How Real Estate Asset Protection Strategies Build Long Term Wealth
Real estate investors often focus on acquisitions and cash flow, but one of the most overlooked components of long term success is implementing proper real estate asset protection strategies LLC structure. In this episode, Mark J. Kohler shares how wealthy investors protect their assets, reduce taxes, and create scalable systems that support sustainable growth. His approach emphasizes simplicity, structure, and discipline rather than overcomplicated legal setups that can create more problems than solutions.
A major theme throughout the conversation is that successful investors treat real estate like a business. This means maintaining proper records, separating finances, and consistently managing entities the right way. Without this level of organization, even the best deals can be exposed to unnecessary legal and financial risk.
The Trifecta Strategy for Investors
Mark J. Kohler introduces what he calls the “trifecta,” a foundational framework for structuring wealth. This system separates your financial life into three key components: a revocable living trust for estate planning, an operational entity such as an S corporation for active income, and LLCs to hold real estate assets.
This structure creates a clear division between active business activities and passive investments, helping investors maximize tax advantages while reducing liability exposure. By organizing assets properly, investors can create a strong legal firewall that protects their wealth as it grows.
Why LLC Structure Matters More Than You Think
One of the most valuable insights from the episode is that simply forming an LLC is not enough. Many investors make the mistake of setting up entities but failing to maintain them correctly. Mark explains that courts look beyond paperwork and evaluate whether the investor truly treated the LLC as a separate business entity.
Key practices that strengthen real estate asset protection strategies LLC structure include:
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Keeping separate bank accounts for each entity
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Avoiding co mingling of personal and business funds
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Documenting annual meetings and decisions
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Maintaining proper accounting and records
These steps may seem simple, but they are critical in preventing legal challenges such as piercing the corporate veil.
The Biggest Mistakes Investors Make
Many investors are sold complex asset protection strategies that are unnecessary or even harmful. Mark highlights that offshore trusts, excessive entity structures, or expensive legal setups are often oversold to investors who do not need them.
Instead of overcomplicating things, he recommends starting with a solid foundation and scaling protection strategies as your portfolio grows. Overbuilding too early can lead to higher costs, confusion, and reduced efficiency in managing your investments.
New Regulations Every Investor Should Know
The episode also touches on new reporting requirements impacting real estate investors, particularly around property transfers and ownership transparency. These regulations are designed to track ownership and reduce fraud, but they also introduce new compliance responsibilities.
Understanding these changes is critical, as penalties for noncompliance can be severe. Investors must stay informed and ensure their entity structures and transactions are properly documented.
Short Bio: Mark J. Kohler
Mark J. Kohler is a CPA, attorney, and nationally recognized expert in tax strategy and asset protection. With over 25 years of experience, he has helped thousands of entrepreneurs and real estate investors structure their businesses for maximum efficiency and protection. He is also a bestselling author, speaker, and educator focused on helping investors build wealth through smart tax planning and legal strategies.
If you want to hear the full conversation and detailed insights, watch the podcast video or read the complete transcript below.
Real Estate Asset Protection Strategies FAQ
What are real estate asset protection strategies?
Real estate asset protection strategies are legal and financial methods used to protect investment properties and personal wealth from lawsuits, creditors, and unexpected risks. These strategies often include entity structuring, insurance coverage, and proper financial management. The goal is to create separation between personal assets and investment liabilities. When implemented correctly, they help investors preserve wealth while continuing to grow their portfolio.
Why are real estate asset protection strategies important for investors?
Real estate asset protection strategies are important because rental properties and investment assets can expose investors to legal and financial risk. Tenant disputes, accidents, or contractual issues can lead to lawsuits that threaten personal wealth. By proactively putting protection strategies in place, investors reduce their exposure and gain peace of mind. This allows them to focus on scaling their investments instead of reacting to problems.
How do real estate asset protection strategies protect against lawsuits?
These strategies protect against lawsuits by creating legal separation between assets and liabilities. For example, using entities like LLCs can limit exposure to only the assets held within that entity. Insurance policies can provide an additional financial layer of protection by covering legal costs and damages. Together, these tools create multiple barriers that make it more difficult for claims to impact an investor’s entire portfolio.
What role do LLCs play in real estate asset protection strategies?
LLCs are one of the most commonly used tools in real estate asset protection strategies. They act as separate legal entities that hold ownership of properties, reducing personal liability. If a legal issue arises, it is generally contained within the LLC rather than affecting the investor personally. Proper setup and maintenance of LLCs are critical to ensuring they provide full protection.
Do real estate asset protection strategies include insurance?
Yes, insurance is a key component of real estate asset protection strategies. Policies such as landlord insurance and umbrella coverage can help protect against property damage, liability claims, and legal expenses. Insurance works alongside legal structures to provide financial protection. A well rounded strategy typically includes both entity structuring and adequate insurance coverage.
