Selling the Beneficial Interest in a Land Trust

Land trusts give an investor a wide array of potentially useful tools. One of those tools is selling property in a land trust, or selling the beneficial interest (as opposed to selling or transferring the deed itself).

The beneficial interest in a land trust is considered personal property as opposed to real property, like the land itself. If the buyer were to default on their payments, the beneficiary would have more flexibility in terms of their options.

If you are interested in pursuing this method, it’s best to set up a land trust and either establish your own company or your personal lawyer as the trustee. The documents can be kept in escrow until the contract is paid in full. This keeps both parties honest and makes the transfer of the property as smooth as possible.

Land Trusts Make Contracts Assignable

The advantage of the land trust is that it allows the beneficial interest to become “assignable”. This operates in a very similar to way to how a stock in a corporation is assignable. A beneficiary of a trust can be changed without needing to change the title of a property. For those interested in selling a property, this can be a useful tool.

The reason why this is possible is because the beneficial interest is not considered in the same category as the property itself. The beneficial interest is considered personal property, while the property itself is considered private property. In addition, beneficial interests can be used as collateral in a loan.

This also adds a layer of privacy to the transaction. The buyer isn’t purchasing a property from you, they’re purchasing the property from a trust. While land trusts can have their drawbacks, there are a number of solid reasons why investors favor using them in certain circumstances.

For those that are simply interested in selling the property from the trust, a land trust still provides more privacy and protects assets in ways that property held outside of a land trust can’t. Land trusts still offer more privacy, protections against liens, and they make it more difficult for an individual to find your property if they’re trying to determine your assets in a lawsuit. Since most litigation attorneys work on contingency, they’re unlikely to go after a defendant who does not appear to hold any serious assets.

Selling the beneficial interest in a land trust is simply one more tool an investor should look into. 

Series LLCs and S Corporations: Which Is Best For Your Business?

Limiting your liability is an important factor when you start a business. Because of this, many entrepreneurs start with a limited liability company (LLC) or an S corporation. But which one is right for you?

What Is The Difference Between A Will And A Trust?Similarities Between A Series LLC and an S Corporation

There are many similarities between an LLC and an S Corp.

Differences Between A Series LLC and an S Corporation

There are some significant differences between LLCs and S corporations.

 

Can I Use a Land Trust in California to Protect Real Estate Assets?

Does California recognize land trusts? Yes, but California real estate investors face certain regulations and restrictions in their home state.

Land trusts (read: What Are Land Trusts?) are not subject to the same burdensome tax obligations as, say, an in-state LLC. In fact, the fact that they are relatively new means that there isn't much law about them at the state level at all. Keep reading to learn more about using a land trust in California, as well as what specific benefits Golden State investors can enjoy when they do so.

California Land Trusts Are New

The novelty of land trusts in California actually confers some benefits onto their owners. Other states with more established case law have more exceptions to the protections of land trusts. In general, law is built on precedent. This means that court decisions aren't made in a vacuum. They are heavily informed by the rulings of past courts, particularly courts in the same area.

California Land Trust Community Property Advantages

California is a community property state. This is most relevant for married real estate investors. In community property states, anything one party gains during a marriage can be legally treated as a joint asset.

Community property laws come up frequently in the unfortunate event of a divorce. Let's look at an example. John and Mary Smith are real estate investors in the San Francisco area who have been married for ten years. They both have their own investments, but Mary is the more prolific investor. They show up in family court after a mutual decision to end their marriage.

With no asset protection measures or land trusts in place, Mary could actually stand to lose some of the investment properties (or even the money she would receive from them if they are sold) in the divorce. However, if she uses a land trust to hold the properties, this is unlikely to happen.

The land trust itself is controlled by a trustee, and therefore will not be treated as community property. In short, Mary would be in a much better situation using a land trust because John has a legal ability to make claims on property with her own name on it. He does not have this ability if the property is held in an anonymous land trust.

Of course, there are ways around state regulations that confer community property status onto assets gained during a valid marriage. Tenancy by the Entireties, also called TbyE, allows married couples to own a piece of real estate together, but not jointly. Some couples elect to use both methods of protection by both securing shared properties in land trusts and owning them TbyE.

This information may seem a touch cynical. Few people, when marrying, ever believe they will end up dealing with the fallout of divorce. But the unfortunate truth is this: over half of marriages do end in divorce.

When it comes to the law, it's perfectly fine to hope for the best. But the smart investor will always prepare for the worst. The wise investor plans ahead to avoid the worst possible outcomes, like lawsuits and losing property in a divorce.

Royal Legal Solutions is Here To Help Investors Like You

Royal Legal Solutions works with real estate investors from all over the country. We keep up with the latest changes in state law and other legal technicalities so that you don't have to.  We are also well aware of and sensitive to the needs of California investors. Whether you're trying to enjoy the tax benefits or asset protection aspects of a land trust, we can help.

How to Protect Real Estate Equity

How to Protect Real Estate Equity

If you have equity in your property, you're at risk. The reality of the situation is that equity is what people are looking for whenever they wanna sue you. There's a couple of different ways that you can protect yourself against this. One is that you could actually take out a true mortgage on the property, going through a bank and going through that entire process and physically pulling the money out. Now that has its own drawbacks, right. I mean, you have closing costs as well as you're having to pay interest on that money. Another option would be to actually disguise the equity. It doesn't actually protect you if there's a lawsuit, but it'll make it look like the property doesn't have any equity attached to it. You do that with a home equity line of credit. A third option is to establish your own mortgage company. And by establishing your own mortgage company, you can issue a mortgage basically to yourself In a way. Through the company structure, this allows you to be able to have a no-cost way of establishing mortgage, besides the recording fees, and attorney's fees in setting that up. But that's always gonna be lower than the closing cost of something you would do at the bank. And you never actually have to do much with it after that. Because it's a true mortgage that's recorded on the property, if there's a lawsuit That mortgage actually has to get paid out before a creditor could collect. My name is Scott Smith, I'm an asset protection attorney with real estate, I'm a real estate investor myself and I wanna help you.

Self-Directed 401(k) Loans: Borrow Against Your Retirement Account

A self-directed 401(k) is a great way to save for retirement. Unlike the typical 401(k) plan set up by an employer, a self-directed one allows for a much more diverse investment portfolio. A self-directed 401(k) also grants you more control over your investment decisions. In fact, because it is self-directed, you have total control. This even includes the ability to make self-directed 401(k) loans to yourself.

