and assets. They allow you to look like a beggar on paper and transfer your assets anonymously to your heirs, taking the target off your back.

Here are a couple of other legal structures we help our clients set up:

S Corporations

Independent doctors or physicians can create S Corporations to handle their taxes. Unlike regular corporations (where profits get taxed twice), S corporations pass their income, losses, and deductions directly to their owners. An S Corp, or S corporation, is a “pass-through” entity, which means that the profits and losses of the business are passed through to the individual owners and are taxed at the owners’ personal income tax rates.

Instead of paying corporate taxes, each owner reports their share of the business’s money on their personal tax returns, paying taxes at their individual rates.

Solo 401(K)

What about retirement?

If you are a medical practitioner who works as an independent contractor, The Solo 401(k) is an ideal retirement plan because it lowers your taxable income and enables you to build up retirement funds through high contribution limits and almost limitless investment capability.

The Solo 401(k) is a qualified retirement plan, just like hospital-sponsored plans. You can contribute to the plan on a tax-deferred basis. You can also contribute Roth funds to the plan and invest tax-free. With some of the highest contribution limits, the Solo 401(K) lets medical professionals lower their taxable income and grow their retirement quickly.

To Wrap It Up …

Even medical professionals with no investments need entity structuring. Here is what a full legal diagram could look like, which includes asset protection structures, estate planning, and tax shelters.

As you accelerate your tax and investing approach, it's important to add in measures to prevent a catastrophic reset. We can show you how to save $20k or more in taxes during the first year, but you will want to set up additional tax and legal structures over time to continue to reduce your taxes down to the 0-10% range.

Without entities, this would be impossible.

It's also important to protect yourself from catastrophic events, no matter how unlikely, so that you don't have any major setbacks on your journey to time and financial freedom.

Tax, Investing, and Legal Strategies for Tech Professionals

Tech industry professionals thrive on innovation, cutting-edge technology, and rapid growth.

However, navigating the world of personal finance requires a different set of skills.

Whether they're W2 employees or entrepreneurs, experienced tech professionals can earn lucrative compensation packages, which unfortunately means significant tax liabilities. That’s why they have to optimize tax strategies and get professional help navigating complex tax laws.

Or if they own a business or have exited a business, our capital gains page can help (if they made a ton of money in their exit and are looking for tax strategies to offset that).

The unique financial challenges faced by tech workers call for tailored tax, investing and legal strategies to help you make the most of your wealth. These include:

✅️ Investing in cash flow deals (like algorithmic trading).
✅️ Creating a 501(C)3 Non-Profit Private Foundation to shelter up to 30% of your income
✅️ Setting up an S-Corporation for any side gigs and leverage the Augusta Rule

Navigating the world of taxes can be daunting, especially for tech workers with complex compensation packages, stock options, and freelance gigs. With the right strategies, however, you can make an informed decision about the best steps to take to secure your financial future.

Let’s get started.

Tax Planning for Tech Professionals

Equity compensation, a high income, remote work (where your employer is in another state with different laws) … These can make tax planning for tech professionals quite complex.

You have to take a lot into account.

Different types of equity compensation have different tax treatments. For example, Restricted Stock Units (RSUs) are taxed as ordinary income upon vesting. Incentive Stock Options (ISOs) may qualify for preferential tax treatment if certain holding periods are met. Non-Qualified Stock Options (NSOs) are taxed as ordinary income upon exercise. But exercising ISOs can trigger Alternative Minimum Tax (AMT) liability.

Lost yet? It can get pretty confusing very quickly.

I believe a solid wealth management strategy starts with tax planning. Remember: salaried (full-time) tech workers are taxed on gross income first, with the IRS taking their cut before you receive your paycheck.

Compare this to business owners and investors (with the correct structures in place), who pay the IRS quarterly on their net income after expenses.

When you (as a full-time employee) invest through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes.

Tech professionals early in their careers may benefit from Roth conversion strategies, paying taxes now on traditional retirement accounts to enjoy tax-free growth and withdrawals in the future. This isn't nearly as strong as the foundation or depreciation deals, however.

But if you’re like most of our clients, you’re further along in your career, making a good salary, and you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs.

High earners in the tech field spend years growing their career and growing their income. The more they make, the more it hurts to see 20-30% of earnings yanked away by the IRS.

I have good news for you: The right CPA can show you how to layer tax strategies to dramatically cut your taxes and even reach the 0-10% range, depending on how aggressive you decide to go.

(Here's the catch: To achieve 0-10%, you actually have to implement all the tax strategies. That's like eating your veggies, nobody wants to do it.)

Many CPAs don’t understand that it's possible to save outside the standard deductions. Things like tax-loss harvesting can offset gains and reduce tax liability. Charitable giving or even setting up a private nonprofit foundation can also help.

A high-level CPA will be able to help you navigate complex tax decisions and make it seem easy. They can find creative (but completely legal) ways to save taxes. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For Tech Professionals

After implementing all the best tax strategies, our tech clients then focus on investing their tax savings into tax-advantaged deals. There are tons of deal types, but there are two categories of investments you really need to know about:

W2 earners should invest in energy or machinery deals that allow them to be a general partner (GP) in the first year in order to claim accelerated bonus depreciation. As of this writing (December 2024), syndications have changed over the past year. They only way to get depreciation as a W2 is to be a GENERAL PARTNER (not LIMITED). This only works for ENERGY & MACHINERY. RV PARKS would require you to be a Real Estate Professional.
If you are a Real Estate Professional, you can also access bonus depreciation from multi-family and commercial investments.
Cash flow deals deals don't offer tax benefits, but can drive so much income that they outperform the tax savings. Investments in this category include things like algorithmic trading and small business funds. One of the top strategies is to invest in cash flow deals through a tax shelter, such as a 501(C)3 Non-Profit Private Foundation, to get the initial tax savings as well as tax advantaged portfolio growth.

Tech pros need to know about e three "financial freedom" strategies they can avail themself of:

Save on taxes (typically this year)
Generate more cash flow (typically this year)
Create a nest egg so you can retire as fast as possible

The first two are short-term strategies. You can save taxes with Royal Legal's tax strategies (and you may still use a foundation, but only as one of many tools to capture tax savings) and you can generate cash flow with something like algorithmic trading.

Creating a nest egg requires a longer-term strategy. Putting money into your own foundation, THEN investing in cash flow deals is the strongest possible move—as long as you don't want to have a bunch of cash on hand. Because once it's in the Foundation, it's no longer yours. We endorse this strategy because that's the best possible move for anybody interested in achieving financial freedom.

Legal Strategies For Tech Professionals

Software executives, Saas founders, and other tech professionals have giant targets on their back when it comes to frivolous lawsuits.

All it takes is a car accident, an injury on your property, or a contractual disagreement—and once somebody knows what you own, they can hire a good attorney to pressure you until you settle out of court.

The way you prevent this is to set up asset protection before you get sued.

Anonymity across all of your entities and assets is key. Holding companies are where you should place your assets. This could be things like real estate properties or other investments. Anything of value that could be exposed during a lawsuit is important to protect. Operating companies run everything.

So here's what you'll be doing:

#1. Set Up a Holding Company

This is what "holds assets," typically anonymously. There are three kinds:

Series LLC
Delaware Statutory Trust
Hub-And-Spoke / LLC (most recognizable as the Wyoming LLC)

#3. Set Up an Operating Company

This is what does your "operations." Collecting rent, paying bills, performing key functions and transactions. This is what turns into the S-Corp because the money is flowing through (but not held inside for very long) this entity, which allows us to apply tax strategies to it.

In this case, you are mixing both. So you would want to differentiate…

Entity structuring means creating LLCs so your assets are held anonymously and separate from your high risk business transactions. We recommend a holding company for any investments or assets. Then a separate operating company for business transactions, such as your consulting side gig. When the operating company reaches $75k/year income, you should turn it into an S-Corp. etc…

PS - The $75k range (sometimes as low as $50k) is basically where you start to save money on taxes.

The reason it takes until then is that the S-Corporation requires a separate tax return and payroll, which both cost money in the $1-2k range. So it doesn't really pay for itself until a certain income threshold.

Unlike C Corps (that face corporate taxes and then shareholder taxes on dividends), S Corps allow shareholders to pay taxes only at their individual income tax rates, simplifying the process. S Corps split profits into wages and distributive shares, the latter of which is not subject to self-employment taxes. This distinction can provide considerable savings on the Social Security and Medicare tax burden.

We’ll also help you employ different types of trusts to create anonymity at the County Recorder and Secretary of State offices, as well as during probate (so you look like a beggar on paper and can transfer your assets anonymously to your heirs).

