Hello to all !!

[laurence]

Right, people seem happy to sue for a brazillion dollars for a coffee spill, I took out my $1 million umbrella policy for the good lawyers as much as the insurance money. Even though I may be sued for $5 million, the first million is theirs, so they'll fight to keep it.

[Gumby]

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[Martha]

Spidey and Psyop, I think you are spending too much time on the internet or at seminars.

Equity stripping? (Better have real debt and real debt has to be paid). Multi-member LLCs just for the purpose of asset protection? (Complicating your tax situation and not helping much if at all for asset protection). Reliance on a belief that a partnership provides the best protection because of charging orders? (I'll argue that one with any lawyer). Man, you guys are way out there. As I said in another thread and to quote Gumby: "forget the mumbo jumbo, keep your nose clean and get good liability insurance".

Spend your time and money on due diligence and being good boys.

But that advice doesn't sell hits on websites or seats at seminars.

[spideyrdpd]

Did you read the article or just dismiss out of hand ? I dont do premes .

None of you really adressed the single member issue
If you can get the silver out of my head wouldnt you be able to get an llc owned only by me ?

[Gumby]

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[Martha]

Even if your brother in law had a legitimate 1% interest,* as a bankruptcy trustee I would step into your shoes as an owner and act to either sell your LLC interest or sell the property.*I would argue that bankrutpcy law trumps any state law restrictions to a charging order.* At best, your brother in law may be entitled to 1% of the proceeds of the sale.* More likely he would get nothing as a fraudulent transferee as Gumby says.* And he would incur attorney fees because he got sued.* And you would get nothing.

So you are putting your relatives at risk in search of a mechanism to avoid your creditors.

EDIT:* When I used to be a bankrutpcy trustee, I would look far closer at people and their financial lives when they set up odd or overly complicated structures.* You may very well invite closer scrutiny from a collection lawyer or bankruptcy trustee if you get too cute. Some people push way to far and end up having their discharge in bankruptcy denied.

[spideyrdpd]

Hi
Thanks for reading. I dont have an issue. My brother in law is the president of the company. He does most of the work while I type on the net
Why do I feel like opposing party ? I am more than willing to admit I dont have all the answers.
I dont think its an issue of going broke and declaring bankruptcy.
The thought is that if you have 5 identical single member llc's that they would have a better chance of saying the same thing your saying. Its just a tool to avoid being sued ?
He has a wife that can be a partner
I also read you can have a faulty or crummy trust be a partner. You would have to explain it to me....
I just dont understand why you goes say its expensive. Of course our lawyer is my Brother in laws buddy. Gee he isnt pepercorn 8)
and while my taxes our expensive the refund checks are very nice. As is the money Enigma gets on his properties !! So he can afford to spend a few more bucks if it adds a layer of protection.

So I am sure you can continue to tell my what cant be done. I wonder what can be done.
I would imagine if you have a llc;s thats a partnership you can do things to insure a partner isnt a "peppercorn" > again yer the lawyers you tell me how :

I would say to pay off the house and put money into ira's/401k maybe a sep ? before paying off rentals. Would be things I would also advise if I was worried about being sued.

[Gumby]

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[laurence]

My neighbor's friend talked in almost the same way. *To this day she and my neighbor insist they didn't do anything wrong, legit business, yadda yadda....

...she's doing a year's house arrest right now. *She wears the same ankle bracelet Martha Stewart made popular. *

[Martha]

Quote:

Originally Posted by spideyrdpd I would say to pay off the house and put money into ira's/401k maybe a sep ? before paying off rentals. Would be things I would also advise if I was worried about being sued.

Yes. Something we can agree on. Depending what state you live in and what is exempt from creditors in that state, it makes sense to build up equity in exempt assets and maximize your retirement plans.

[spideyrdpd]

Quote:

Originally Posted by Martha Yes.* Something we can agree on.* Depending what state you live in and what is exempt from creditors in that state, it makes sense to build up equity in exempt assets and maximize your retirement plans.*

Its not about creditors its about the lawyers that chase people with deep pockets. About trying to not be a good target for the slip and fall guys.
If having a partner makes it even a little more difficult to get to property 2 and 3 I would be all for it.
I am all about layers of protection !

[Martha]

Quote:

Originally Posted by spideyrdpd Its not about creditors its about the lawyers that chase people with deep pockets. About trying to not be a good target for the slip and fall guys. If having a partner makes it even a little more difficult to get to property 2 and 3 I would be all for it. I am all about layers of protection !

Well I am not going to agree with you and you aren't going to pay any attention to me, so let's call it quits.

[Enigma]

Hey Martha !

I am paying attention (and no I am not being sarcastic)

Learning more and more as I read and*a couple of questions please.

I understand the payoff house part and the full funding of* 401k/IRA* part. However, if I leave my debt with investment properties how will I have the cash flow to RE??