What are the most common mistakes in real estate asset protection strategies?
One common mistake is failing to properly maintain legal entities, such as mixing personal and business finances. Another is relying solely on one layer of protection, like an LLC, without additional safeguards. Overcomplicating structures or ignoring professional guidance can also create vulnerabilities. Consistency, simplicity, and proper execution are essential for effective protection.
When should investors implement real estate asset protection strategies?
Investors should implement real estate asset protection strategies as early as possible, ideally before acquiring their first property. Establishing protection early helps prevent complications and ensures assets are properly structured from the start. Waiting until after a problem arises can limit available options. Proactive planning is key to long term success.
Can beginners use real estate asset protection strategies effectively?
Yes, beginners can and should use real estate asset protection strategies from the beginning of their investing journey. Starting with basic steps such as forming an LLC and obtaining proper insurance can provide meaningful protection. As the portfolio grows, strategies can be expanded and refined. Building good habits early creates a strong foundation for future investments.
How do real estate asset protection strategies support long term wealth building?
Real estate asset protection strategies support long term wealth building by preserving the assets investors work hard to acquire. By minimizing risk and preventing major financial setbacks, investors can continue to grow their portfolio with confidence. Protection strategies also make it easier to scale by creating organized systems and structures. Over time, this stability allows investors to focus on growth rather than risk management.
Disclaimer: This summary was written with the help of AI and reviewed by Rod’s Team.
01:20:07:26 – 01:20:30:00
Speaker 1
Welcome back to lifetime cash flow through real estate investing. I’m Rod Khleif, and I’m thrilled you’re here. Very interesting gentleman that I’m interviewing today that, I couldn’t even begin to do his bio. Just his name is Mark Koehler. He’s a CPA. He’s an attorney. We won’t hold that against him. We, And he’s got all sorts of businesses going on, that, I my my head was spinning as he was describing it.
01:20:30:00 – 01:20:31:15
Speaker 1
Mark, welcome to the show, brother.
01:20:31:18 – 01:20:40:28
Speaker 2
Oh, thanks for having me. I love real estate. And, Yeah, I’m a good attorney. I’m a lover, not a fighter. So I’m about saving money for good.
01:20:41:00 – 01:20:57:01
Speaker 1
I love it. So why don’t you tell a little bit of your story and, And then we’ll drill down on some of the strategies, because I, like I said, I know you you speak on a lot of real estate stages. I’m surprised it’s been this long since we’ve met because I’ve been in the industry. You know, I’m long of truth.
01:20:57:04 – 01:21:04:04
Speaker 1
So, but anyway, to, tell your story and, and, you know, kind of bring us to the current, current situation where you are.
01:21:04:07 – 01:21:18:10
Speaker 2
Yeah. Right. Thanks. And for your listeners out there, I’m going to be to the point, because I want to provide as much value for you here. And you might have a great tax strategy, a bad tax strategist or advisor. I want to give you some key things to ask and look for, and some strategies you might not be aware of.
01:21:18:12 – 01:21:39:08
Speaker 2
But, I grew up as an entrepreneur. I love being an entrepreneur. And, I wanted to get an accounting degree because I felt it was the lifeblood of small businesses. You got to know the numbers. I was the the class president, the class clown. And then I ended up hiring all the student accounts to communicate and walk and chew gum.
01:21:39:08 – 01:22:00:03
Speaker 2
So I would love that. Then I had a professor that was a lawyer, and I was like, Holy crap, I could be a tax lawyer. And then I thought I saw the, the light. And, and it was I started to build my practice 25 years ago, and I wanted to serve only small business owners and investors. I quickly branched out nationally.
01:22:00:03 – 01:22:18:14
Speaker 2
I’ve read some books, I got a podcast and YouTube channel and all that stuff. But I quickly realized, you’re going to love this, right? A more and more of my clients that would walk through the door. Almost everyone that was successful owned real estate. They own passive real estate. Now, whether they classified as a real estate professional or not, we didn’t cover that.
01:22:18:21 – 01:22:37:06
Speaker 2
But it really started to surprise me. And then I remember as a kid, my dad and then my mom, my mom during the week and ride down on the weekends would take us to the commercial properties we owned. And I was a janitor. I learned how to clean commercial buildings. My dad was a microbiologist, and he would buy commercial buildings and rent them to doctors.
01:22:37:08 – 01:23:02:22
Speaker 2
And so my job with my mom and brother and sisters, we were the cleaners during the week. And then my dad was flipping commercial real estate. And back in the 80s, your parents didn’t sit down and teach you. They just kind of made you do it with them. And so it started to like, learn about all that, and it all came back to me with in a, in a wave of knowledge of, oh my gosh, that’s where real wealth is built in the long run.