My team can show you how to save $20k or more in taxes during the first year, and additional tax and legal structures will continue to reduce your taxes down to the 0-10% range. Without entities, this would be impossible.

Here’s a 20-year forecast that shows how the right combination of tax strategies, investing and corporate entity structure can grow your wealth:

Protect yourself from lawsuits with estate planning, no matter how unlikely you think they are, so that you don't have any major setbacks on your journey to time and financial freedom.

The Path From High Tech To Financial Freedom

You’ve worked hard your entire life. It’s time to gain control over your time and money. Rapidly achieving true freedom requires a good tax and investment strategy.

We help tech executives and other professionals in the digital space save $20k or more in taxes during the first year—then re-invest that tax savings into turnkey properties, ATMs, self-storage syndications, apartment complex rehabs and more. We help them create the right tax and legal structures to continue to reduce your taxes and create true anonymity to protect their money.

In the end, we can help you:

Own assets anonymously so that your wealth isn't at risk
Set up limited liability companies to protect your wealth from lawsuits
Minimize risk by separating your business activities from your assets
Hold each asset in isolation so that lawsuits can't jeopardize your entire portfolio
Use insurance as a last line of defense

Tax, Investing, and Legal Strategies for W2 Employees

Not-so-fun fact: As a W2 employee, you are taxed at a rate higher than businesses and investors.

In fact, no group in America pays more taxes than high-salary wage-earning W2 employees.

Whether you are a medical professional, a tech professional or any other full-time employee for a U.S. company, there are some little-known ways you can jumpstart your tax savings and investment journey.

They include:

✅️ Setting up a 501(C)3 nonprofit Private Foundation and invest in high-performance depreciation and cash flow deals
✅️ Finding general partner investment opportunities in energy and machinery to get bonus depreciation
✅️ Investing in Short-Term Rentals and using Cost Segregation and the STR Loophole

Let’s take a look at these tax, investing and legal strategies for 9-to-5’ers so you can make an informed decision about the best steps to take to secure your financial future.

Tax Strategies for W2 Employees

Tax planning is a key component of a solid wealth management strategy. Remember: W2 employees are taxed on gross income first, with the IRS taking a portion before you receive your paycheck.

In contrast, business owners and investors (with the correct structures in place) pay the IRS quarterly on their net income after expenses.

When you (as a full-time employee) invest through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes.

If you’re like most of our clients, you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs. That’s why finding the right CPA to work with is so crucial. You need someone who knows what they’re talking about.

The right CPA can help W2 earners leverage tax strategies to achieve and maintain tax rates in the 0-10% range. This accelerates your overall cash flow and net worth.

If you find a CPA with an MBA and who can perform Chief Financial Officer functions, even better— these folks will be able to help you navigate complex tax decisions and make it seem easy.

When you work with that level of CPA, you'll start to find creative (but completely legal) ways to save taxes. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For W2 Employees

W2 employees spend years growing their career and growing their income. At a certain point we have plenty of income but 20-30 percent of it is being sucked away by the IRS.

Saving money on tax is important, but the real magic happens once W2 earners invest their tax savings into tax-advantaged deals.

There are tons of deal types, but the top asset classes include real estate, syndications in energy or machinery, and algorithmic trading. In short, deals can do three things:

Give you ROI (for example, after 3 years, you get twice your money back)
Give you cash flow (ex: you get dividends/distributions every quarter)
Give you tax savings (depreciation)

In general, there are two categories of investments you should be looking at...

Depreciation Deals

W2 earners should invest in energy or machinery deals that allow them to be a general partner (GP) in the first year in order to claim accelerated bonus depreciation. As of this writing (December 2024), syndications have changed over the past year. They only way to get depreciation as a W2 is to be a GENERAL PARTNER (not LIMITED). This only works for ENERGY & MACHINERY. RV PARKS would require you to be a Real Estate Professional.
If you are a Real Estate Professional, you can also access bonus depreciation from multi-family and commercial investments.

Cash Flow Deals

These deals don't offer tax benefits, but can drive so much income that they outperform the tax savings. Investments in this category include things like:

Algorithmic trading (ex: Forex)
Small business funds
A variety of deals that call themselves cash flow, meaning they focus on providing you with cash right away.

One of the top strategies is to invest in cash flow deals through a tax shelter, such as a 501(C)3 Non-Profit Private Foundation, to get the initial tax savings as well as tax advantaged portfolio growth.

You see, there are three "financial freedom" strategies at a high level:

Save on taxes (typically this year)
Generate more cash flow (typically this year)
Create a nest egg so you can retire as fast as possible

#1 and #2 are short-term strategies. You can accomplish #1 with Royal Legal's tax strategies (and you may still use a foundation, but only as one of many tools to capture tax savings) and you can accomplish #2 with a good cash flow deal (algorithmic trading, for example).

#3 is a longer-term strategy. Putting money into your own foundation, THEN investing in cash flow deals is the strongest possible move—as long as you don't want to have a bunch of cash on hand. Because once it's in the Foundation, it's no longer yours.

So when we endorse this strategy, it's because that's the best possible move for anybody interested in #3 - achieving financial freedom.

Legal Strategies For W2 Employees

As you accelerate your tax and investment approach, it's important to incorporate asset protection and legal strategies into your plan. The Royal Legal approach for W2 earners lets you:

Own assets anonymously so that your wealth isn't on public display
Set up limited liability companies to protect your personal net worth from lawsuits
Minimize risk by separating your business activities from your assets
Hold each asset in isolation so that lawsuits can't jeopardize your entire portfolio
Use insurance as a last line of defense in case everything goes wrong

Even a W2 employee with no investments needs to set up legal support. Everybody needs an estate plan, not just for their kids but also in case they become incapacitated and need someone to help make medical and financial decisions (ex: car accident, COVID, etc...).

Setting up an LLC, even as a small consulting or investing firm, can give you options to a big range of new strategies.

Once your LLC hits the $50-75k income mark, the S-Corp election becomes your best friend. S Corps utilize pass-through taxation, meaning income and losses "pass through" the company directly to the shareholders.

Unlike C Corps (which have corporate taxes and then shareholder taxes on dividends), S Corps allow shareholders to pay taxes only at their individual income tax rates, simplifying the process.

For businesses generating between $75,000 and $250,000 in profits per owner, electing S-Corp status can offer significant savings. While LLCs face self-employment taxes on all profits, S-Corps split profits into wages and distributive shares, the latter of which is not subject to self-employment taxes. This distinction can provide considerable savings on the Social Security and Medicare tax burden.

The S Corps elections also means you can write off business expenses such as equipment, work meals, travel and more. For example, you can depreciate vehicles—80% if under 6,000 lbs or 100% if over 6,000 lbs.

You can even pay your kids to work, typically up to around $14k/year. They avoid income tax and you avoid having profit taxed at your normal income tax rate. Win/win!

There’s a Path to True Financial Freedom For W2 Employees

You’ve worked hard your entire life. It’s time to gain control over your time and money. Rapidly achieving true freedom requires a good tax and investment strategy.

We can show full-time, W2 workers how to save $20k or more in taxes during the first year. Then we give you access to high performance deals and model out different investment options so you can see the best path to rapidly achieve your financial goals.

The Private Foundation. Oil & gas syndications. Machinery deals. And short-term rentals. These are your best options as a W2. The list of deals that outperform traditional stock market investments (and sometimes provide additional tax benefits) is long.

Take a look at a typical 20-year plan that includes asset protection structures, estate planning, investing and tax shelters:

How To Leverage Private Foundation/501(c)3 Non-Profits To Grow Your Passive Investment Income

Despite strong career performance and disciplined financial habits, many high-income earners struggle to break free from the "rat race."

For those earning $150k or more, traditional investment strategies and savings plans usually won’t get them the financial freedom they need. This can be attributed to a few critical factors:

High Taxation: Taxes can eat up a significant portion of earnings, particularly for those in high tax brackets.
Lack of Passive Income Streams: The majority of income may come from active work, meaning a continued trade of time for money.
Traditional Investing Shortcomings: Common financial advice around 401(k)s, IRAs, and stocks may lead to incremental gains but not true wealth-building.

We help our clients break free from their financial constraints by exploring alternative investments and advanced tax strategies to significantly improve net worth and cash flow.