Personal Loans Via Your Solo 401(k)

As a self-directed 401(k) owner, you are allowed to borrow from your account. This is not permitted in almost all other types of retirement accounts. The Internal Revenue Service (IRS) distinguishes between taking a loan from your self-directed 401(k) and requesting a distribution. Early distributions can cause your entire individual retirement account (IRA) to be disqualified and subject to penalties and taxes. This is not so with a self-directed 401(k) loan. If you need a personal loan, for anything, the self-directed 401(k) is your best bet. Let us look at the two most frequently asked questions about how this works below.

How Much Can You Borrow?

You can borrow up to $50,000 or half of your balance, whichever is lower. In other words, if you have $75,000 in your account, you can only borrow up to $37,500; but if you have $150,000 in your account, the loan is capped at $50,000. Unlike a bank loan, borrowing from your self-directed 401(k) does not require a credit check.

How Does Repayment Work?

Borrowing from your self-directed 401(k) works like any loan. In other words—and here's the bad news—you must repay it. If you are on a regular pay cycle, you can elect to make blended payments. These will consist of the principal and interest owed on the loan, as dictated by an amortization table. If you do not receive a regular paycheck, you must make a payment every 90 days. You have 5 years to pay back your loan. After that, the remaining balance of the loan is deemed to be a taxable distribution by the IRS. (There is a caveat if you are borrowing for the construction of your home. If you did, speak with a financial expert to determine if you are eligible for a longer repayment period.)

Have Questions About Self-Directed 401(k) Loans?

We have many years of experience helping our clients understand the IRS regulations placed on self-directed accounts. While these types of accounts give you total control over your future finances, we are here to ensure you do not trip over regulations that can cost you in penalties and fees. If you are considering taking a loan out of your 401(k), our experts advisors can help you plan your repayment options.

CERCLA Liability: Are Land Trust Trustees Accountable?

A lot of folks often wonder whether or not a trustee of a land trust has personal liability under EPA or other Federal regulations.

The answer is no—with some caveats. When the trustee acts at the behest of a beneficiary, or whoever holds the power of direction, then the trustee would be themselves insulated from personal liability. The trustee, however, is still personally responsible for what they themselves do. If the trustee were to commit fraud or violate some other federal regulation, then they themselves could, of course, be held liable.

Land Trustees and EPA (CERCLA) Violations

The law can be  vague when it comes to certain kinds of EPA violations. This includes chemical dumping on land held by a trust. CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act) names “owners” of a parcel of land or “operators” of a facility but does not go on to define these terms in detail.

Through a very expansive interpretation of these terms, individuals who had nothing to do with the disposal of chemical waste nor even knew about the disposal could be potentially named in a lawsuit.

A US district court in Illinois, however, determined that a trustee did not qualify under the definition of “owner” and therefore could not be held liable for unlawful acts committed on the property. Other states might, however, decide that the trustee is an “operator” of the property, depending on their role in managing it.

The fact is, when CERCLA was drafted, Congress did not consider the status of the trustee. It became apparent that there was an issue only after CERCLA was passed into law. For land trustees, this represents a legal gray area.

There are two things to consider here. Firstly, trustees provide a valuable service to Americans and the government does not want to interfere with that. However, the government also has a tendency to lean on an easy target when they want testimony or evidence in a trial. Since the law is ambiguous, that option is available to them. Whether or not they can act on the threat is a different story.

“Owner” vs. “Title Holder”

Illinois decided that a trustee does not qualify as an owner, and other states may have similar decisions. It will differ from state to the next. No one can be held liable, however, merely for being a “title holder”. Under CERCLA liability regulations or any other law, the trustee would only incur liability under the theory that the trustee is an owner.

While agents of the government are liable to charge an individual with whatever crime they please, in order to prove that the trustee is liable for items held in the trust, they would have to make the case that the trustee is the “owner”. The courts seem opposed to defining a trustee as such.

What are the Main Differences Between a Series LLC and a Traditional LLC?

A limited liability company (LLC) is a popular way for entrepreneurs to file a business entity. A LLC offers owners a level of flexibility not provided through the formation of other types of businesses. As its name implies, an LLC also affords owners limited liability that can help protect them from incurred debt or lawsuits that may be filed against the business. A series LLC is similar to the more traditional LLC. Similar to a corporation umbrella, a series LLC has a “parent” LLC with one or more “child” LLCs that are filed beneath it. However, a series LLC has its differences as well. How do they stack up? Keep reading!

The Similarities

A traditional LLC and a series LLC follow the same formation regulations. Articles of formation, and any associated fees, will be to be filed with the appropriate government body. Most states also require an operating agreement. Both versions of the LLC protect owners from liabilities. Additionally, they do not limit the number of stakeholders or owners and permit non-US citizens to take part in the company.

The Differences

Series LLCs, however, are not recognized by every state. Those that do recognize and permit the formation of a series LLC may have varying laws that dictate how to do so.
other states, like California, do not permit series LLCs to be formed but do recognize those legally established in other states. Others yet do not recognize series LLCs at all. Series LLCs allow a company to separate and “box” specific assets into various sub-LLCs to help protect them from each other. If a lawsuit is brought against one of the series LLCs, for example, the assets and earnings of the other LLCs are shielded from any legal consequences. A series LLC can also help to reduce startup and ongoing administrative costs. For example, if you file for a traditional LLC in Kansas, the fee is $160. If you file for a series LLC, the master will cost $250 and each series will be an additional $100. If you want to protect three separate assets from debt and litigation, under a series LLC, this will cost you $450. To get the same protection from a traditional LLC, you would need to file three separate LLC entities, for a total of $480.

Professional Guidance

Royal Legal Solutions can provide professional guidance to help you make the most of your entrepreneurial dreams. Our staff understands the nuances of state laws throughout the United States and Canada. As experts, our experience can help you avoid accidentally violating the various regulations your company may encounter and maintain your limited liability. If you would like to schedule a consultation, contact us today.

Checkbook Control Facilities for Self-Directed 401(k)s

Saving for your retirement is one of the best ways to prepare yourself for the next phase of your life. Your investment choices can limit or enhance your portfolio. Different types of retirement accounts provide you with varying degrees of control and opportunities. A traditional individual retirement account (IRA), for example, puts your account primarily in the hands of a financial advisor. It limits your investment possibilities to bonds, stocks and mutual funds.