01:23:02:22 – 01:23:16:16
Speaker 2
Is in real estate after my small business, after my day job, the corporate job, whatever it is. And so I continue to buy real estate myself. I own several different asset classes. I love real estate, and I love saving taxes. So they go.
01:23:16:18 – 01:23:40:20
Speaker 1
Well, 90% of the world’s millionaires either made it in real estate or invest their money they make elsewhere in real estate. So there you go. So, so you’re, you’re an investor in real estate as well. But I know that, you, you speak on stages around tax mitigation strategies and maybe some misconceptions. So I’m not sure what’s the best to start with, but, let’s go there.
01:23:40:23 – 01:23:58:19
Speaker 2
I was a fun and again, as a lawyer, what I love to bring together is the asset protection and tax planning. There’s a lot of options out there that say, oh, you need a Wyoming LLC, or you need this structure, you need this trust, or you need that and they get sold crap that actually could cause tax problems, not solutions.
01:23:58:21 – 01:24:02:04
Speaker 2
And so they oftentimes those conversations go hand in hand. We can go, well.
01:24:02:04 – 01:24:17:14
Speaker 1
Let’s start with asset protection. And I know a lot about that. Or at least I feel like I do. So so let’s let’s start there. Because I used to have an offshore trust in the Bahamas and all kinds of other crap back in the day. But but let’s go there for sure.
01:24:17:14 – 01:24:38:07
Speaker 2
Sure. So one thing I teach and some of you might be fascinated by, this is what I call the trifecta. It’s trademarked cheat. You know, for years that track back. If you just Google color trifecta and hit images, you’re going to see it all over. It’s in my books. I write for Entrepreneur magazine in this trifecta. The base of it, the first piece is your revocable living trust.
01:24:38:09 – 01:24:59:25
Speaker 2
Everybody needs a revocable living trust. It doesn’t provide asset protection, but it provides clarity. It’s part of your estate plan. It can provide privacy, and it’s going to own everything. Now, if we want to add additional asset protection, it comes after our foundation. 50% of Americans don’t even have a wealth. And if you own real estate, small business, married, single kids, whatever you’re going to need to trust.
01:24:59:25 – 01:25:22:22
Speaker 2
So that’s foundation. Then I split your life in half. On the left side, I put your operations. So if you’re running a restaurant or you’re consulting or you’re a, realtor, a broker, a doctor, whatever, if you’re going to run a small business, you’re eventually going to be an S corporation real quick. So we take your LLC or your aim for your PC and make sure we’re maximizing it for strategy with the S Corporation.
01:25:22:26 – 01:25:43:10
Speaker 2
Love to talk about that. On the right side is where we put our assets. So we have this firewall down the middle left side operations right side assets. That’s where we create our passive income and we invest. It could be through IRAs, forward KS health savings accounts, covert sales. It could be crypto. It could be real estate. Whatever.
01:25:43:13 – 01:26:06:17
Speaker 2
And then we have our after tax money where we could buy rental property, mobile homes, duplexes, commercial, multi-unit, whatever it is. And we want to maximize flow through losses, create cash flow appreciation deferred. And it’s one of the best tax strategies in the world is in the real estate industry. We just can’t find that asset class. So it works for us.
01:26:06:20 – 01:26:28:26
Speaker 2
So then we get to the structure of, well, how do I hold that real estate? Well, typically we’re going to have an LLC in the state where that real estate is registered properly with proper accounting and separate it’s distinct, you know, and title and everything running it right with our lease agreements. And if I have enough real estate, I might add another layer.
01:26:28:26 – 01:26:35:05
Speaker 2
I might add this charging order protection entity like a Wyoming entity, which is the rage, right.
01:26:35:07 – 01:26:36:06
Speaker 1
We’re Delaware.
01:26:36:09 – 01:26:47:02
Speaker 2
Yeah. Way too oversold by there. And I have enough assets that it makes sense. I can add an additional layer of protection. And that LLC would own my other LLCs.
01:26:47:05 – 01:26:47:21
Speaker 1
Like a holding.
01:26:47:21 – 01:26:56:12
Speaker 2
Company and privacy. So that’s how it all comes together for me. Is this trifecta where I can see how it all comes together.
01:26:56:15 – 01:27:15:19
Speaker 1
Yeah. No, that’s exactly the structure that I teach as well as you know you have to have an LLC to hold the ownership in the state that the is located. And then you get enough real estate, you have a holding company and it’s Delaware, Wyoming or Nevada typically and just for a number of different reasons. But you like Wyoming the best, I guess it I hear I’m hearing.
