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:
We invite you to read on and learn how to maintain anonymity operationally.
Anonymity is essential because it stops lawsuits before they start, as belligerent parties will be unable to find the actual target of the suit.
We obtain anonymity by using a variety of tools. These tools include using:
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:
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.
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:
What matters is how you plan to purchase the home. If you buy it:
When you contract service providers, you will want to interact through an anonymous operating LLC. These providers include, but are not limited to:
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
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.
In some cases, you will want to disclose actual ownership. Some of the most common parties to tell include:
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:
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:
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:
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Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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