However, a self-directed 401(k) gives you complete control over your investments and an increased chance to diversify your portfolio. In fact, with a self-directed 401(k), you can invest in everything from real estate, to precious metals, commodities and more. This level of portfolio diversification has the potential to create enormous returns. While there are risks associated with such potential, some individuals prefer self-directed 401(k)’s to other retirement account options. In addition to the potential earnings and diversification, a self-directed 401(k) allows you to have checkbook control.

Checkbook Control Facilities

As the owner of your self-directed 401(k), you maintain full control of your plan. In fact, unlike a self-directed IRA, the Internal Revenue Service (IRS) does not require you to have a qualified trustee or custodian. As the plan’s owner, you are your own trustee. This allows you to open a trust account in the name of your self-directed 401(k) at any bank or credit union. Checkbook control enables you to act immediately on investment opportunities. Because you do not have to go through a custodian, you eliminate the approval process some firms require. You simply write a check from your self-directed 401(k) trust fund and the money will be transferred immediately upon receipt.

The Do’s and Don’ts of Checkbook Control

As with any checkbook account, there are a few do’s and don’ts you should be aware of.

Do:

Don’t:

Royal Legal Solutions

While you are the owner of your self-directed 401(k) plan, you will need to open the account with a provider. At Royal Legal Solutions, we understand the nuances of investment portfolios and IRS regulations. Our goal is to help you increase your retirement fund without incurring penalties from the regulatory bodies.

Understanding the Situs of an Out-of-State Land Trust

The “trust situs” is the technical legal term for where a trust is located. It’s typical for the situs of a land trust to be located in the home of the settlor (the trustor). Under certain conditions, it can be to the advantage of the settlor to establish the situs of the trust outside of their home state.

For instance, changing the situs of a trust to a different state can have a profound impact on how the trust is processed. Administrative efficiency will differ from state to state, as will taxes. When the situs of a trust is changed to another state, the laws that govern that trust are shifted alongside it.

It’s a powerful tool for trustees to have at their disposal. What would be the sense of establishing a trust if it’s not going to behave in the manner that you want it to? If your state’s laws don’t meet your goals, changing the situs of the trust to another state is the last option available to you.

Protecting the Trust from Lawsuits

Another advantage of shifting the situs of a trust to another state is that it makes it more difficult to sue. When a trust is established in an individual’s home state, it’s easier and less expensive for those within the state to sue the trust. There’s less legal legwork involved and lawyers would not need to cross jurisdictions.

Moving the situs of a trust can be beneficial regardless of how friendly your state is to your personal goals. In addition, a trust can have multiple situses. A trust can be under the jurisdiction of one state while being taxed under the laws of another state.

Trust Situs: 4 Types

Situs can be divided into 4 types:

The administrative situs is particularly important because that will determine the jurisdictional situs as well. Any individual that wants to sue the trust would have to take their case to whichever state in which the trust is administered.

The tax situs is also quite important. Every state will have different laws concerning how income from a trust is taxed. Moving the tax situs can thus protect the trust from overly greedy states. In addition, some states tax trusts based on where they were created. Others will tax based on the location of the trustee. Other states have no trust income tax at all.

Having a financial advisor or lawyer who can sort these kinds of things out can help a great deal. Obviously, you don’t want multiple states making tax claims against your trust. On the other hand, you do want your trust to be insulated from being an easy target in a lawsuit.

Understanding the Function of Tenancy by the Entirety (TBE)

Tenancy by the Entirety (which is abbreviated T by E or TBE) is a holding title in which a married couple each own 100% of the interest in a property. It is distinct from joint ownership insofar as it can only be used by married couples, and the agreement must be broken by both spouses as opposed to only one. In addition, a creditor going after one spouse could not lien or force the sale of the residence because of a debt owed by only one spouse. The only caveat is that a TBE can only be used for their primary residence.

Tenancy by the Entirety and Asset Protection

Property titled under TBE is considered legally separate from individually-owned property. The TBE agreement is itself considered a person, in the same way that corporations can be considered persons. Two persons, who are married to one another, establish a TBE agreement for legal purposes. The TBE itself is considered a third person. In this way, a home can be insulated against judgments against one or the other spouse.

In addition, if two creditors have judgments against one spouse, or two creditors have judgments each spouse, the home would be safe from the creditors. It is only when one creditor has a judgment against both spouses that the house itself would be vulnerable.

Tenancy by the Entirety and Land Trusts

TBE agreements and land trusts each come with their own set of benefits. These benefits can be used in conjunction with one another when the beneficiary is established as the TBE (the legal third person created by the agreement) as opposed to one or the other spouse.

Those who set up a land trust in this manner can insulate their assets from creditors while essentially hiding their identity as the legal owner of the property. In addition, they can establish a beneficiary without needing to file paperwork with public records. Furthermore, they can retain tax advantages should they qualify for any.

There are a handful of states that allow TBE for married couples, but not every state does. In addition, using a TBE as the primary way to protect an asset from creditors can backfire. Anything can happen before a judge, and if a creditor’s lawyer can convince the judge that the TBE was only created for the purpose of defrauding creditors, a judge might throw out the TBE.
For those that are looking to establish a TBE, it’s best to do this when the home is purchased.

One other consideration: if one or the other spouse files for a divorce, the TBE is immediately nullified. While a TBE can be a good way to protect your residence from creditors, it’s important to realize that under some circumstances it cannot be relied upon.

One Property Per LLC Is Great. But A Property Management Company Is Better.

 

A common asset protection strategy for a real estate investor as to have one property per LLC. And that makes sense because if you have a lawsuit with one property, you don't want it affecting your other assets.

Say we have one LLC with Property A held inside of it and a completely different LLC with Property B held inside of it.

This is a great situation. If you have a lawsuit involving Property A, it's not going to affect Property B.

To further increase your protections, you should have a corporation which acts as your property management company.

This company is completely separate from the LLCs, which hold your assets. And because it's completely separate, if you have a contractor sue you, if you have a tenant sue you, if you have anybody else that deals with the business of running your real estate company that would sue you. The property management company is the entity that they're going to be able to sue.

They won't have a claim against your LLC properties (Property A and Property B). And that's what we want. It protects your credit score if you are sued as an individual (if you ran the business yourself) and it gives you the asset protection you need.