One notable strategy is the use of a Private Foundation. This is a self-funded nonprofit organization accomplishes a few things for you:

Shelter Income from Taxes: Up to 30% of annual income each year can be sheltered inside a Private Foundation, allowing for significant tax savings.
Invest Tax-Efficiently: By directing investments through a foundation, you can bypass traditional capital gains tax and take advantage of a much lower excise tax rate, which allows you to grow your investments faster.
Gain Financial Flexibility: Unlike other tax shelters like IRAs, there are no penalties for withdrawing funds from a Private Foundation, providing more freedom and control, and allows you to turn the Foundation into a passive income stream.

Will Establishing a 501(c)3 Attract Suspicion From the IRS?

Is this legal?

Many skeptics, including accountants or attorneys, might claim that using a Private Foundation will lead to legal trouble. However, this concern is largely unfounded.

First, you should understand that there are two types of 501(c)(3) organizations: Public Charities and Private Foundations.

Private Foundations are well-recognized and legally established entities often used by high-net-worth individuals. You’ve heard of a few of them:

The Bill and Melinda Gates Foundation
The Ford Foundation
The Getty Foundation
The W.K. Kellog Foundation
The Bloomberg Family Foundation

The confusion and doubt usually arises because:

CPAs are conservative and avoid advising unfamiliar strategies that require legal expertise, not to mention that they will be talking you out using their other tax services.
Attorneys lack knowledge of tax codes and want to avoid potential liability, which means they won’t recommend this strategy unless they specialize in non-profits and understand it in depth.
Investors often repeat advice without truly understanding how it works, which means they are telling you what their CPA or attorney told them.

Don’t worry, the Private Foundation is a “white hat” strategy and is a completely legitimate and tax-compliant vehicle for financial freedom, used by the ultra rich as well as savvy investors to accelerate their wealth-building process.

You Can Draw A Salary From Your Private Foundation

A director of a Private Foundation can receive a salary. Director compensation is based on asset performance, and their wage should be “reasonable,” usually determined by standard HR practices for compensation analysis.

The salary must be covered by the Foundation's passive income, along with the mandatory 5% annual donation of its total value.

Here’s the trick: A founder of a nonprofit can be its director. That’s you.

The goal is to build capital quickly to eventually replace your current income. Unlike typical directors, Royal Legal clients also manage investments, handle legal, tax, and bookkeeping tasks, and support the Foundation’s operations—all with our support.

Real-Life Application: Tax Saving and Wealth Accumulation

Consider this typical scenario: Our client earns $250k per year and pays 20% in taxes. Under our guidance, she uses a Private Foundation to shelter $75k annually.

This reduces her taxable income, saving her around $15k in taxes every year.

After accounting for mandatory donations to charity, she is left with a true tax savings of over $11k annually, which she can reinvest.

By creating the Private Foundation, our client not only saves on taxes but also can invest those savings in high-yield opportunities, allowing her money to grow more quickly and efficiently than it would have with traditional investing methods.

By investing through a Private Foundation, she gets more of her returns by avoiding high capital gains taxes, allowing the wealth to compound much faster.

Comparison of Financial Growth Over Time

When using the Private Foundation for both income sheltering and high-performance investments, the difference in growth is substantial. Over a 5-year period, the compounding effect can lead to a considerable gap between traditional investing and tax-optimized, high-yield strategies.

This happens because instead of paying capital gains tax, which can easily be 20-30%, you are paying a tiny excise tax which makes those investments grow nearly tax free.

When you invest in high performing alternative assets, you can achieve annual returns between 20-30%. Then instead of paying your regular income tax and capital gains, you are paying the 5% donation and a small excise tax. This allows you to save tax on the front end and as you grow, which allows you to turn the Foundation into a passive income machine which you can use to achieve financial freedom faster than you thought possible.

How Much Can You Save?

The following table outlines tax savings based on different income levels and tax brackets.

These numbers are based on a 30% donation of annual income to the Foundation, which is the maximum amount that qualifies for tax savings.

Income	Tax Savings Using The Foundation
Income	20% Tax Bracket	25% Tax Bracket	30% Tax Bracket
$150,000	$6,750	$9,000	$11,250
$250,000	$11,250	$15,000	$18,750
$350,000	$15,750	$21,000	$28,250
$500,000	$22,500	$30,000	$37,500
$750,000	$33,750	$45,000	$56,250
$1,000,000	$45,000	$60,000	$75,000

Building the Right Investment Portfolio

The tax savings that come from directing your own nonprofit can be invested in assets like real estate, small business investments, energy & machinery funds, and market-based investments. These alternative asset classes offer 20% or higher returns, but it’s essential to always vet each opportunity thoroughly as there are many scams with high return claims and you need to make sure you are only investing in legitimate deals.

While high-return investments can propel you to financial freedom quickly, it's essential to de-risk your portfolio by:

Only investing what you can afford to lose. Don’t sell your house and go to Vegas!
Pulling out your initial investment once returns have accumulated to that amount, this allows you to play with “house” money.

By adopting a conservative approach to risk while targeting high yields, investors can safely build wealth without jeopardizing their financial future.

The Private Foundation strategy is one of the best tools we know for rapidly achieving financial freedom by replacing your W2 (or active 1099) income with a passive director’s salary for managing the Foundation.

Ready to learn more? Reach out to our team today and get started … You’ll soon be the CEO of your own wealth-building company and the founder of your own charitable foundation!

Comparing Section 179 and Bonus Depreciation for Asset Deductions

The IRS provides tax incentives for business investments in fixed assets through Section 179 and Bonus Depreciation deductions.

These two deductions are often applied for manufacturing and real estate companies, but they can be creatively applied to many other businesses as well.

Understanding the differences between these deductions helps optimize tax benefits. Let’s take a look.

Eligible Assets

Section 179: Applies to personal property like equipment, machinery, and certain real property (e.g., HVAC systems, roofs). Assets must be used primarily for business.
Bonus Depreciation: Extends to farm buildings and land improvements. It applies to assets with a useful life of 1-20 years, including certain real estate improvements.

Bonus depreciation requires applying the deduction across all assets within a particular asset class, whereas Section 179 allows for more selective application on an asset-by-asset basis.

Annual Deduction Limits

Section 179: The deduction limit for 2023 is $1,160,000, with an investment limit of $2,890,000. There must be enough business income to utilize this deduction.
Bonus Depreciation: For the 2023 tax year, the deduction is 80% of an asset's cost, down from 100% in 2022. Unlike Section 179, there’s no business income limit, so it's usable even when reporting a business loss.

Deduction Timeline

Both deductions must be taken in the tax year when the asset is placed into service. However, Section 179 allows flexibility to defer part of the expense, while bonus depreciation requires a set percentage to be applied.

Special Considerations for Listed Property

Listed property (used over 50% for business purposes) has specific deduction limits. For vehicles under 6,000 pounds, the maximum Section 179 deduction is $12,200, and bonus depreciation adds up to $8,000, totaling $20,200.

Deciding Between Section 179 and Bonus Depreciation

Income and Expense Evaluation: Use Section 179 if you have enough business income; otherwise, bonus depreciation is more suitable.
Consider Fixed Asset Purchases: If total fixed asset additions exceed Section 179 limits, bonus depreciation may be the better choice.
Tax Bracket Planning: Analyze current and future tax brackets to decide between accelerated or straight-line depreciation.

Combining Both Deductions

You can use both Section 179 and bonus depreciation, especially when near the Section 179 deduction limits. However, state regulations may differ from federal rules, so be mindful of potential complications when filing state tax returns.

By strategically using Section 179 and bonus depreciation, business owners can effectively manage their tax liabilities while maximizing deductions on qualifying assets.

Case Study: Section 179 Vs. Bonus Depreciation

2023 Example	Section 179	Bonus Depreciation
Net Business Income	$1,000,000	$1,000,000
Fixed Asset Investments	$400,000	$400,000
Deduction	($400,000)	($320,000)**80% of $400K
Taxable Income	$600,000	$680,000

Your State Matters

Every state is different in how they treat bonus depreciation and Section 179 deductions.With the 2023 example (above), if the investor used the bonus depreciation in Kansas (for example), they would be able to utilize the $320,000 deduction. However, if his equipment was located in California, would only be able to apply a $80,000 deduction ($400,000 spread out over five years). This is because California does not conform with the federal treatment of bonus depreciation and does not allow accelerated bonus depreciation.

How To Use Tax-Loss Harvesting to Reduce Your Tax Burden

Tax-loss harvesting (TLH) is a strategy that involves selling investments at a loss to offset capital gains and reduce taxable income.

We can incorporate the strategy into your personalized plan for financial freedom. 1099 or W2 workers who make more than $150,000 per year and who pay over $20,000 in tax annually can lower their tax bills and optimize portfolio returns.

By strategically realizing losses, they can improve their overall financial situation and potentially reinvest in assets that align better with their long-term goals.