I had originally planned to have all business and personal assets. Everything: (cars, toys, the whole shootin' match paid off. The exception is the 260k debt which remain as investment debt.

Would a better strategy be to acquire more properties than originally planned and go into each property with say,,,,,a 50% cash stake. It would add a nice hedge to vacancies and spread risk as well.

I cant touch my 401k for another 20 years with the quirky exception of IRS code 72t but that seems cloudy at best getting "private letter ruling". Anyway I was counting on that as my second layer of protection so to speak. Almost like a built in inflation hedge that kicks in at 60.

My original plan was to have a long time husband/wife friends with almost identical goals be 50/50 joint tennants. I have found them to be top notch honest and ethical in the 15 years I have known them and our goals are scary similar. Now with my newfound knowledge we are going to our business attorney and getting LLC's for each of the properties.

We are about equally funded as far as real estate assets. However if we did go 50/50 on every thing at 50% cash down we would be approaching 5-6M in assets. Thats a scary large number.

Any $$$ that I did not use from income stream was going to take a MM fund to 100k then the balance laddered in CD's up to about 5yrs then mutual funds. Likely very low cost index type funds ie. Vanguard, etc.

Also I am a vanilla boring type guy (read, low risk). Family man, Wife, 2 kids, drive the speed limit, never had a ticket. The only time I have seen the inside of a courthouse is when I have been a juror. In my 39 years nobody has even so much as whispered to me that I had behaved irresponsibily. I am now assuming increasing risk with additonal properties but I have very capable council and will follow his direction on the correct amount of insurance to have for my financial situation.

Keep talking Martha, I am listening,

Thanks

[spideyrdpd]

Hi I agree I am learning more > was hoping Gumby would share more as well. Oh and I also agree on what your saying about backruptcy. Although theres gotta be a way around it. Since Trump end up better off after bankruptcy.

[Martha]

Quote:

Originally Posted by Enigma Hey Martha ! I am paying attention (and no I am not being sarcastic) Learning more and more as I read and a couple of questions please. I understand the payoff house part and the full funding of 401k/IRA part. However, if I leave my debt with investment properties how will I have the cash flow to RE?? I had originally planned to have all business and personal assets. Everything: (cars, toys, the whole shootin' match paid off. The exception is the 260k debt which remain as investment debt. Would a better strategy be to acquire more properties than originally planned and go into each property with say,,,,,a 50% cash stake. It would add a nice hedge to vacancies and spread risk as well.

Especially if you are in a risky business it makes sense to pay off debt against exempt property first and maximize retirement plans. But if you need the cash flow from rental properties to live on, you need to pay that debt as well or sell the properties and invest the proceeds elsewehere. We used to own rental properties. We slowly paid down the debt on those properties. When the market felt right, we sold the properties. We didn't take out equity to buy more properties like a number of people do. However, I can understand the strategy of going into more properties, especially with the large amount of cash investment you suggest. A business question only you can answer. It's not like we don't use leverage. We are passive investers in several real estate investments that are leveraged and the leverage has been to our advantage.

Quote:

I cant touch my 401k for another 20 years with the quirky exception of IRS code 72t but that seems cloudy at best getting "private letter ruling". Anyway I was counting on that as my second layer of protection so to speak. Almost like a built in inflation hedge that kicks in at 60.

You can roll over the 401k into an IRA when you leave work and then do 72t distributions. No letter ruling necessary.

[Gumby]

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[spideyrdpd]

Hi gumby
Thanks for the article. Is this it ?
http://www.post-gazette.com/pg/06198/706475-68.stm

They have a link that goes to this site which discusses the single member llc.
http://www.assetprotectionbook.com/singlememberllc.htm
Which discusses my issue of not having the charging order.
Otherwise it does discuss the other points we have both agreed on

[Gumby]

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[spideyrdpd]

Thanks Gumby
I was curious so I checked Oregons homestead laws. If I read it right it only protects the first 33k ? Doesnt seem like much protection . It may have been an older number ?

Hi Engima
I have partnered with people. I dont think I would put all my eggs in with any one person. I have been burnt a few times.Plus then who really decides what happens. It might be nice to do some cross over stuff. So maybe you do something where your a 20% partner in something he does and vs a versa.

Heres another forum where you could possibly post your question
and a discussion on asset protection and single member llc's
http://www.assetprotectioncorp.com/c...c;f=1;t=000361
It also discusses equity stripping. Which again wasnt my thoughts as much as just not putting as much down. Interestingly the idea of an annuity came up since they have asset protection. Ken lay had put some of his bucks in one and they say it will not be accesible to the civil suits.

[Brat]

Quote:

Originally Posted by spideyrdpd It also discusses equity stripping. Which again wasnt my thoughts as much as just not putting as much down. Interestingly the idea of an annuity came up since they have asset protection. Ken lay had put some of his bucks in one and they say it will not be accesible to the civil suits.

I think annuities are thought of as retirement programs. Martha would know the ins and outs of that exemption.