Land Trust Documents: What You Need for Proper Record Keeping

There are a number of good reasons why an investor would want to look into a land trust. A land trust involves the transfer of a property’s title over to a trustee. The trustee is usually referred to as a settlor. In a land trust arrangement, the beneficiary has ultimate control over the relationship and can revoke the trust at any time. A few reasons why a land trust might be desirable to someone:

What Do I Need for Proper Land Trust Record Keeping?

Essentially, there are only two land trust documents that are required to create a land trust. Those are:

The TA (trust agreement) is incredibly important. It is recommended that you keep additional copies of it handy. You will need the trust agreement in the event that you want to either change the trust or sell a property from the trust. Make sure that you have both hard copies and digital copies that you can easily access.

For those that have misplaced their TA, a new copy can be drafted by the trustee. This is yet another reason why land trusts are superior to wills. If a will cannot be produced when it is required, it is presumed to have been destroyed or revoked by the individual who drafted it. For those who have lost their trust agreement, there is no such presumption.

The trustee, however, will need to indicate that the new TA is an amended and restated copy. They do this by indicating such at the top of page one on the restated TA. At the top of the document simply write:

“Amended and Restated Trust Agreement”

In the body of the TA, it’s good practice to indicate somewhere that the original trust agreement was lost or could not be found and needed to be redrafted by the trustee.

For obvious reasons, it’s better to have not lost the original trust agreement in the first place. Nonetheless, it’s not exactly the end of the world when that happens. Trusts are meant to be versatile and save folks some of the inconveniences of dealing with wills. So there are methods in place for managing such issues if they occur.

Know that the Feds are Tracking Secret Buyers of High End Real Estate

There are some real estate investors that are secret because they use cash to buy their properties. They do this to keep it off the radar. However, the federal government will now be tracking these secret real estate investors because they feel that illicit money is going from hand to hand during these secret property transactions. Because of this, the government now requires the names of everyone who pays with cash to make sure they are doing it legally. Or so they say, right?

Areas They Are Targeting and Tracking

So, what areas are they targeting and tracking currently? The first place they started targeting and tracking was Manhattan in New York. However, they are also tracking Miami Dade County in Florida. Manhattan is where this illegal money handling started. Although that may be the case, they will track everyone who pays for a property when buying real estate, in cash. These cash purchases protect the buyer from letting anyone know who they are. Now, they will not be able to shield their identity since the government is getting involved.

Is Money Laundering Going on in the Real Estate Industry?

The federal government will be investigating to determine whether or not there is money laundering going on in the real estate industry. Since cash is being used, no one knows the identity of the buyer. However, that has changed because they require the names of everyone who uses cash so they can keep their investigation going. The Treasury Department and the federal government will be using as many resources as they can to investigate this further.

Secret Real Estate Buyers Using LLCs and Shell Companies to Hide

These so-called secret real estate buyers are using Limited Liability Companies and what they call Shell Companies, to hide the fact that they are buying luxury real estate properties with cash. According to Spoiled NYC, the first high-end luxury apartment was sold through these so-called Shell companies for $18.2 Million and used the name "LLC, 432 Parkview." However, they will no longer be allowed to do this since they are now being targeted and tracked by both the Treasury Department and the federal government.
What do you think about these secret real estate buyers using cash for their properties to hide their identity? Now that the Treasury Department and the federal government are involved investigating, and requiring names of cash purchasers,  if there is money laundering going on, it will now be put to a stop.

What is a Roth Solo 401(k) Plan?

Retirement investment accounts such as IRAs and 401(k)s are subject to regulations dictated by the Internal Revenue Service (IRS). No surprise there, right?

Because of this, the various types of retirement accounts have very specific investment and distribution guidelines, which they must abide by or owners will be faced with penalties, fines and taxes. Retirement accounts are typically taxed in one of two ways: pre-tax deductions or post-tax wages. A self-directed 401(k), also known as a solo 401(k), provides plan owners with an almost tax-free investment opportunity and some of the most diverse portfolio options. And when you opt for a Roth solo 401(k), the possibilities are endless!

Limitless Investment Potential With A Roth Solo 401(k)

Many types of retirement accounts limit your investments to mutual funds, stocks and bonds. This is not so with a Roth solo 401(k) plan. In fact, with your Roth solo 401(k) plan you can invest in things like:

Funding Your Roth Solo 401(k)

You can fund your Roth solo 401(k) account in two different ways.

  1. When you make contributions to your Roth solo 401(k) account, you can deposit your funds into your account. Simply write “Roth” in the memo line of your contribution check before depositing it into your account. These contributions are made after taxes have already been deducted from your paycheck. This makes your investment returns and earnings tax-free and entirely yours.
  2. If you have traditional funds already in your Solo 401(k), they can be converted into Roth contributions. The IRS does not consider this to be a distribution. Instead, this is considered to be an “in plan” conversion.

As your plan provider, Royal Legal Solutions can help you figure out the best way to fund your Roth solo 401(k) account. Whether you want to deposit Roth contributions directly into your account or opt for an “in plan” conversion, we are here to make the process easy for you.

Self-Directed IRAs vs Roth Solo 401(k)s

As stated above, your Roth solo 401(k) allows you to invest in real estate. You may already know that a self-directed IRA (SDIRA) permits this as well. Both a Roth solo 401(k) and SDIRA permit you to borrow money for investment purposes. However, the IRS subjects a portion of the profits generated by these investment loans to an Unrelated Business Income Tax (UBIT). (This is typically around 35% of your profits.) While a UBIT is owed on loan profits of a SDIRA, the Roth solo 401(k) earnings are exempt.

Illinois Land Trusts vs. California Land Trusts: What Real Estate Investors Should Know

A land trust, or what they call a Title Holding Trust in Illinois, is a trust that a person, or grantor, creates to put his or her real estate property, personal property, or assets in another person's name. This grantor, uses a land trust to protect his or her property or assets from creditors. Once the property or assets is in another person's name, creditors cannot touch the real owner's property and assets. When naming a land trust, you can either choose an individual you trust or a bank or other institution to hold on to your property and assets for you.

If you were to ask your attorney from a state that doesn't use land trusts about them, they wouldn't know what you were talking about. This is because land trusts are only in certain states. We will discuss two of them now and they include California and Illinois. Here are the differences between the California land trust and the Illinois land trust.