The Mechanics of Tax-Loss Harvesting

To execute TLH effectively, investors need to understand the basics.

Identifying Losses and Gains: Begin by reviewing your portfolio to identify any investments with losses. The aim is to offset these losses against gains from profitable investments to minimize your tax liability.

Capital Loss Offsets: Losses are used to offset gains on a dollar-for-dollar basis. If capital losses exceed gains, up to $3,000 can be deducted from your ordinary income each year, and any excess can be carried forward to future years.

Short-Term vs. Long-Term Gains/Losses: Gains and losses are categorized as either short-term (held for less than a year) or long-term (held for over a year). Understanding the tax implications of each is crucial, as short-term gains are taxed at a higher rate, similar to ordinary income.

Strategies for Executing Tax-Loss Harvesting

Timing the Sale of Investments: Year-end is a strategic time for tax-loss harvesting, as it allows you to assess your total gains and losses. However, market volatility throughout the year can also provide opportunities to harvest losses.

Tax Implications on Reinvestment: After selling an asset at a loss, reinvest in a similar, but not identical, asset to maintain the desired portfolio balance while still taking advantage of the tax benefit.

Avoiding the Wash-Sale Rule: To prevent abuse, the IRS enforces the wash-sale rule, which disallows repurchasing the same or substantially identical security within 30 days of the sale. To avoid this, investors should carefully plan their sales and subsequent purchases.

Optimizing Tax Benefits with Tax-Loss Harvesting

Balancing Short-Term and Long-Term Investments: Since short-term capital gains are taxed at higher rates, prioritizing losses to offset these gains can significantly reduce your tax burden. Long-term gains are taxed at a lower rate, so they should be managed differently.

Maximizing Capital Loss Carryovers: If your capital losses exceed your gains and the $3,000 deduction limit, the excess can be carried over to future tax years. This means TLH can continue to benefit your tax situation long-term.

Using Tax-Loss Harvesting for High-Income Earners: For those earning $150k or more and paying over $20k in taxes, TLH can be a powerful strategy. By offsetting gains with losses, high earners can significantly reduce their overall tax bills.

Tax-Loss Harvesting Tools and Services

Robo-Advisors and Automated Tax-Loss Harvesting: Many financial services, particularly robo-advisors, offer automated tax-loss harvesting as part of their offerings. These platforms can help identify opportunities for TLH without the need for constant monitoring.

Working with a Financial Advisor: A professional can offer personalized guidance on when and how to harvest losses effectively. They can also provide insights into how TLH fits within the broader context of your financial plan.

Considerations and Risks in Tax-Loss Harvesting

Market Risks and Timing: Selling an investment at a loss may mean missing out on a market rebound. Before harvesting losses, consider the potential for asset recovery and the impact on your overall strategy.

Cost Considerations and Fees: Transaction fees and other costs can eat into the benefits of TLH. Evaluate the cost of selling and repurchasing investments to ensure the net tax benefit is worthwhile.

Portfolio Drift and Long-Term Strategy: Frequent buying and selling of assets to harvest losses can lead to portfolio drift, where your asset allocation no longer aligns with your long-term goals. It’s important to balance tax savings with maintaining a well-diversified and stable portfolio.

Conclusion: Leveraging Tax-Loss Harvesting for Optimal Financial Health

Tax-loss harvesting is a valuable strategy for reducing tax liability, improving investment returns, and maintaining a healthy financial portfolio. For W2 employees and 1099 earners looking to maximize their income, tax planning is crucial, and TLH can be an integral part of that plan.

Continuous portfolio monitoring throughout the year is key to finding the best opportunities for harvesting losses, as is consulting a financial advisor to tailor strategies to your specific financial situation.

By leveraging Tax-Loss Harvesting effectively, investors can take proactive steps toward financial freedom and early retirement.

Can A Trust Own An LLC? Choose Your Land Trust Beneficiary Wisely & Reap The Rewards

Can a trust own an LLC? In other words, can your LLC be the beneficiary of a trust?

Having a land trust is a good idea for property owners and real estate investors. Land trusts are especially a good idea in case you own more than one property and don't want everyone snooping into your business.

Land Trust Vs. LLC? Think Of It More As A Symbiosis

You can choose whoever you want as beneficiary for your land trust. However, it should be someone you know and trust. After all, your property title will be going to them to keep it safe and private for you. While your property is in a land trust's name, no one can see that you own it. For example, the title company cannot announce in the local newspaper that you own property (like they do with everyone else).

How to Start a Land Trust For Privacy and Asset Protection

First, you have to choose someone or a certain business to be your land trust. You don't have to choose an individual if you can't find one to do it for you. You also have the option to choose a business if the business owner agrees to do it.

Whichever one you choose, you need two legal documents for the land trust. The first legal document is a trust agreement between the owner of the property and the person or business who will be the land trust. The second legal document is the deed of the property from the owner to the trust.

Although the land trust will be holding on to the deed of the property, they will not be the owner of the property and will not receive any benefits from holding the deed and having their name on it. The owner still has all rights. The land trust is just for privacy. The trust agreement is also private and only you and the land trust know about the agreement.

Land Trust With LLC As Beneficiary for Privacy and Asset Protection

Although a land trust is for privacy and asset protection, a land trust does not receive the benefits that an LLC or a business does. However, if someone falls on your property and gets hurt, the beneficiary will be held responsible.

This is the main reason to use an LLC or a regular business to stand in as the beneficiary of the property. The reason for this is that LLCs and other businesses are protected from something like this happening.

That was just the first reason for obtaining an LLC or other businesses as a land trust. The second reason to do so is because they receive tax benefits. This means that the transfer of the property can be done tax-free.

A third reason to use an LLC is that many attorneys and accountants don't even know what a land trust is in many states. Because of this, you won't have to worry about litigators looking at your property and thinking you have deep pockets. This way, they won't be trying to file a lawsuit against you.

Land Trust Mortgages: How To Borrow Money Using a Land Trust

I’ve been harping on for years about the importance of setting up a land trust for your real estate investments. Today I want to touch on one of the issues many real estate investors struggle with – how to borrow money using a land trust.

There are times when you may want to borrow money to make improvements or preserve assets held in a land trust. There may also be a need to refinance the property at some point. You need to make sure that the trust has the power to borrow money. It may not always be the case and this is normally covered in the trust deed.

Let me get right into the mechanics of it all.

What Do I Need to Get a Mortgage Loan Using a Land Trust?

The first step you’ll need to take is to have the trustee sign the mortgage or note. However, you will need to apply for the loan and sign the guarantee or the note since the trustee won’t be signing personally.

Alternatively, if you have your property in a land trust already and want to borrow money against the beneficial interest, then the lender will need to serve a Notice of Collateral Assignment on the trustee. The trustee will then write an acknowledgment of the assignment.

When this happens, the trustee is no longer able to transfer title of any property held in the trust or encumber or mortgage the property without the lender’s written consent.

Here are the five things the lender will be looking for when granting the loan:

The lender will need to review the trust instrument.
The lender will need to confirm the grantor and trustee identities.
The lender will need to establish whether the trust grants the trustees power to borrow money and pledge or encumber trust assets.
The trustees may be required to sign a trustee certificate reciting some key terms of the trust and confirming the authority of the trustees to take out a loan.
The bank will need evidence that the property is actually owned by the trust. For this, you will be required to provide the deed on record for review.

If you’re seeking to obtain a loan against trust assets, you need to consult with an expert trust administration attorney. You do not want to take any action that might potentially harm the assets of the trust.

You may also be interested in our article that answers the question, "Can I take a loan from my S Corp?"

Syndication: Deal Structuring Secrets

A private placement memorandum is a legal document companies use to raise funds from private investors or venture capitalists. For real estate syndication, the deal structuring document outlines the terms of the investment opportunity.

Watch Seth Bradley, Esq. discuss PPMs in great detail on Episode #59 of our Royal Investing-Strategic Growth Membership.

Summary Of The Offering In Syndication

The Summary of the Offering refers to a crucial section of a PPM. It's used in real estate syndication to give potential investors an overview of the investment opportunity.

The purpose of the Summary of the Offering is to provide:

essential details about the project
the investment structure
terms
sponsorship team

The Summary comes immediately after the cover page and the table of contents. It grabs the reader's attention and provides a concise overview of the investment opportunity.

Offering In A Real Estate Syndication PPM

An offering in this context refers to the opportunity for investors to purchase shares in a real estate syndicate and:

amount of equity offered
price per unit

506(c) vs. 506(b)

506(b) is a popular exemption for real estate syndicators because it allows for up to:

35 non-accredited investors
an unlimited number of accredited investors

However, some limitations exist on how those non-accredited investors may learn of the investment opportunity.