01:27:15:21 – 01:27:32:28
Speaker 2
In fact, there’s a couple of other states that are trying to show themselves, because of privacy, I can often set up these entities without disclosing the manager or the owner to. That is terrible, right? But there’s other states that are good. Wyoming. What’s nice about it is it’s also for Delaware.
01:27:32:28 – 01:27:35:29
Speaker 1
It’s the cheapest. Yeah. Everything okay? Okay.
01:27:36:00 – 01:27:38:21
Speaker 2
Interesting to choose from okay.
01:27:38:21 – 01:27:57:26
Speaker 1
Okay. So you’ve got this trifecta, with the trust. You got your operations in an S Corp, and then, of course, you own your assets and LLCs. Okay. You know, talk a little bit about tax mitigation and how that ties into all this, if you would.
01:27:57:28 – 01:28:17:14
Speaker 2
You bet. And as we know, I want everybody to go, well, that doesn’t sound like a lot of asset protection people a lot. And then we’ll transition to. But I just want to say if you start to build up more and more assets, we start to add additional asset protection strategies. We don’t get oversold and come out of the gate buying crap we don’t need.
01:28:17:17 – 01:28:37:09
Speaker 2
And a lot of the asset protection is just doing good annual minutes. Good. Separate accounting lease agreements, title people set up entities all the time, put them in the drawer. If they don’t know what the hell they got it. It’s it’s maintaining what we set up, where the real protection begins. And an umbrella policy is cheap because it never pays out.
01:28:37:09 – 01:28:46:03
Speaker 2
But we still. Yeah. So we couple it with insurance, we get the right entities and we grow our structure as our assets grow, not the other way around.
01:28:46:05 – 01:28:47:20
Speaker 1
I agree completely.
01:28:47:22 – 01:29:06:22
Speaker 2
Yeah, yeah. And and I say that to someone out there that you might have way too many entities, get a review. You know, I’ll mention our law firm here if you do review. We help clients around the country, but we try to keep it affordable and say, let’s not throw the baby out with the bathwater. And let’s also try to get organized and do the maintenance that’s needed and not overdo it.
01:29:06:22 – 01:29:29:07
Speaker 2
So that’s where asset protection really starts to, you have effective asset protection is where you’re having a conversation once a year. You understand what you have. Your maintaining it properly. You’re going through those little steps that make all the difference in the world. I, I’m an expert witness at trials in court where they bring me in to say, how can I pierce the veil?
01:29:29:13 – 01:29:29:21
Speaker 2
How can.
01:29:29:21 – 01:29:43:19
Speaker 1
You? Yeah, they’re trying to pierce the veil. Yeah, I had tried that. I had that attempt done on me once. I had to be 30 years ago. I had a woman who was cleaning houses and supposedly the maintenance guy sexually harassed her. It was complete bullshit. Cost me 20 grand to win. But that’s exactly what they tried to do.
01:29:43:22 – 01:29:59:09
Speaker 1
Back then. It weren’t any losses. It was all corporations. This is pre LLC and they tried to pierce the corporate veil. And you know I had to go back and recreate minutes and shit like that that that I hadn’t done which you’re just describing right now which and that’s the beautiful thing about LLC is you don’t have to do that anymore.
01:29:59:11 – 01:30:17:09
Speaker 1
That’s why I don’t like corporations anymore. I don’t know why anybody would get one. Candidly, you can you can classify your losses in S Corp. But but yeah, I literally had that happen to me. Like I said, a lifetime. It might have been 40. It was 40 years ago. Actually not I think about it, but but yeah, so, so no, I, I like what you’re saying and of course you should have an umbrella life insurance policy.
01:30:17:09 – 01:30:32:17
Speaker 1
That’s a, that’s a, that’s a no brainer. And you know, and these additional layer losses, you know, if that, if that holding company LLC is not doing business publicly, it’s pretty darn bulletproof. Would you agree with that or. No.
01:30:32:19 – 01:30:34:11
Speaker 2
Well, right. This is where I hope.
01:30:34:11 – 01:30:37:04
Speaker 1
If it’s just holding membership interest.
01:30:37:07 – 01:30:42:14
Speaker 2
Okay. Well yeah, you’ve thrown out a lot. And to be honest, I disagree with a lot what you just said. Really?
01:30:42:14 – 01:30:44:17
Speaker 1
Okay. What you disagree with. Let’s let’s debate it.
01:30:44:20 – 01:31:02:20
Speaker 2
Go there LLC. You still need to do fricken minutes. They really in their book they need an operating agreement. They need an annual minutes. They need to maintain. Just like a corporation. The LLC has its own corporate veil. You go to court and get sued in your LLC discovery, you’re going to damn well show up with your minutes, and you’re going to go home and try to put them together.
01:31:02:24 – 01:31:03:06
Speaker 2
Important.