About the California Land Trust

Does California recognize land trusts? Yes, but they use land trusts a little different than they do in Illinois and other states. What they use them for is to conserve land that no one else is using. The land trusts are rooted in local communities in California and work with the public (residents of the state, land owners, and different agencies) to conserve these properties for the benefit of everyone in the state. These properties, under land trusts, are used to educate the public, entertain them, and help improve the health of the public. The state of California has more than 150 land trusts that protect and enhance more than 2.5 million acres of land.

About the Illinois Land Trust

Land trusts were first started in the state of Illinois and are also called Title Holding Trusts. Land trusts in Illinois work a lot different than those in California but much the same as the land trusts in the few other states they exist in.

In Illinois, they work to protect the landowner, versus protecting the land itself (like in California). These trusts go in someone else's name to protect the property owner to keep creditors off his or her back for good. Although the owner of the land trust signs his or her property and assets over to someone else using a land trust, they still maintain all rights to their property and assets. The land trust must do what the land trust owner tells them to do.

As you see, there is a big difference between a California land trust and an Illinois land trust. One conserves the property for everyone to enjoy while the other just holds the property and assets in another person's name for the protection of the landowner.

You Don't Have To Be In Illinois To have An Illinois Title Holding Trust

You can form a land trust even 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).

Can My Series LLC Have an Unlimited Lifespan?

Regular readers know our firm absolutely loves the Series LLC. It's among the most versatile and powerful entities for real estate investors, or anyone with a growing business in need of asset protection. Today, we're addressing how the Series LLC holds up over time. So, can your Series LLC live on forever? Why would you want a company that could achieve such longevity? We'll answer these questions and more below.


Can The Series LLC Have an Unlimited Lifespan?

The short answer is yes, it absolutely can. Traditional LLCs can also have unlimited lifespans under some circumstances. What does this mean in practice?

Some types of companies have laws that require them to re-file with the state to continue existing beyond a certain point. Otherwise, these companies will be required to dissolve within a specified timeframe. By contrast, the Series LLC has an unlimited lifespan, also referred to as a perpetual lifespan, automatically. When you use this structure, you won't have to worry about re-filing, or other paperwork hassles. Read on to learn more about the specific benefits of this feature.


Why Should I Care About My Company's Lifespan?

There are several advantages to having a company with an unlimited lifespan. The most obvious of these is that you'll save money. Re-filing with the state isn't free. You have to pay fees when you re-file to prevent the dissolution of a company with a concrete lifespan. The Series LLC, however, is immortal. You pay once, when you establish it, and you're done. Some other perks of perpetual lifespans include the following:

Of course, there are many more benefits to the Series LLC as a whole. You can read much, much more in our previous posts about advantages of using a Series LLC.


How Do I Form My Series LLC?

Forming a Series LLC still requires filing paperwork with the state. You'll also need an Operating Agreement for the parent company, banking and bookkeeping preparation, and enough Series for each of the assets you intend to protect. Funding the Series LLC is another issue to deal with. Getting this done correctly is important to make the most of your new entity.

That's why it's important to get help from a qualified attorney with specific experience in Series LLCs and their management. At Royal Legal Solutions, we offer a full-service Series LLC package that gets you in business as soon as possible. If you're ready to get started, schedule your Series LLC consultation today.

Some Drawbacks of Series LLCs

The Series LLC is a remarkably powerful tool, but it isn't a panacea. Few things in life are perfect, and the Series LLC is no exception. No entity, legal tool, or strategy is one-size-fits-all. Today, we're going to discuss some of the drawbacks of using a Series LLC. This post should help you determine if the Series LLC is right for you.


Series LLCs Aren't Cheap

Forming a Series LLC costs money--usually several hundred dollars. Those costs can go up depending on if you need additional features for asset protection purposes. The Series LLC isn't unique in this regard. In reality, forming any company is going to cost you money. But forming a company correctly is difficult to do on your own, unless you're an attorney. If you aren't an attorney, you'll almost certainly need the guidance of one.

Lawyers aren't cheap, but if you want a correctly-formed entity you can rely on, this is an expense worth paying for. The alternative is doing it yourself, which means you risk making mistakes that your business will end up paying for in the end. You could lose liability protections, or even fail to register properly. The consequences of these mistakes are generally more costly than employing an attorney to oversee your company formation in the first place.

That said, Series LLCs do save immensely on start-up costs. This is because you're only going to file and pay fees once. If it comes down to using multiple Traditional LLCs or the Series LLC, the Series LLC actually is cheaper. How much you will pay is going to depend largely on what type of business you're running.

Series LLCs are Newer Business Structures

The Series LLC is a young entity compared to other corporation options. This means there hasn't been as much law made specific to the Series LLC. Courts operate on precedent, or previous rulings from other courts and prior changes in law.

When a legal concept or structure is as new as the Series LLC, it becomes difficult to predict what outcomes you'll face in certain situations. This is simply because you're entering barely-charted territory.

Bankruptcy

Bankruptcy is one example of where the Series LLC's newness can become problematic. If you're unfortunate enough to end up in bankruptcy court, your Series LLC may protect the items in your series. But it isn't certain.

Because there is little precedent on how the courts treat the Series LLC, it's impossible to say whether each Series would be treated as a unique entity. Similarly, we just don't know how the entity as a whole will be regarded by these courts. It's literally going to be up to the judge, and some business owners don't like this unpredictability.

The law is ever-changing, and the future is uncertain. For now, however, Series LLC protections have been able to withstand legal scrutiny and many attempts to breach its protections.

Ultimately, understanding how a Series LLC works and whether the Series LLC is right for you is going to depend on your business needs. If you're unsure whether this structure is the right fit for you, feel free to ask questions in the comments section below. You can also contact us for help forming the best entity for your business.

Series LLC Tax Treatment: How the IRS Sees Your Series Entities

The Series LLC comes with so many awesome features for real estate investors that some of us think it's darn-near magical. While it's certainly a powerful structure with plenty of useful applications, even the Series LLC is forced to acknowledge a power greater than itself.

No, we aren't talking about you. We're talking, of course, about the Taxman.

Admittedly, this isn't the sexiest topic in the world, but it's essential knowledge for responsible members of a Series LLC. We'll make this as painless as possible. Below, we'll go over how Uncle Sam views the series within your Series LLC and what you have to do to stay on his good side.

How Uncle Sam Treats the Series LLC

For tax purposes, the Internal Revenue Service treats the Series LLC very similarly to a traditional LLC. The major question I get about this topic is whether each individual series is taxed separately.