One significant aspect of 506(b) is that it prohibits general solicitation and advertising, which means you can only market the investment to people you have an existing relationship.

506(c) is another regulation used by real estate syndicators that allows them to solicit investment offerings to anyone without limits on how many accredited investors they can accept.

Unlike 506(b), syndicators using 506(c) advertise publicly and attract investors through various marketing channels.

Importance of "Use of Funds" In A Syndication PPM

The "use of funds" section is crucial in a real estate syndication PPM, as it outlines how the syndicate uses investors' money.

The "use of funds" section typically includes expenses such as:

acquisition costs
due diligence
legal and accounting fees
property management fees
renovations

Real Estate Syndication Private Placement Memorandum: Company Section

The "Company" section is a critical component that outlines important information about the company offering the investment opportunity.

The Company section typically includes the following information:

General Company Information
Goals and Objectives of the Company
Management Team
Roles and Responsibilities of Management Team
Legal and Tax Structure
Risk Factors

Key Elements Typically Included In The Management Section Of A PPM

The management section of a PPM document typically includes the following key elements:

Roles and Responsibilities
Decision-making Process
Financing Strategy
Exit Strategy
Investor Participation

The management section is essential as it provides insight into how the syndicate:

manages the investment
who will be responsible for its success
how investors can participate in the investment's operations

Private Placement Memorandum: Business Plan Section

The business plan section of a PPM outlines the syndication's investment objectives, strategies, and plans to achieve the set goals.

Below are the essential components of the business plan section:

Market Analysis
Investment Strategy
Investment Property Description
- property type
- location
- age
- size
- physical condition
Financial Projections
Exit Strategy
Risks
Management Team

Deal Structuring: Fees Section Overview

A PPM typically includes a fees section, which details all the fees associated with acquiring, managing, and eventually disposing of the property.

Acquisition Fees

This fee covers the expenses incurred during the purchase of the property. These expenses include legal work, due diligence, and other transaction costs.

Management Fees

This compensation goes to the syndicator or a property management company that oversees the property's day-to-day operations, including leasing units, maintenance, and repair work.

Disposition Fees

This fee covers the expenses incurred during the sale of the property.

Asset Management Fees

Asset management fees go to the syndicator for overseeing the investment and managing the property's overall performance.

Other Fees

Other fees may include legal expenses, accounting fees, and additional regulatory costs associated with the syndication process.

Distributions In A Real Estate Syndicate PPM

Different types of distributions can be included in a PPM, including:

Preferred return refers to the fixed rate of return paid to investors before the general partners.
Equity splits refer to how profits divide between the general and limited partners.
Waterfall provisions specify the order in which profits distribute to different classes of investors.
Capital accounts track investors' contributions to the investment.

It is essential to understand the different types of distributions included in a real estate syndicate PPM, as they can significantly impact the overall return of the investment.

Deal Structuring: Risk Factors

This section aims to disclose any material risks to potential investors so they can make informed investment decisions.

The section should divide into three categories:

industry risks
company risks
risks related to securities

Industry risks pertain to risks that affect the real estate industry.

Company risks relate to risks specific to the company offering the securities, such as management and financial risks.

Risks related to securities are inherent in investing in the securities themselves, such as lack of market liquidity or regulatory changes.

Importance And Relevant Contents Of Investor Suitability And Qualification

This section helps protect the interests of both the issuer and investor by ensuring that only suitable investors who can bear the investment risks should participate.

To determine investor suitability, the PPM includes critical concepts such as:

accredited vs. non-accredited investors
suitability standards
minimum investment requirements
investment experience

Deal Structuring: Significance Of The Subscription Agreement

The subscription agreement section of the PPM outlines the specific investment opportunity offered to the subscriber. This section typically includes information on the following:

investment objectives
nature of the investment
capital structure of the syndicate
terms of subscription
minimum investment amount
payment frequency

The subscription agreement also outlines the rights and responsibilities of each party involved and may include the following:

management of the project
distribution of profits
limitation of liability for both the syndicate and the investor

Importance Of The Operating Agreement: Syndication Private Placement Memorandum

The operating agreement is a crucial component of the PPM as it sets out the rules and regulations governing the operation of the syndication.

Organizational Structure
Distribution Waterfall Provisions
Indemnification Provisions
Profit Sharing Arrangements

Other Significant Provisions

In addition to the above, the operating agreement should also address other significant provisions, such as the following:

term and termination of the syndication
transferability of investor interests
buy/sell provisions
restrictions on the syndicate manager's activities

Deal Structuring: Key Takeaways

A private placement memorandum (PPM) is a legal document companies use to raise funds from private investors or venture capitalists. It is an offering memorandum that outlines the following:

terms of the investment opportunity
risks
securities offerings
financial projections

Knowing how to navigate a PPM ensures you syndicate deals benefit you. Do you want to learn more about real estate syndication investing? Sign up for our weekly FREE Group Mentoring.

Best Practices Structuring Entities With Partners

The first thing you need to consider for your business is choosing a structure. Jason Marino, Esq., staff attorney with Royal Legal Solutions, offers his expertise on best practices when structuring entities with partners.

This decision should be made among you and your partner(s) and will impact your business in the future.

You’re looking for low-cost and efficient structures as a real estate investor. According to Marino, the structures that meet those criteria include:

Joint Venture Agreements
LLCs
Series LLCs

You can use other structures, but these are ideal for real property. In this article, we’ll discuss the ins and outs of each of the structures and how they affect you as a real estate investor.

Structuring Entity: Joint Venture

What is a joint venture? When you structure your business entity with partners using a joint venture, you enter into a formal contractual agreement.

Benefits Of Structuring Your Partnership As A Joint Venture

A joint venture is less formal, and the contract is usually brief. Here are some of the benefits:

You can avoid and control internal disputes
It’s easier to terminate
You’re less tied to it
Good for one-of projects
Low-cost
Low maintenance

Your joint venture provides asset protection if done correctly with proper infrastructure (LLC, DST).

Disadvantages Of A Joint Venture Structure

Like any entity structure with partners, a joint venture has some disadvantages, which we will cover here:

Don’t adapt well to complex projects
Lacks asset protection
Long-term projects don’t work well with a joint venture

Structuring Entity: Limited Liability Company (LLC)

An LLC can have complex partnership clauses in its operating agreements. Ideally, they’ll have partnership clauses built into them.

Benefits Of Structuring Your Partnership As An LLC

An LLC provides more control and durability than a joint venture. Here are some additional benefits of an LLC:

Provides more detail and sophisticated control over a partnership
Avoids and controls internal disputes
Asset protection included

Disadvantages Of An LLC Structure

An LLC is more complex and requires you to register with the secretary of state and requires additional actions for proper upkeep. For instance, you have:

More formality
- Registered agent
- Bank account
- EIN
More maintenance
- Annual or biannual compliance with the secretary of state
- Franchise tax filing
Higher cost
- Filings with state
- EIN
- Operating agreement

Although there is added cost and maintenance with an LLC, it provides much more protection than a joint venture agreement.

Structuring Entity: Land Trusts With Series LLCs

A Land Trust with a Series LLC is related to the traditional LLC we discussed above, but it has some additional benefits for real estate investors.

The primary benefit is the flexibility in adding partners at various levels:

Land trust level is for partners involved in a single project
- Anonymity
- No asset protection
Child series LLC is for 3rd party partners who don’t want to use their entity
- Limited to one project
- Get protection from LLC
Parent LLC level is for family or highly trusted partners
- Deeply involved in business operations

Advantages Of Structuring As A Land Trust With Series LLC

Similar to a traditional LLC, a Land Trust With Series LLC gives you more control. Some additional benefits include the following:

Detailed control over a partnership
Avoids disputes
Asset protection with parent and child LLC

Disadvantages Of A Land Trust And Series LLC Structure

A Land Trust and Series LLC are formal agreements. That means there will be additional regulatory requirements and costs for maintenance.

More formality
- It replicates itself into child series, which can require more bank accounts
More maintenance
- Maintenance of an LLC
- May require individual record keeping for each child LLC
More cost
- More protection = more cost
- Scaling cost is lower than having individual LLCs

I’ve Chosen A Structuring Entity With My Partner; Now What?

You’ll need to choose clauses. There are some universal clauses, but many will be unique to your situation, goals, and plans.