01:31:03:07 – 01:31:13:14
Speaker 1
Never heard that. I’ve never heard that before. That to me, the advantage of an LLC was, yeah, you have an operating agreement that governs what you’re doing, but they don’t require minutes inside that operating agreement.
01:31:13:14 – 01:31:32:08
Speaker 2
So you know what Dennis doesn’t require? I floss, but what do I do? That’s right. And let me say to on this you wanted you minutes. Let me just say really this is one of the best tax ranges I talked about all over the country having an annual board meeting with your family, your loved ones. Now, I just for off trip to the Cayman Islands.
01:31:32:11 – 01:31:47:09
Speaker 2
I’m holding. I’m holding my board meeting. And guess what? It’s going to force me to do my books. I’m going to do a panel. I’m going to look at my EBITDA. I’m going to look at what my plans are for the next year. It’s going to hold me accountable. Having a board meeting is one of the most good management decisions you can make.
01:31:47:14 – 01:32:08:21
Speaker 2
Great for asset protection. And in your LLC, you better have all the Accountable Plan provisions. Write it off. Home office auto reimbursements by. If I’m doing any health care strategy. If they’re not in your minutes, good luck in an audit. These policies have got to be maintained. We have a whole service. We mean to maintain tens of thousands of entities doing their annual minutes, but it’s totally expensive.
01:32:08:21 – 01:32:11:27
Speaker 2
I gotta tell you, we’re 200 bucks a year. I know it’s my way.
01:32:11:27 – 01:32:25:20
Speaker 1
So you do. You do these minutes. I mean, I understand the board meetings and, you know, and I could see where that could be valuable. And I guess, you know, keeping track of what you’re doing. And I guess the minutes could be the framework for that.
01:32:25:22 – 01:32:30:25
Speaker 2
But fairness. Fair enough. If you don’t have a board meeting. What the hell are you? Right. Do that one.
01:32:30:25 – 01:32:33:01
Speaker 1
Sure, sure, sure, sure sure, sure.
01:32:33:01 – 01:32:52:29
Speaker 2
Yeah. That’s good. Yeah, it’s fair enough. I’ve loved this. My wife and I, we have a family board meeting around the hall. We don’t. We don’t have Thanksgiving. We have a board meeting and eat turkey in the afternoon. Gotcha. Gets around and we talk about real estate. We talk about money, and we talk about our trifecta and what we’re doing, and have the kids talk about their businesses.
01:32:53:01 – 01:33:12:02
Speaker 2
You write it down, that’s minutes. Oh, and by the way, if there’s a lawsuit, I got a record, I got separate accounting. I got all the books done. I’m tight. If that’s when an LLC becomes bulletproof, that’s what’s bulletproof. Not the more that. Oh, you. No one knows you’re the manager. Yeah. And try discovery and interrogatories. Any planes going to find out who the hell owns?
01:33:12:02 – 01:33:12:16
Speaker 2
That’s for.
01:33:12:16 – 01:33:12:27
Speaker 1
Sure.
01:33:13:02 – 01:33:35:21
Speaker 2
Miniature. So sure, I just I’m. You can see the dramatic. Me. Because I’m just so passionate about it that we should be running towards the LLC structure and the minutes and the organization because it offers so many tax and legal benefits, not oh, I don’t you don’t want corporations with real estate because it’s a stupid tax strategy. Real estate in an S Corp is one of the worst things you can do.
01:33:35:28 – 01:33:39:16
Speaker 2
But I want real estate in my LLC and I’m going to because.
01:33:39:19 – 01:33:49:12
Speaker 1
Yeah, I, I’m still, you know, I don’t want to spend too much time on this, but I’m still struggling with the, the, the.
01:33:49:14 – 01:34:02:03
Speaker 1
The protections around minutes as it relates to litigation in an LLC. That’s I’m struggling with that. But we can put that off to the side I, I unless you’re going to help me understand that, please.
01:34:02:04 – 01:34:26:03
Speaker 2
Totally answer because I’ve been an expert witness in court on this. Okay, okay. With people that show up and have one sheet of paper from Legalzoom I got me LLC. This is good. Did you respect the corporate bail? So anyway, what the minutes do and we’re not even talking about an IRS audit. Good luck in an audit without minutes and all the accountable plan provisions for reimbursements of expenses, those have to be written down with the code section referenced.
01:34:26:03 – 01:34:41:01
Speaker 2
And if you get into an audit, your account is going to make you do it. Well, why don’t I do it in first place? But anyway, so the protection is if you’re in court and some tenant falls down the stairs and gets hurt, whatever the hell, and they shoot you and get sucked into a court and you show up, you hey, what a lawyer does.