For now, the IRS regards the Series LLC as one big entity. This means, that each series within the structure is not considered a separate company and therefore does not require separate returns. Of course, you will have to declare any income you've gained from your Series LLC, and we'll elaborate on that below.

It's important to note that the Series LLC isn't without its tax advantages. Its status as a pass-through entity will save you money and spare you from excessive corporate taxes that you would pay for other types of companies.

How To File Taxes for Your Series LLC

Your operating company (also called the "shell" or "master" company) is what will appear on your tax return. Provided the series that made money for the relevant tax year share common ownership, you can take advantage of pass-through taxation and simply report all income on the Schedule E portion of your personal tax return.

There are ways you could file separate returns for each cell, but this is typically not recommended for Series LLC owners whose income is mostly coming from passive investments like real estate. We do, however, recommend that Series LLC owners keep thorough, separate records for their series to ensure liability protection and simplify the tax process. This applies regardless of how you choose to file.

How to Ensure You're Filing Properly: Get Help

Please keep in mind that this information about Series LLC tax treatment relates only to taxation at the federal level. State law can change more frequently, and your state may implement or already have state tax requirements specific to the Series LLC.

This is one of many reasons that smart Series LLC owners use qualified CPAs and attorneys to help them handle their taxes. Our experts at Royal Legal Solutions stay on top of the most up-to-date information about Series LLCs and tax law. If you still have questions about how to handle the taxes for your series LLC, you're not alone. We're here to help.

Don't wait until the Taxman comes knocking! Contact us to take advantage of your personalized consultation today.

Keep more of your money with a Royal Tax Review

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

What States Are Permitting Series LLCs?

The Series LLC is beloved by investors and business people for its versatility and a broad range of benefits. However, it isn't a universal structure yet. Not all states allow the in-state formation of Series LLCs. Below, we'll go over which states do not permit Series LLCs. We'll also tell you what you can do if you live in one of those states. Don't worry--you can still form a Series LLC. Keep reading to learn how.

States that Offer Series LLCs

The Series LLC was initially pioneered by Delaware, a famously pro-business state. Even today, Delaware remains a popular state for entity formation. Other states followed in Delaware's footsteps, and today you can get a Series LLC in Texas, Tennessee, Utah, Nevada, Illinois, Oklahoma, and Iowa.

Though not technically a state, residents of Puerto Rico also have the option to form a Series LLC without ever leaving the island.

States That Don't Permit Series LLCs

As of this writing, the only state that doesn't allow the formation of an in-state Series LLC is California. California has specific and strict regulations governing business in general, and there is currently no such thing as a California Series LLC. Traditional LLCs are common, as are other types of entities and agreements. We've written about special considerations for California real estate investors before.

If your state doesn't offer a Series LLC, don't slam your hand down on the panic button just yet. There's a way to get around the restrictions of your location, easily and 100% legally.

How to Form a Series LLC From Any State

Fortunately, your Series LLC doesn't have to be formed in your state of residence. This means, provided you're a U.S. citizen, you can form an out-of-state Series LLC.

The following are the most popular states for forming a Series LLC:

Each of these options comes with specific operational, judicial, and tax benefits. Which option will be best for you depends on which features and perks you'll get the most out of. For more details, refer to our previous article on the best states for forming a Series LLC.

After you've selected a state and formed your LLC, you will be able to register the company with your state of residence. Even California allows its residents to register a Nevada or Texas Series LLC and conduct business within California. Of course, these laws will vary based on where you live. Each state will have its own regulations that dictate what you and your company must do to be in compliance with the law. You can get an idea of what you'll need to do by doing some basic research online.

However, the wisest course of action is to seek the guidance of an attorney with experience in entity formation, and ideally, experience with Series LLC in particular. At Royal Legal Solutions, we routinely help our clients select, form, and manage the best type of Series LLC for their individual situations. If you have questions about the best option for you or are ready to get started, don't hesitate. Reach out to us and schedule your Series LLC consultation.

Series LLC For Real Estate Investors

Whether you're a veteran investor, or a new investor just beginning to build your real estate empire, the series LLC for real estate investors has many features and benefits you should know about.

If you've been using a traditional LLC for asset protection and have never heard of the series version, prepare to have your investing world changed forever.

The series LLC is one of the most effective entities a real estate investor can form. When you take advantage of this structure, you'll not only be able to streamline and grow your business, but you'll also receive the benefits of lawsuit prevention and asset protection.

As both an investor and an attorney, I believe that the series LLC is the best structure for real estate investors who want asset protection while they build their real estate empire.

What is the Series LLC?

The Series LLC is very similar to a traditional LLC (see our Series LLC vs LLC article). The only difference is, instead of being one big company, the series LLC is a network of LLCs. It uses a parent-child structure. Your parent company is its own LLC, and it can have as many "children," or Series, as you have assets to place within them. Each asset will have its own LLC, complete with liability protections and many more benefits we'll discuss below. Take a look at the following diagram for an example of what this looks like in practice.

The set-up is elegant in its simplicity. The operating company, dubbed "Big Daddy" above, is in charge of the kids. Each kid is its own asset. Of course, you could have any combination of properties or property types.

Biggest Benefits of the Series LLC For Real Estate Investments

The benefits of a Series LLC are numerous. Here are the top reasons you should consider this structure.

Scalability: One Structure, Infinite Real Estate Investments Assets

With the Series LLC, incorporating new assets is easy. Suppose you spot a cute little fixer-upper property at a great price. When you buy it, all you need to do is a little bit of paperwork and have your attorney sign off on it to add it into the structure. If your Series looked like the one above, your new asset would be "Series 4."

And you aren't restricted to just real estate, either. Any asset can go into its own series - cash, gold, cryptocurrency caches, your midlife crisis Jaguar, etc. If you can think of it, you can stick it in the Series LLC.

Tax Benefits and Cost Savings On Real Estate Investments

The Series LLC allows for pass-through taxation and its benefits. This means you'll dodge hefty corporate taxes and get to file any profits on your personal return. For most people, this is infinitely cheaper. With the help of a competent CPA, you could save thousands.

Other cost savings are relevant for Series LLC owners as well. The clearest of these is evident when you consider how much it would cost to have each asset in its own Traditional LLC. The annual fees would add up. With the Series version, you're getting an infinite amount of LLCs for the price of just one.