Choosing Clauses For Your Structuring Entity

There are three broad categories of clauses you need to be familiar with regardless of the structure your choose:

Timing
Ownership and responsibilities
Dispute

Timing Clauses

Timing clauses avoid confusion and avoid disputes between partners. The clauses determine the following:

Duration of the partnership
Notice to each partner
Payment of partnership profits

Ownership And Responsibilities

The ownership and responsibility clause defines the expectation of each partner. The clauses determine:

Ownership
Who makes decisions
Profit sharing
Partner powers

Dispute Clauses

Dispute clauses provide the mechanism or agreement for resolving disputes. The clause control:

Dispute resolution methods to avoid lawsuits
- Mediation
- Arbitration
- Lawsuit (usually as a last resort)
Non-compete clauses

Key Takeaways

The best practice for structuring entities with partners depends on your specific situation, future goals, and open communication.

In general, as a real estate investor, you can structure your business using the following:

Joint Venture
Traditional LLC
Land Trust with a Series LLC

After determining your entity structure, you must hammer out the clauses. Your specific circumstances dictate which clauses you will need.

Do you have questions about structuring your entity with a partner? We have answers! Join Royal Investing Group Mentoring to link up with our subject matter experts. They will happily teach you more best practices for structuring your business and answer other burning questions.

Series LLC Updates 2023

The Texas Legislature passed new laws regarding Texas series LLCs. The law went into effect on June 1, 2022.

Ostensibly, the law provides additional protection for individuals, businesses, and other entities conducting business under the protection of a series LLC. In addition, the statute (Tex. Bus. Org. Code § 101.601 Subchapter M) characterizes a series LLC as being "protected" or "registered."

In this article, we'll go over how the law defines the different characterizations of LLCs and the ramifications that this law may have on you as a real estate investor.

What Is An Ordinary LLC?

A series LLC created before the law took effect (June 1, 2022) will be called an ordinary series LLC.

This type of LLC is virtually indistinguishable from a "protected" series LLC. In other words, the law will treat an "ordinary" LLC the same way it would treat a "protected LLC."

What Is A Protected LLC?

A protected LLC is a series LLC created after June 1, 2022. The term "protected" did not exist in any laws before June 1, 2022, so any LLC created before that date is called "ordinary."

Both "ordinary" and "protected" series LLCs enjoy equal rights and legal protections. The only difference is in what they are named.

What Do I Need To Do For My Series LLC?

As long as you want to keep your "ordinary" (or "protected" if created after June 1, 2022) LLC, you don't need to do anything. If you want to create another "protected" LLC, the process has not changed.

What Is A Registered LLC?

A "registered" LLC is a new series LLC introduced by the statute that took effect on June 1, 2022. Delaware's registered series LLC provides the model for Texas' registered LLC.

78-a defines a "registered" series LLC as a "series of domestic limited liability company that is formed as a registered series in accordance with Section 101.602."

The critical difference between an "ordinary" or "protected" series LLC and a "registered" series LLC is that the "registered" LLC must be publicly filed and registered with the Texas Secretary of State.

A registered series is an option, not a legal requirement.

How Do I Create A Registered LLC?

To create a "registered" series LLC, you must file a certification of registered series with the Texas Secretary of State.

The state has the following fees:

Certification of registered series: $300
Certificate of amendment: $150
Certificate of termination: $40

For the certification of registered series, each costs $300 to file. The fee is in addition to the original $300 fee you must pay to create a general series LLC.

For example, suppose you create a series LLC and want to have one of the entities in the series registered. That would cost $600.

$300 for the general LLC
$300 for the registered LLC

Any subsequent registered LLCs would cost an additional $300.

Naming Requirements For a Registered LLC

The registered LLC must contain the following:

Registered series, OR
Abbreviation of "RS" or "R.S." AND
The name of the company

Are There Advantages To Having A Registered LLC?

You must publicly file a registered series. The public filing requirement may give banks, lenders, and title companies peace of mind regarding your LLC's proper and legal formation.

It may become the case that entities involved in real estate transactions prefer a registered series LLC because they can be sure that a registered series LLC is legal.

What Options Do I Have For My Series LLC?

If you have an existing "ordinary" or "protected" LLC, you have the following options:

Do nothing
Convert your series to a registered series
Create a new registered series
Merge your ordinary or protected series with a registered series

Currently, the statute's effect is in flux because of the newness of the situation in Texas. What may occur in the future is that entities such as banks, lenders, and title companies will only conduct business with a registered LLC.

The forms for converting or merging an ordinary, protected, or registered LLC are available online with the Texas Secretary of State.

Key Takeaways

Since June 1, 2022, Texas law has included a provision that differentiates between "ordinary," "protected," and "registered" series LLCs:

Ordinary/protected are virtually the same and have the same legal protections
Registered LLCs are publicly filed and may become the preferred LLC for conducting business in Texas

It is not apparent exactly how the new law will play out, and you have the following options:

Wait
Create a registered series LLC
Convert or merge your existing series LLC to registered

The attorneys at Royal Legal Solutions are here to help you understand the power Texas Series LLCs can bring to your business. If you would like to achieve bullet-proof asset protection, take our quiz. Then, you’ll have to opportunity to schedule a meeting with an advisor to discover if this is a strategy you would benefit from.

Key Person Insurance To Protect Your Profits

We'll review how to mitigate the financial loss when a key person dies through a key person insurance policy.

Preparing for someone's death seems macabre. No one likes to think about the eventual demise that we all face.

As the adage goes, failing to plan is planning to fail. And in the arena of real estate, that saying is incredibly prescient.

What Is Key Person Insurance?

Key Person Insurance is something that can be provided for any person inside of your company who holds critical pieces for the company's continued operations. The company is the beneficiary and pays the premiums.

In a small business, a key person is usually an owner, the founder, or perhaps a critical employee. The main qualifying point is whether the person's absence would cause significant financial harm to the company. If this is the case, key person insurance is worth considering.

How Does It Work?

Under a key person life insurance policy, the business owns the policy, pays the premiums, and is the beneficiary. If a key person dies, the company then collects a death benefit. You or your partners can use that money to help a business replace lost revenue as they search for a replacement.

This type of insurance can be crucial for a business that relies heavily on the health and well-being of a key individual.

What Are The Benefits?

One of the significant benefits is that should the "key person" become disabled; your insurance coverage can step in and pay up to 100% of the death benefit if needed.

The money can be used as a financial cushion to buy time for the company, sometimes just a small family business, to find a new person to step in, to sell, to shut down, or implement other strategies that can save the company.

Key person insurance gives your company options other than fire selling or bankruptcy, which happens when you lose the key person.

The coverage for key person insurance can be as low as $100,000 or up into the multi-millions of dollars.

Another aspect of this insurance would be employee retention.

In the employee's contract, you can state that a percentage of the life insurance policy would go to the family should death or disability happen while employed by your company. These types of term policies can be very inexpensive and have a massive benefit to your company.

Both of these strategies can be instrumental to ensuring that you, your family, and your businesses grow and maintain the financial freedom we are working towards.

What Can Key Person Insurance Protect Against?

Key person insurance protects the company against risk and protects profits and partners.

Protect profits

The insurance will counteract the lost income from sales or disrupted operations that the key person is involved with.

The company may use the death benefit to cover the costs of recruiting, hiring, and training a replacement for the deceased.

Or suppose the company cannot continue to operate. In that case, the insurance allows the business to pay debts, provide cash for investors, cover severance for former employees, and will enable the company to close down without chaos.

Protect partners

The insurance enables the surviving partner(s) a cash infusion to buy out the key person's stake in the business. Combined with a buy-sell agreement, these two types of protections ensure an orderly continuation of the company.

How Much Does Key Person Insurance Cost?

The cost depends on how much insurance a company needs. However, this insurance will cost less than bankruptcy if the worst happens to your key person.

Some factors that you may need to consider when researching include the following:

Size of business
Nature of business
Key person's role

The cost also depends on whether you buy a term or a permanent life policy. Typically, term life is cheaper.

Like any other insurance, the individual's age and overall health will determine the insurance cost.

Key Takeaways

Key person insurance is a life insurance policy that protects a company in the event of the death of a key executive or other critical individuals.

Insurance is necessary if an employee's death is detrimental to the company and disrupts the operation of the business.

The key person for small businesses is typically the owner or founder. The company pays the insurance premiums, is the policy's beneficiary, and will receive the death benefit if the person dies.

Investing in proper protection is critical to mitigating your company's risk. Otherwise, you'll be in trouble when a key person dies. That means you need reliable insurance specific to your needs as a real estate investor.

If you want to learn more, check out our article about the challenges faced by real estate investors. It could be the difference between life and death–for your business.