01:34:41:02 – 01:34:56:02
Speaker 2
They sue the individuals and they sue the LLC and let the judge sort it out. You do the Smiths immediately for yourself and say you can only go after my LLC, and then you better show the LLC is untitled. Don’t worry about do on sale clause crap you’re going to. The LLC should be on time.
01:34:56:03 – 01:35:00:24
Speaker 1
There’s been no no money going in that you know, you haven’t treated it like a piggy bank.
01:35:01:00 – 01:35:19:26
Speaker 2
Yep. Nope. No co-mingling the ellipses on the lease and you’ve respect the corporate bail by showing we’ve respected by having annual meetings. We have we we document our processes. We recognize insurance and document that we’re. This is what shows a court.
01:35:19:29 – 01:35:37:05
Speaker 1
No, no, I got it, I got it, I got me, okay. You got me now, now now I get it. It just it just shows a higher level of, you know, you’re treating it. You’re really treating it like a business. I mean, I still think it’d be hard to say it’s not a legal entity if you didn’t co-mingle funds and stuff, but I can see how that takes it to another level.
01:35:37:05 – 01:35:40:27
Speaker 1
So you got me. That totally makes sense. Okay.
01:35:40:29 – 01:36:03:12
Speaker 2
And the extreme for everybody listening, we’ll wrap it up with this is the other extreme of that is I have people talking to the guy the other day that had 20 Wyoming LLCs and I go, you’ve got 20 bank accounts. Now you it’s the all the properties on title. Well, no. But they write the check there and I got to sell it to the the tenants even know this LLC exists.
01:36:03:15 – 01:36:13:15
Speaker 2
Well I guess they do because of the leak. I’m like, Holy shit, one sheet of paper. It’s not an LLC. And so that’s extreme. So everybody, you know, I’m not sure I know. So so let.
01:36:13:15 – 01:36:32:19
Speaker 1
Me ask you a question because because I teach this again I teach entity structure in my bootcamps. And I tell people that at the very least, if you’ve got multiple LLCs, they need to be ledgers separately. And, and you don’t you don’t put your personal you don’t do any of your personal expenditures in there. They’re legit separately.
01:36:32:23 – 01:36:49:00
Speaker 1
Like, for example, you know, if you’ve got ten duplexes and you decided to put all ten in separate LLCs, I it’s my belief you could have one bank account as long as you ledger each properly, each LLC separately. You disagree. Yes. Okay. So you feel like they need their bank account.
01:36:49:00 – 01:37:04:03
Speaker 2
It’s great. I’m going to come in and sue all ten. And I’m going to if you one is go. And I’m going to say they’re all co-mingling your personal with the LLC is the same thing as co-mingling properties with ten different LLC co-mingling completely interesting.
01:37:04:03 – 01:37:05:05
Speaker 1
Okay.
01:37:05:08 – 01:37:05:18
Speaker 2
And so.
01:37:05:18 – 01:37:07:13
Speaker 1
Approaching
01:37:07:15 – 01:37:24:25
Speaker 2
LLC is a separate operating entity that owns this property, has its own books, its own bank account, its own merchant account, whatever the hell assets from the tenant that is separate. If I’m doing one bank account for all that I’m as a plaintiff attorney, I’m going to be like, what the hell? You commingled all these LLC IDs together and a judge is going to go.
01:37:24:27 – 01:37:27:14
Speaker 2
Looks like one big LLC to me.
01:37:27:16 – 01:37:46:00
Speaker 1
Interesting. Interesting. Okay, well, you’re speaking from litigation experience. I I’m, you know, I used to have a litigation support company. Pretty big one back in the day. So I know enough about law to be ignorant, but, no, you’ve you’ve educated me a little bit about the dangers. For sure. Fair enough. Yes.
01:37:46:03 – 01:38:02:06
Speaker 2
It makes life easier. It’s like if I go to my bedroom and I’m like, you know what I hate? Chest of drawers. I hate having a cabinet over here. I’m just going to put my clothes on the floor. It’s easier to get everything. It’s simpler. But once we do all these drawers, we’re like, oh, my socks are here, my underwear is here, my shirts are here.
01:38:02:11 – 01:38:09:21
Speaker 2
And we think these extra bank accounts are a pain in the ass. But in the end, they set us free. We’re organized. We’re clean. Yeah.
01:38:09:23 – 01:38:30:06
Speaker 1
And no, I don’t disagree. I don’t disagree with that. What you just said, and and, you know, certainly I mean, you know, I, my students buy larger assets anywhere from 40 to 300 units and certainly those are in their own individual LLCs that that money that comes from their management company should be ledger. I should be in separate bank accounts.