Asset Protection Made Simple For Real Estate

A Series LLC is the foundation of a superior asset protection plan. Real estate investors especially need this structure as a starting point. It offers the single most powerful liability protection of any entity one could possibly form. The reason for this is simple: each "Series" holding its own asset keeps it isolated from everything else you own.

How the Series LLC Prevents Real Estate Investment Lawsuits

You may think that you don't need any additional protection from lawsuits because you run an ethical business, have insurance, and try to treat your tenants and customers well. Sadly, if you believe this, you are mistaken. Did you know that one-fourth of Americans fall prey to a lawsuit at some point in their lives? This figure is even higher for real estate investors, up to one-third according to some sources. Why? Because we tend to have more assets for litigious people to want to pursue in court.

The cold truth is that lawsuits are a ruthless, cut-throat business. And like all businesses, they're after one thing: cash. That means, the more wealthy you become from your real estate ventures, the more likely someone is to try to come after your cold hard cash and any assets. Since success makes you an attractive potential payday for unscrupulous and greedy people. Insurance won't bail you out of this situation, and neither will your good reputation or even the best business practices in the world. Lawsuits don't even have to be valid or logical to cost you everything you've worked so hard for.

To avoid this fate, you will want as much protection as you can get. Fortunately, the Series LLC can have your back. In addition to being a less attractive target, the Series LLC's isolation of assets means that if you are sued, only that individual asset is on the line. When implemented properly along with other precautions, Series LLCs are the core of an asset protection plan that is powerful enough to stop lawsuits before your name is even typed out on filing papers.

How Do I Set Up My Series LLC?

Setting up the Series LLC is very simple, but it must be done correctly. Investing in an asset protection plan is one of the wisest moves you can make as an investor, but if you don't do it correctly, you won't get the full benefits of asset protection. One mistake with your anonymity or Operating Agreement, and the plan you've so cleverly devised could be rendered completely ineffective. That's why we offer a full-service product where we complete all of the steps for you, and guarantee your anonymity.

Maybe you already have an LLC for your property. This is great, but the Series version is far superior to the LLC alone. Fortunately, you can incorporate your existing LLC into a Series LLC easily. Even better: it won't cost you any more than you're already paying for your Traditional LLC.

It's never too early to establish or beef up your asset protection plan. But you can certainly wait too late, and the consequences will be dire. If you haven't set up anything yet, you are completely vulnerable. Take care of this before you consider buying any more properties. If you have property in your own name, this is even more urgent.

 

Our experts are here to advise you on what methods will work best for your individual situation. We're here to help you set up your Series LLC and everything else you need for a bulletproof asset protection plan. Keep the predators and money-hungry attorneys at bay: take action and set up your Series LLC consultation today.

Investment Property Insurance Questions You Should Ask Your Agent

Real estate investors that do well are smart folks, but it can be hard for smart people to admit they aren't experts at everything. Many of us have successful careers outside of investing. Maybe you're a CPA or a neurosurgeon, or an attorney like myself. But smart people like ourselves need to be mindful that we are also wise. Wisdom is knowing that there are things you don't know.

And what do the wise among us do when we don't know something? We ask questions! Insurance is vital, and typically a legal requirement for your investment properties. Insurance alone is not an advisable strategy for asset protection purposes. At Royal Legal Solutions we highly recommend insuring your properties as your first line of defense.

Question 1:  What Types of Policies Are Available To Me?

Typically, you'll find policies along a spectrum of Basic, Broad, Specified, and Comprehensive. The first is exactly what it sounds like: the bare minimum. Comprehensive is the opposite end of the extreme, and the most all-inclusive kind of policy you can acquire. A good starting point is to write down what you have; i.e. assets, debts, dependents, monthly income, monthly expenses, and how you make a living. This way you can formulate a plan for what coverages you will need and work from there.

Question 2: Can You Please Explain My Policy And What It Covers?

This is fairly straightforward. You may also take this opportunity to ask what other types of investment property insurance the home already has (fire, etc.) to get the best idea of your needs.

There's a second part to this question: you will also want to ask what your policy does NOT cover. Some policies cover slip-and-fall accidents, and some don't. Many investors need this coverage, especially those who flip or rehab homes. Think about it: with all the contractors,  laborers, and both prospective and future tenants coming through the property, you can't risk not having your backside covered. Asking what isn't covered will help you make the most informed decision possible.

One major concern you should know about your policy is whether it covers the loss of rent. Landlords can face this in situations as extreme as natural disasters (just ask the landlords who had to rebuild after Hurricane Sandy) or as mundane as a few teenagers armed with spray paint defacing your property. (maybe also add about short-term rentals, where damage to the property or furnishings in the property cause a loss of revenue? Assess your risks alongside your agent, but remember insurance is cheap when you think in terms of loss so investors who can afford it should take advantage.

Question 3: What Information Do You Need For An Investment Property Insurance Quote?

This may seem obvious, but the details of your situation will help the agent get you the most appropriate and accurate quote for your needs. Here are some typical things you will have to provide:

Question 4: What Is My Property's True Replacement Cost?

TRC is different from the value of your home but critical for real estate insurance purposes. It's usually measured in square footage, and a good agent will work with you to determine your need. Feel free to shop around with various agents to ensure you're getting the best, honest deal. There are over 4000 different factors that go into determining the assessed value of a property.

Final Notes: The More You Know, The Better Off You'll Be

You want an agent who is both transparent and able to answer all of these questions. You can start by researching reputable agents online. If an agent won't answer these questions, that's a giant red flag. Move on.

Still stuck? We now have an in-house insurance agent on staff to assist real estate investors. Together we can streamline coverage through the policies we offer to ensure that you are protected and that your loved ones are cared for in the event something unforeseen occurs. We offer a single point of contact for all of your policies including auto insurance, property insurance, and life insurance. To get started, take our Insurance Quiz and book your free consultation. You've got nothing to lose in requesting a quote and everything to gain if we can save you money.

