The best castle defense is one where the living trust owns the LLCs and the LLCs own property. Imagine your assets are components of castle. Each barrier in your castle keeps you safer. The more the barriers the more the protection. When tenants become hostile and have a reason to hire an attorney, they will first look for the ownership of record. If you do not have LLCs or a trust, they have the capability to knock on your door during dinner. If a hostile tenant comes at you, they will seek an attorney who is only interested in liquidating your assets to receive compensation. Contingency fees are only received if they are succesful in winning a lawsuit and if they can place judgements on assets. If they discover you have a castle, they will not likely take the hostile tenant’s case because it will be too much work for them.
Your Manager – As your property manager, it’s our job to keep tenants from even approaching your LLCs or your trusts. Our job is to treat tenants with respect and take care of their needs while collecting rent. We do everything possible to eliminate any reason for them to look for the LLCs. With a castle defense, tax records will show the LLCs own the property but they will not reveal the trust owning the LLC.
Your Attorney – They are essentially the architect of your castle. They will connect your trust to the LLCs and the properties. Your family may or may not be connected to these components. The key to the castle will be given to your executor in the event you suddenly become incapable of running the castle. Your executor who has keys to the castle should not be your attorney or family! The executor needs to be someone who you trust and has experience running or selling castles. A professional with real estate experience is highly recommended. Typically, this executor will receive some compensation for liquidating your castle. Somewhere in the vicinity of 5%.
Your LLCs – Each LLC should have no more than 5 properties. Some attorneys will recommend one LLC for each property. This is a judgement call but we recommend each tower or LLC hold no more than $1M in assets. Each business you own should have it’s own tower. The fewer connections between towers the better . You may consider family members has managers of individual towers. If one collapses, it’s not the end of the world. If you have your castle built properly, your son in law can’t bring down the entire castle.