01:38:30:06 – 01:38:50:26
Speaker 1
I, I don’t disagree with that. Okay. Fair enough. Well no. You’ve educated me a little bit here, buddy. I appreciate it. Because I teach this and I want to make sure I’m teaching it properly, but, you know, I, I mean, obviously what you’re citing are, are, are, you know, when it gets really litigious and and you’ve got blood dripping from their teeth, attorneys coming after you.
01:38:50:28 – 01:39:02:14
Speaker 1
But I hate. Yeah, yeah, yeah. So as far so your asset protection is, is, is all domestic then you basically do it with LLCs and things like that. Is that correct?
01:39:02:16 – 01:39:26:17
Speaker 2
Say this to anybody out there. If you’re getting pitched one of these offshore trusts or this Delaware statutory trust for this, right. Because, you know, you use everything, don’t own it and blah, blah, blah, and someone’s trying to charge you 20 or 30 grand people. Oh my hell, you’ve been sucked into this crap to rot, right? Yeah. Get a second or third opinion and I’m not saying that stuff doesn’t work, but it comes with a heavy cost.
01:39:26:19 – 01:39:34:19
Speaker 2
And a lot of times, yeah, selling it are gone the next year. You get it. They’re not great for tax planning. And right. It’s just because.
01:39:34:21 – 01:39:53:08
Speaker 1
It helped me in my divorce a little bit because they had to go to the Bahamas to sue me. But, you know, it’s still it was a pain in the ass. I will, I will I will definitely say that, you know, back then we were doing individual land trusts for anonymity, owned by a limited partnership in which the general partner was a corporation.
01:39:53:08 – 01:40:05:15
Speaker 1
The limited partners. I think I’m this is a long time ago. A limited partner was the trust. Yeah. But anyway, it’s it’s, I’ve been I’ve been around a long time pre LLC, you know. So. Yeah.
01:40:05:22 – 01:40:28:19
Speaker 2
Well if you are you bring up privacy. If we could go there for a minute. I’m sure you’re aware of this but many of your listeners are not. Okay. March 1st. Now for those not knowing this but this is reported on March 2nd. March 1st. Yesterday, FinCEN, under the Department of the Treasury, issued the new real estate reports that have to be filed when real estate transfers occur.
01:40:28:19 – 01:40:51:22
Speaker 2
Now, under a variety of rules and, if we could go there. I’ve been recording podcasts all week long letting people know that when you just transfer your property that you closed in your name or whatever, and you close it and transfer to another LLC or two from your name to an LLC, this report is due. Or the penalties again are like all this boy stuff.
01:40:51:22 – 01:41:03:13
Speaker 2
Five years in prison and 250 grand in penalties or more and blah blah blah. Last year all of you probably remember rod, write the boy report. Everybody was freaking out that I got to report this information.
01:41:03:15 – 01:41:05:14
Speaker 1
To private LLC. Right?
01:41:05:16 – 01:41:29:01
Speaker 2
Well, Supreme Court killed it, not file. This one did not get killed. And all the lawsuits, no one’s winning them. And this is an end around again trying to find out who is owning real estate. And so you might think this is B.S. and an attack on your privacy. And it could be look that way, but there is so much money laundering and bad actors that own your estate, and people don’t even know who owns it.
01:41:29:04 – 01:41:39:15
Speaker 2
Iowa. Right now, 25% of Iowa is owned by LLCs where you don’t even know who the owner is. Big corporations offshore China. It’s it is crazy. So.
01:41:39:15 – 01:41:46:13
Speaker 1
So are you talking about, close transactions or are you talking about any sale period?
01:41:46:15 – 01:41:52:14
Speaker 2
Okay, so we could do a whole show on this. So I’m just going to hit the highlights, and I recommend anybody just go Google.
01:41:52:17 – 01:41:53:26
Speaker 1
And what’s it called again?
01:41:53:28 – 01:42:12:18
Speaker 2
It’s called the Real Estate Report. Super simple. It’s kind of funny. Real estate okay FinCEN March 1st. Just your Google is going to blow up for you. You can go to fincen.gov. And they will they have a FAQ. You that’s it changes every time I go there. I’ve been writing articles on this and doing my YouTube on this.
01:42:12:20 – 01:42:39:16
Speaker 2
The gist of it is everybody, if you transfer your property into a trust, you do not have to file the report. And so when you transfer your primary residence into your revocable living trust reports, not do us next exemption, I’m just going to hit the big ones. If you buy a property with a standard loan, closing with a bank and a title company, the normal closing, you don’t have to file the report because guess what?
01:42:39:17 – 01:42:59:05
Speaker 2
The bank is already reporting everything in the bank defense, right? Because there have been some reporting financial institution, but where it’s hitting people the most is if I close on a property and I did it to this LLC, there’s no standard closing. There’s no no new bank loan. Now, there could be a loan on it, but it’s not a new closing.
01:42:59:07 – 01:42:59:26
Speaker 1
Gotcha.