Property, LLC, and Company Structure

Property, LLC, and Company Structure

As a real estate investor, you have to understand that lawsuits are a business and they're serious. Insurance will not protect you from most lawsuits that will happen regarding the transaction of your buying and selling of real estate. Every time you're entering into a contract, every time you actually sell a piece of property, every time you're leasing a property to a tenant, these are all things that insurance doesn't cover. The only thing that is going to save you and your hard earned dollars is an asset protection strategy. That is the property LLC and company structure. What I do, is I make it, so that if anybody looks to sue you, it'll look like you own nothing. That if they were to sue you, that it'll make it a nightmare for them to try to come after you. And what does a nightmare mean in litigation? It means having to risk thousands and thousands of dollars with the mere hope of being able to get something out of the other party. Now ask yourself, as an investor, and as a businessperson, do you go to Vegas rolling dice, hoping that you'll recover? Probably not, and neither will an attorney, that they might have to take the case on contingency. Unless attorneys are in the business of only taking basically guaranteed wins. And we make it such that it is a gamble for them to try to come after your money. They just won't do it and that's what we specialize in. We make it as difficult as possible at Royal Legal Solutions for anybody to find out what you own or for them to succeed against you in a lawsuit. And even if they were to succeed against you in a lawsuit, their ability to come after your assets would be minimalized to the fullest extent of the law. My name is Scott Royal Smith, I'm with Royal Legal Solutions. I'm an asset protection attorney who specializes in real estate asset protection. I'm a real estate investor myself and I'd like to help you.

How to Invest Using a Self-Directed IRA Loan

This is one of a multi-part series on the Self-Directed IRA. Depending on how familiar you are with the account type already, you may already know that the Self-Directed IRA one of the best retirement solutions. This is particularly true for experienced investors and self-employed individuals. Even if you're neither of these yet, you'll still want to read on.  A whole world of profitable investment opportunities is just waiting for…YOU!
 
Think of your Self-Directed IRA as a “retirement investment vehicle” which allows you to use your retirement funds to invest in all varieties of investments. This includes, fortunately for my fellow real estate empire builders out there, real estate.  But regardless of your preferred investment types, the best part for all account holders is that if you form and execute your Self-Directed IRA properly, your money grows tax free and you don’t need to take orders from a custodian. This will also free you from the expensive custodian fees that may have been a burden on your retirement account savings for years.

Below, we'll talk about how to take advantage of some of the Self-Directed IRA's best features, but focusing first, of course, on how to get a loan for your investments.

Why Traditional Loans Won't Work For Your Self-Directed IRA

Most investors using retirement funds to make an investment will use cash to make those deals. Whether the investment is in the form of stocks/bonds, gold, or real estate, most investors will not borrow any funds to make an investment.
One significant reason why retirement account investors will generally not borrow money (also called debt or leverage) as part of an investment of real estate acquisition is the IRS. This should come as no surprise, as most Americans fear the IRS--and with good reason.
Internal Revenue Code Section 4975 prevents you, the IRA holder, from personally guaranteeing a loan made to your IRA. This applies to your Self-Directed IRA,  because you are barred from using a typical loan or mortgage loan as part of an IRA transaction. The IRS considers such loans prohibited transactions, which can trigger major consequences and fees for the investor who runs afoul of prohibited transaction rules.

The bottom line is simple: you just can't get an ordinary loan with Self-Directed IRA. But you may still need one to cover your early investments. Don't worry though. You, as a newly empowered Self-Directed IRA investor, do still have a financing option: a non-recourse loan.
 

What is a Non-Recourse Loan and How Does it Work?

Non-recourse loans differ wildly from traditional loans in a major way. Non-recourse loans aren't guaranteed by anyone at all. Rather, they're secured by collateral, such as a valuable property or other asset. While in theory any asset could be used for collateral, lenders in this case are typically securing  the loan via the asset or property that the loan will be used for.

So if you, the borrower, are unable to repay the loan, the lender’s only recourse is against the asset, such as the investment property you intend to use the loan for. They can't come after you personally.  That's the simple definition of "non-recourse."
 
On average, non-recourse loans are tougher to obtain than a traditional loans or mortgages. Fortunately, this is a common enough strategy for investors that you will have your pick from a wide variety of reputable non-recourse lenders. But you should be aware of the fact that interest rates on non-recourse loans do tend to be slightly higher than those of personal loans.
 

IRS Rules Regarding Non-Recourse Loans

The IRS has some strict limits on how these types of loans may be used in retirement accounts. The main thing you should know is that Uncle Sam allows IRA and 401k plans to use non-recourse loans solely for financing purposes.

The rules covering the use of non-recourse financing by an IRA can be found in Internal Revenue Code Section 514. Section 514 requires debt-financed income to be included in unrelated business taxable income (UBTI or UBIT), which can trigger around a  40% tax for 2017 and 2018. If non-recourse debt financing is used, the portion of the income or gains generated by the debt-financed can also get you hit with the approximately 40% UBTI tax.
 
So for instance, if you choose to invest 60% IRA funds and borrow 40% on a non-recourse basis, 40% of the income or gains generated by the debt financed investment would be subject to the UBTI tax.
 
Let's keep it simple and imagine for the purpose of this example that the investment property you wish to buy is $100,000. This means that as a  Self-Directed IRA investor, if you invest $60,000 IRA funds and borrow $40,000 on a non-recourse basis and the IRA investment generates $1,000 of income annually, 40% of the income or $400 would be subject to the UBTI tax.
 
But don't stress it too hard. There are ways to reduce the $400 base tax. It should be clear from this example that using as little non-recourse financing as you need is ideal, but that's not the only way to lower your base tax.

How To Save On Taxes By Avoiding the UBTI

You can use a Solo 401k Plan, if you already have one, to dodge the UBTI.  This is one reason that Solo 401ks and Self-Directed IRAs are such attractive investment vehicles. Used together, or using strategic rollover methods, you can reduce your need for financing, but the news gets even better.
 
If you use non-recourse financing to invest in real estate through your Solo 401k Plan or your Self-Directed IRA, you will “escape” UBTI/UBIT tax due to an exception. This exception can be found in the Unrelated Debt Financed Income (UDFI) rules found under IRC 514(c)(9). If you're curious, you're welcome to learn about how this works, but due to space reasons, I'll just tell you that many of my clients have used this exception to save thousands in tax dollars while securing the loans they need for their Self-Directed IRA investments.

And there's no reason why you can't do this too. That's all for now, but if this subject interests you, keep your eyes peeled for many more upcoming pieces on the Self-Directed IRA and its "big brother" account, the Self-Directed IRA LLC. These will also be discussed in an upcoming book I'm authoring and giving away for free for Bigger Pockets. Stay tuned for updates on that, and happy investing!