Combining Asset Protection and Privacy, use the FlexTrust LLC™. Are you concerned that anyone with Internet Access can find out what you own – even where you live? Does it concern you that person with wrong motives can use this information against you? If so, watch this short video:
Most people of means understand the with today’s technology, anyone with an interest can discover what they own and gather a great deal of information about them through public records. What if there a way to shield your identity while protecting assets and become effectively a “financial ghost”?
People use trusts for a variety of reasons. They may want to avoid probate, create a private estate, make asset administration more streamlined, and more. While our approach is to use an anonymous trust to form an LLC, it is important to understand first how trusts work and their benefits and limitations.
There are only two types of trusts. They may be called different names, but each falls into one of two categories: 1) A revocable (living) trust or 2) An irrevocable trust.
The key difference is one may be modified or dissolved completely (revoked) and one may not be modified or revoked. For our purposes, we are going to use a revocable trust since the real protections come from the LLC inside the trust. Therefore trust is used primarily for its anonymity features.
Trusts are not filed anywhere and their creators’ identities’ are only known by those forming them and their advisors.
A trust is similar to a corporation in several respects. The person is forming the trust (the founder), the person controlling the trust or trustee (think corporate officer), and the person who receives the benefits, or beneficiaries (think shareholders). In a trust, all three roles may be played by the same person. In summary, if you form a revocable living trust, you may have complete control and total anonymity.
The FlexTrust LLC™ is an LLC formed by one of these trusts, but the trust may be used for other purposes like controlling the management of your assets during incapacity or death. This could include your entire probate estate, residence, bank accounts, etc. The purpose of this article is to explain how to combine all the benefits of a revocable trust with an LLC.
With a trust-owned LLC, the most a person can discover from public records is the name of the incorporator and registered agent. Since anyone can act as a registered agent (i.e., a friend, our firm, or another company) you may create a Texas Series LLC without revealing your identity. The state will ask who the managing member is, however in the case of a trust, the names of the trustees are NOT required.
This entire structure is “tax neutral” meaning all the income and losses flow out of the LLC to the trust and then on the trust creator’s personal tax return. Therefore “tax neutral” means NO CHANGE!
Furthermore, if you purchase property in the name of the trust, your name will not be associated with that property at any stage. If you purchase the property after the LLC is formed and transfer it, the record of the transfer will show if someone knows where to look – but they won’t know if you sold the property to a third party or moved it to your own entity – because your name is NOT associated with that entity! The following diagram visually shows this entire process:
Forming a Revocable Living Trust or a Texas Series LLC requires a high degree of technical skill. There are online resources like LegalZoom that allow you to form some basic structures at reduced costs. In total, the strategy outlined in this post requires a minimum of ten separate steps, each of which must be done with precision. If your structure is set up incorrectly, you may not know until it is too late. We recommend you consult with competent financial, legal, and tax professionals (all three) before you engage in this process. We have a network of CPAs, probate attorneys, and entity formation experts at our disposal.
A word about probate
In closing, before considering any type of estate planning it is important to understand that you have two estates – a probate estate and a non-probate estate. Some assets are not subject to probate and will NOT be affected by any type of will or trust such as life insurance, joint bank accounts, transfer upon death designations, etc. Real estate, ownership of businesses, and anything with a title is subject to probate. Therefore a complete estate plan must incorporate your wishes across both estates – probate and on-probate. Besides providing asset protection and total financial privacy, our goal is to minimize or even eliminate probate entirely. For a free consultation and more information:
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