01:42:59:28 – 01:43:11:19
Speaker 2
You can initiate it. That transfer is the classic and it’s only for real estate. Your commercial listeners are going to love this. That’s another exemption. If it’s a transfer of commercial property you’re exempt from this.
01:43:11:21 – 01:43:12:28
Speaker 1
So it’s just houses.
01:43:13:00 – 01:43:15:01
Speaker 2
With four units and lower.
01:43:15:03 – 01:43:41:13
Speaker 1
Down to residential real estate. That’s interesting. It that is a freaking invasion. I got to tell you. That’s that’s bullshit. Because, that’s just government overreach and stupidity. Candidly, just another wasted government entity. But that’s interesting. I don’t deal in that world anymore. But that’s really good to know. So real estate report, I will definitely research that, and, and they just want to know if you transferred.
01:43:41:13 – 01:43:57:19
Speaker 1
They just want to know who owns that LLC. Basically, you might be doing it for asset protection, which I’ve done numerous times. You know, you put it into an LLC, you don’t have to pay a transfer tax because the equitable ownership hasn’t changed. Typically, you know, you don’t have a do on sale if you can prove the equity.
01:43:57:21 – 01:44:05:24
Speaker 1
Sometimes the the equitable ownership didn’t change, but, very interesting. Okay. Well, I’m learning a lot today, Mark. I appreciate it, brother. Oh.
01:44:05:26 – 01:44:28:01
Speaker 2
Well, and everybody out there be careful of it because the penalties, are significant. And again, the government’s trying to catch bad actors. And by us self-reporting we’re helping do that. And let me say this, okay. This is not public record. By reporting this report I’ll tell you what’s in the report. But by recording it, it goes to the Department of Treasury as if it was your tax return.
01:44:28:03 – 01:44:32:28
Speaker 2
There’s to admit this is a system to the IRS under the Department of Treasury.
01:44:33:01 – 01:44:33:12
Speaker 1
Gotcha.
01:44:33:16 – 01:44:59:12
Speaker 2
So enforcement, network. And so, crimes network and so no one can get it without a government agency allowing it to go out. But it’s a slippery slope. Many of us don’t trust the government, for my information, to stay private. And so we’ve got to be careful. And you nailed it to the report. It’s just like the boy who’s who’s there’s four pieces.
01:44:59:19 – 01:45:11:10
Speaker 2
Who’s filing the report? Title company. Your lawyer, yourself. Who’s the owner of the property being transferred? Who’s the beneficial owner of the of.
01:45:11:10 – 01:45:12:29
Speaker 1
The new entity?
01:45:13:01 – 01:45:30:24
Speaker 2
And the fourth piece is a description of the property address and the entire legal description. That’s all on the report filed with Vincent. We’re only charging $50 more at our law firm. We provide a lot of privacy planning for our clients, but we’re trying to 50 bucks more than the average deed just to get the report done.
01:45:30:26 – 01:45:42:01
Speaker 2
But you don’t have to provide a driver’s license or passport, but you have to provide your Social Security number and the beneficial ownership of the LLC. No rental property for units or less went into effect.
01:45:42:05 – 01:45:47:23
Speaker 1
Now, do you have to provide an ID number for the LLC or just your your personal Social Security number.
01:45:47:25 – 01:45:52:13
Speaker 2
For the LLC work okay, but the number of the beneficial owner, too.
01:45:52:15 – 01:46:08:07
Speaker 1
Gotcha, gotcha. What a waste of time. Unbelievable. Well, listen, brother, I, my head’s swimming a little bit, so I’m probably going to cut it off here, but I appreciate you coming on the show. And. And, where can people find you?
01:46:08:09 – 01:46:31:06
Speaker 2
Well, thanks so much. The law firm’s probably the best jumping off point, and that’s k o s reuters.com. So Keiko esses and Sam lawyers.com. We do a privacy console and asset Protection Council will build your trifecta. All of that. Our typical onboarding plans are under a couple grant. And then you can decide where do I go from there.
01:46:31:09 – 01:46:43:07
Speaker 2
And you get to talk to a real lawyer on a call, not somebody that’s think sort of guru in this area with attorney client privilege. And we can help you make a plan. We can start helping you do your minutes. Whatever.
01:46:43:07 – 01:46:52:10
Speaker 1
Very interesting or very interesting. Well, thanks, brother. It’s a pleasure to meet you. And, you know, again, you’ve added tremendous value today, and I appreciate you coming on.
01:46:52:12 – 01:46:55:28
Speaker 2
Thanks for having me. I’ll be back. We’ll talk taxes. I’m going to save some money inside.
01:46:56:03 – 01:46:57:21
Speaker 1
All right? Sounds good. Take care.