Resourceful Investor's Guide To Structuring a Short-Term Lease

You've decided to get into the short-term rental industry. As a result, you need to know how to structure a short-term lease.

A whole host of situations and challenges come with this type of property. One of the primary challenges is the level to which your state regulates the industry. There are many laws and regulations that may apply to your city.

As with any real estate agreement, you want to protect yourself with an enforceable contract containing legally binding terms. Your agreement must encompass the landlord's and tenant's rights and outline essential details concerning the local occupancy laws.

To help you, we will review the 9 essential items you should include on a short-term lease agreement.

What is a short-term rental?

A short-term rental is an investment property that is rented for a short time. These properties, sometimes called vacation rentals, are an alternative to hotels. They have seen their popularity rise since AirBnB emerged in 2008.

Owning a short-term rental comes with some distinct benefits, including the following:

The rental rate is higher than longer-term rentals.
You can use it as a second home or a vacation home.
Tenant turnover is frequent and by design.

Before Creating A Short-Term Lease, Do Your Research

First, you must ensure you can have a short-term rental in the property's location.

Local laws

As a real estate investor, you must check local laws and regulations. Laws vary between jurisdictions: in some places, there are no regulations, and in others, short-term rentals are outright banned.

Protect yourself

Short-term rentals have more tenants shuffling through them. An increase in the number of people coming and going on the property increases your potential liability.

We've long championed the usefulness of an LLC to shield yourself from liability; without an LLC, you may be liable (sued) for incidents that occur on your short-term rental. And a lawsuit can be costly.

In addition to an LLC, it's a good idea to work with an attorney to create a short-term rental agreement. A legal professional can advise on safeguarding yourself from potentially problematic tenants who steal from or damage your investment property.

Screen your tenants

Screening your tenants is incredibly important. You will run into fewer issues and save time and money if you thoroughly vet your tenants. Make things easier on yourself by having a platform that lets you directly communicate with your tenant.

After you've done due diligence, you should establish a short-term lease agreement.

Short-Term Lease Agreement: The Essential Ingredients

As a real estate investor, you may ask yourself, "what should I include in my short-term lease agreement?" The answer depends. Local laws and regulations may stipulate precisely what you have to include, and the rules may apply at the granular level.

In general, every short-term lease should have the following 9 elements included.

#1. Property details

The first item on a short-term lease should be a clear description of the property. Your description should include every item inside your vacation rental. Also, be direct and to the point, and do not leave any room for misinterpretation or ambiguity.

#2. Tenant information

Your short-term lease agreement must include relevant information about the tenant. At a minimum, you should have the following:

Name
Home address
Phone number

#3 Tenancy period

The tenancy period is a critical portion of the lease agreement. The length of the stay starts on the day (down to the hour) that the tenant enters your rental property. The period ends the day (and hour) the tenant departs.

Suppose you fail to list the tenancy period. In that case, you may run into severe legal issues-like a tenant refusing to vacate the property.

#4 Payment

This potion should include everything that has to do with payment. You will want to include the following:

Security deposit information
Agreed upon rent amount
The date that rent is due
Whether you offer a grace period for late rent

#5 Tenant duties

You must define the tenant's obligations in the short-term rental lease. The duties might include maintaining the property and paying the agreed-upon amount at the agreed-upon time.

#6. Cancellation process

This section explains how the tenant should cancel the rental agreement. Typically, you'll want a written cancellation request from your tenant.

#7. Amenities

You can use this section to add more details and information about the property and what you have available. You can include information about AC, TV, and a pool.

#8. Additional clauses

Consider including additional clauses that limit your tenant's acceptable activities. A standard additional clause is the prohibition of pets from entering the premises.

#9. Signature

Your contract is legally binding only if both parties sign it. Consequently, you need to leave room for signatures.

Key Takeaways About Crafting Your Short-Term Lease

A short-term lease agreement is critically important because it protects you. As a result, you should always remember to have one for yourself and your tenants' safety and protection.

This legally binding contract makes it so that you can enforce the terms of agreements and ensure that your rights are safe.

Why Ordinary People Set Up Offshore Bank Accounts - Offshore Banking And Asset Protection

We often get questions about offshore bank accounts here at Royal Legal Solutions. Offshore bank accounts are one avenue for real estate investors to protect their assets.

We thought it was time to give you a straightforward guide to how these accounts work. Also, what you need to do to open one, and how to manage an offshore bank account like a pro.

Aren't Offshore Bank Accounts for Criminals?

Of course not. You might see criminals talk about their offshore bank accounts bursting with hidden millions. That's for primetime television. It's storytelling stuff, and the truth is less glamorous and much saner. Almost anyone can open an offshore account. Furthermore, almost anyone can enjoy asset protection benefits, privacy, and other perks.

An ordinary real estate investor may use an offshore bank account for a few reasons. Some primary uses include:

holding cash assets
taking advantage of foreign banking privacy laws
protecting income from legal attacks

You can prevent lawsuits altogether if used with other asset protection tools. But that's making a dent in the surface of the power of these accounts.

These accounts are not "for criminals." But, it would be dishonest to imply criminals don't use offshore accounts to hide their money.

So, have certain types of criminals exploited offshore bank accounts? Sure. But most countries don't like hosting criminals, even in their banking systems. Many have enacted legislation to discourage crimes by using an offshore account. Such crimes include money laundering or establishing offshore accounts.

Pay attention to how any country you're considering banking responds to these threats. A strict rule of law is desirable in your banking host country. It provides stability.

Benefits of Using Off-Shore Bank Accounts: The Appeal for the Ordinary Investor

You can expect a lot of variation between countries. Each gets to make its banking laws, and how financial privacy is one thing to consider. Yet even amongst this variation, there are some common threads. It's vital to be clear that your situation will determine which benefits you use.

Here are a few top reasons ordinary people take advantage of offshore banking. It might surprise you how downright innocent or dull they are.

Stability and Control: Break Free of Banking As Usual

Destabilization of currencies isn't the stuff of dystopian fiction. It can and does happen worldwide, more often than you think. You may feel you have to be ultra-wealthy to worry about global banking stability. That's far from true. This problem impacts a considerable percentage of people.

Most Americans don't worry about the U.S. Dollar. Look at what happens in countries like Zimbabwe that experience genuine financial crises. It got so bad that the government lopped zeros off their bills to combat hyperinflation. The country set a world record by printing trillion-dollar bills. That trillion-dollar note may seem like a fun novelty to buy on eBay. But, it was serious business for everyone who relied on that currency to live.

Americans suffer from thinking instability happens to "other" places like Zimbabwe. But if you look at actual statistics, you might find our system isn't as secure as you think. Our banks over-leveraged themselves. That caused a crisis many times in recent history. Even if you assume financial crises are flukes, we can still look at worldwide economic data.

For instance, the World Economic Forum measured the soundness of banks in countries worldwide. Their Global Competitiveness Report measured the perceived safeness of a country’s banks. Then, they ranked the world's nations in order of perceived safety. The results may surprise you!

Where do you think the U.S. ranked? At the top?

The American banking system is the 18th safest in the world. 17 countries outranked the USA. They're the ones you want to look at if stability is a significant motivation for your accounts.

Offshore banking can mitigate instability. Even if the world outside is in chaos, you can rest easy if your money's sheltered offshore. You can use an offshore bank account to protect your money from conflict and uncertainty.

Currency Options and Diversification

With offshore accounts, the U.S. Dollar doesn't confine you. You will select which currency or a mix of money you'd like to default to for your bank account. The ability to diversify appeals to many real estate investors. There may be economic advantages to exploring possible alternatives to your primary currency. Insufficient research could cost you. When in doubt, call a pro.

Asset Protection Benefits of Offshore Banking

Litigants file 15 million new lawsuits yearly in the U.S. That's one lawsuit for every dozen adults. Real estate lawsuits, in particular, are always a genuine threat. The threat grows as you become more successful. In our litigious society, protecting your money is ideal.

You can protect your assets with domestic tools. Offshore bank accounts offer you the luxury of moving everything of yours into security. You're moving the assets into a different jurisdiction rather than an entity structure. The principle remains the same.

Because you choose where to place your funds, you stay in control without being at risk. Generally, it is more difficult to "go after" foreign-held assets than domestic ones. Also, you may receive extra asset protection from your host country. You get to choose which legal rulebook you will play by. That's a tremendous advantage for anyone building wealth with their business.

Taking Anonymity Even Deeper: Banking Privacy

Your privacy is one reason to consider offshore banking. Switzerland is famous for their protections. If privacy is a significant motive for you, ask yourself: from whom? Because it is possible to have privacy from people and governments alike. It will likely help you plan to know if your primary concern is, say, creditors over the Taxman or vice versa. You can evade interaction with either through the intelligent use of offshore bank accounts.

