“Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do.” - H. Jackson Brown Jr

As we have seen this year, life can turn on a dime ... and we can't plan for every one of the specific ways it may do so. But we CAN plan broadly.

For me and my family, we've put some simple plans in place for a VARIETY of circumstances, not just financial or legal. And it truly helps us sleep better at night, just knowing we have it all covered.

And the unfortunate reality is that the most recent numbers indicate that almost 60% of Americans don't have a basic will -- and that's a big problem.

One of the big reasons that most families don't yet have this in place is because of some incorrect thinking about whether it's right for them or if it's even necessary. And sure, some just haven't gotten around to creating a will or trust. Others think they don't need an estate plan because they're not "rich".

I've even heard from people that they don't want to put it in place because when they do, it's sending some sort of death
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“Life is really simple, but we insist on making it complicated.” -Confucius

Regardless of national events, or where things are at with PPP and EIDL -- as a small business owner, it's important that you take a REGULAR, clear-eyed look at the underlying legal and financial foundations of your business.

As we all pull our tax documentation together, I can't think of a better time.

I started with these last week, and I'm wrapping them up today.

My Small Business Health Quiz (Part 2)

From last week...

#1: Is the value of your business firmly established?
(Buy/Sell Agreements)
#2: Is there an emergency plan?
(Will & Asset Protection Strategy)
#3: What happens next?
(Business Succession Plan, and more)

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Have you heard of a “series” LLC? It’s a special kind of LLC that is available only in a handful of states. Delaware was the first state to adopt it and now about 20 states that offer it and the list is growing.

While it was initially designed for other purposes and industries, the real estate community has jumped on it. So let’s explain what it is. First, it’s an LLC in structure like any other LLC. There are members, managers, an operating agreement and certificate of organization, which is filed with the state. It can be taxed as a pass-through (single member), partnership (multi-member), and it can even make an “S” election with the IRS to be taxed like an S-Corp (although there’s rarely a need for this and it can cause tax complications).

But then, this special LLC is permitted to create what are called “series” within its structure. To understand this, we need to talk liability protection. If you own a rental property in an LLC and there’s a slip and fall, the plaintiff will sue the owner of the house, that is the LLC. Being the defendant on lawsuit means that if there’s a judgement against it, the court can go after ANY asset the LLC has. This would include other rentals. Thus, most investors prefer to separate out their rentals so that the bunch are not as risk if there is a problem with one.

So, investors would set up a holding company (t
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In our last article, I taught you that the Series LLC forms the base of your asset protection structure. It’s simple, inexpensive and provides a great deal of protection. And you’ll learn the basics of how to run and manage an LLC before getting more complicated.

Many clients, especially as they build their portfolio of rentals, seek out additional privacy and protection. This is great! But it does add layers of complexity and cost. But, as your assets grow, then it makes sense to up your asset protections as well.

For privacy, many investors use what is called in the real estate industry as a “land” trust. These kinds of trust do not exist in Utah and most of the country. But we have a modified version of them investors use that we call “real estate” or “property” or “asset holding” trusts. The key to this trust is that it’s not registered with the state. That means it’s a private document that keeps the owners of the trust totally off the record.

Most investors use these trusts to “hold title” to the property privacy purposes. However, these trusts do not provide any asset protection! So, you still need an LLC that will own the trust. Then the trust owns the house. See how that sticks an extra “layer” in between the property and yourself?

On the county land records, only the trust appears, not your LLC. And since the trust isn’t re
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The asset protection trust is more accurately called the Domestic Asset Protection Trust or “DAPT.” It is a highly protective, irrevocable trust and less than 20 states even allow them. Utah is one of the! Assets owned by this kind of trust can be protected from lawsuits, debt collection, judgments, bankruptcies and even divorce.

This is a different kind of trust than the family trust. In the family trust, you leave your assets to beneficiaries, like your children. In the DAPT, you actually leave the assets to yourself as beneficiary! That means they are still your assets; but they receive the protection as if you’ve already given them to someone else. That’s the key difference. However, it’s not for everyone.

First, this is a complicated and detailed trust. It’s usually more expensive to create and maintain than the other two types of trusts. Second, while you do have access to the income from trust assets, you cannot take “regular” distributions. So, if you need that income to live on and pay monthly bills, you can’t put those assets in this trust. There are also restrictions
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The family trust is to most common type of trust used in the United States. Most people have at least heard of this kind of trust and many have created one. The first thing I want to say is that EVERYONE needs a family trust! Whether you’re single or married, with or without children, or have small or large estate, you need a family trust.

The family trust is the core of your overall family protection plan because it is designed to own, control and allocate your assets after you die. Without a trust, your estate will end up in probate even if you have a will. Probate is an expensive, public court process. It typically costs more than a family trust. Your estate and property become public information. And the court will end up dictating who receives your assets.

Most family trusts come in an estate plan package of documents. You’ll get a “pour-over will” that works in coordination with the trust, powers-of-attorney and the health care directive. This last document is also called the “living” will that provides end-of-life instructions to family and doctors in the event you’re on l
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This article continues our discussion of trusts, specifically the real estate trust. First, only a couple of states, like Florida and Illinois, have true “land” trusts. I won’t get into the legal details on how they are different, as that gets complicated. Just know that unless you live in these states you are NOT using a land trust. This gets confusing as many investors attend educational events where these trusts are taught or sold without distinguishing them.

The rest of us have something a little different. We call these trusts real estate trusts, asset holding trusts, property trusts or the like. They are really just simple living trusts but should be created by a knowledgeable attorney. They are designed to hold title for privacy purposes and facilitate transactions such as wholesaling or even selling real estate.

Trusts are a kind of legal entity (like LLC) that can own things. They can be a named buyer on a purchase contract and be named on county land records. Because trusts are not registered with the state, no one will
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