Greater Selection, Financial Perks

Interest rates with foreign bank accounts are often higher compared to American banks. Instead of shopping from a few select banks, you now have the entire world of finance from which to pick and choose. If you want a high-interest savings account, you can have that.

An attorney and financial advisor may be able to offer more insight into your situation. The benefits of offshore banking aren't even specific to real estate investors. Anyone in the West may want to consider the higher interest rates to find better deals overseas.

Off-Shore Banking Can Be For Everyone

No true one-size-fits-all asset protection plan involves only offshore banking. Reaping its benefits is easy and not time-consuming. There's a final one that is huge but more difficult to quantify. There are emotional benefits. Knowing you have an emergency plan that can withstand a financial disaster. It's tough to hang a price tag on genuine security.

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom. Reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

Navigating Historically High Inflation Combined with Low Interest Rates

Let's discuss what's happening with the cost of goods and how you can navigate historically high inflation with low-interest rates.

We recently held a Royal Investing Group Mentorship with Ron Galloway, an expert financial researcher with 35 years of experience to answer the inflation question. Galloway has been featured in The New York Times, CNN, CNBC, and The Wall Street Journal.

Please keep reading to learn more about inflation, how it's measured, and the potential impact on low rates in your real estate investments.

What Is Inflation?

According to expert financial researcher Ron Galloway, inflation is "simply an increase in the money supply." In the past year, nations increased their money supply up to four times, says Galloway, which led to historically high inflation.

The rate currently reduces your money's value and drives up prices.

When you shop, do you notice that things cost a little more each time you go back?

For example, last year your shopping cart cost $300. An identical shopping cart might cost you $320 or more this year. At its most basic, that's inflation.

Contributing Factors

Galloway explains that the economy is not as strong as it is reported because of:

a high unemployment rate
supply chain issues caused by high unemployment
increase of deposits into checking accounts
the significant growth of $1, $20, and $100 bills in circulation
historical lows in the movement of money (people are hoarding it)

Each of these factors contributes to the inflation situation we are experiencing.

How Is Inflation Measured?

We measure inflation by measuring the cost of many items over a specified period. The Bureau of Economic Analysis and the Bureau of Labor Statistics measures goods and services costs, categorizes the expenses, and creates different price indexes.

Price Indexes

Price indexes are lists of prices. There are different price indexes; one measures households and their consumption of personal goods and services. Another price index measures commercial companies and their raw materials consumption and needs for machinery.

Measuring Inflation

To measure inflation, we look at the level of a price index. If the price index level is higher than over a year ago, we know that prices are higher on average, and there is inflation.

Galloway argues that inflation numbers provided by government statistics agencies do not adequately account for essential goods like food and fuel. Necessary commodities like food and energy cannot negate an increase in prices and other goods that aren't essential, like electronics.

That means that real inflation for essential goods may be even higher than the reported rate of 7.5%.

What Is the Impact of Low-Interest Rates on Banks?

The impact of low-interest rates is that banks are less willing to loan money. Banks have increasingly heightened their standards and investigated and thoroughly vetted potential borrowers. All in all, interest rates are low, but there hasn't been a corresponding increase in loans.

Galloway explains that real interest rates are "the rate of interest minus inflation." Accordingly, the combination of low-interest rates and rising inflation disincentivizes banks from loaning money.

As a result of that unprofitable combination, top institutions would instead use their cash for trading derivatives between each other. Galloway notes if one of those significant banks defaults on their derivative, we'd have a repeat of the 2008 recession.

Expand your portfolio, diversify your assets, and hedge against inflation. To do that, you might consider investing in Carbon Credits.

What Is the Impact on People Who Hold Assets?

Inflation eats up your cash, but people in debt and assets benefit from it. If you hold assets, like real estate, during an inflationary period, those assets increase in value.

Now might be a good time for you to invest in real estate.

Indeed, prices are up, but so is demand. So far, there are no obvious indicators that the housing market will slow down. In addition, as Galloway mentioned, real estate, a tangible asset that appreciates, is a good investment during inflationary periods.

If you are ready to take the next step to secure your financial freedom, check out:

Key Takeaways

Never in history have we had interest rates this low and inflation rate so high. As a result, you need to protect yourself and your assets. Here are the key takeaways from today's discussion:

inflation is an increase in money supply
price indexes measure inflation
the actual rate might be closer to 20%, not the reported 7.5%
low-interest rates and high inflation makes banks less likely to loan money

During this period, it is an excellent time to be a real estate asset owner. If you want to learn more about market trends or other real estate investment topics, register for FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST.

How to Maintain Operational Anonymity

How do I maintain operational anonymity after a structure is in place?

Maintaining operational anonymity isn’t easy, which is why most real estate investors worry about being the target of a lawsuit, regardless of the protection in place.

Does this sound like you? You’ve made it to the right place. In this article, we’ll explain:

why anonymity is important
how to obtain and maintain anonymity
who you should disclose your identity to and how
what you should do if someone compromises your anonymity

We invite you to read on and learn how to maintain anonymity operationally.

Why Is Operational Anonymity Important?

Anonymity is essential because it stops lawsuits before they start, as belligerent parties will be unable to find the actual target of the suit.

How Do We Obtain Anonymity?

We obtain anonymity by using a variety of tools. These tools include using:

an agent trust as the member of your LLC
a land trust to hold title to a property
a separate LLC for operations (vs. operating from your asset holding LLC)

We hide assets using Anonymous Trusts, which allows you to keep ownership information hidden. The Anonymous Trusts keep you safe by owning your LLC and serving as the Title Holding Trust, the name disclosed when filing Articles of Incorporation.

In practice, it would look like this:

You
LLC
Series LLC
Anonymous trust listed as the owner of the property
Your real property

When someone goes to research the owner of the real property, the Count Clerk’s records will show the anonymous trust as the owner. Neither the trust owner nor you registered with the state, so your identity is safe.

How Do You Maintain Your Operational Anonymity?

There will be times when you need to maintain operational anonymity throughout running your business. As you continue on your real estate journey, you want to make sure that you protect your investment and your livelihood.

What follows are three common scenarios in which you will want to maintain your anonymity:

#1 How To Purchase A Home

What matters is how you plan to purchase the home. If you buy it:

with cash–purchase the house into a land trust using a nominee trustee
with a loan–purchase the property, take the loan in your name, then move to the land trust post-closing

#2 How To Enter Into A Contract With A Third Party

When you contract service providers, you will want to interact through an anonymous operating LLC. These providers include, but are not limited to:

contractors
property managers
utility providers

The operating LLC will be the party that contracts with the service provider, and you will sign as the manager of the LLC.

When you contract with a tenant, you will interact through an anonymous operating LLC or a third-party property manager. The operating LLC will be the party that works with the service provider, and you will sign as the manager of the LLC

#3 How To Sell Your Property

When you sell your property, anonymity is not a priority. To sell, you should move the title back to your name and sell. When you sell the property in your name, it simplifies the closing process. Finally–as the seller–you ensure the proceeds check comes directly to you.

What Parties Can You Disclose True Ownership To?

In some cases, you will want to disclose actual ownership. Some of the most common parties to tell include:

your bank
your lender
your title company
your insurance agent
court officials

How Should I Disclose True Ownership?

Sometimes you may not need to maintain complete operational anonymity and disclose true ownership. When considering whether you should tell your identity to each of the previous parties, ask yourself the following questions:

How will the information be used?
Will the data be publicly available or privately held?
Under what circumstances would you disclose this information to a third party?

What Happens If Your Anonymity Has Been Compromised?

Don’t panic if someone compromises your anonymity. You have options available to you to address the situation. The initialism “STACK” details the steps you should follow:

Stop the action until you gather more information
Talk to the party requesting the information to understand why the information is needed
Assess if you can provide information without disclosing ownership
Call your attorney if the information is necessary to see how to give it safely
Know who can distribute the information and where

Conclusion

Ideally, it’s clear how to maintain operational anonymity while managing your real estate investment.

Now that you know how to protect your privacy, here are some key takeaways about the protection provided by anonymity:

Anonymity is essential, but ultimately the liability protections are your foundation
LLCs and trusts can protect your privacy
Protect your anonymity by following the guidelines:
- who can receive information
- how to sign documents
- how to ensure records do not end up with third parties
If anonymity is compromised, you can take some steps to mitigate the exposure

Do you want to join other savvy investors and learn more about how to protect or grow your investments? Register for FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST.