|
The Delaware LLC
Many of our clients have a Delaware LLC own their properties. Further, they hold these properties in a “series LLC”. This is one LLC that allows separate LLCs series under it, therefore avoiding the use of multiple LLCs for each property owned. Each series can have different members, percentages for profits and losses and managers, etc. A purpose trust can first be formed in an offshore jurisdiction, such as Belize. . It exists for a purpose and not for beneficiaries. It’s purpose is to provide confidential ownership of the IBC’s. This is the abbreviation for an International Business Company, which is similar to a corporation here, an exempt limited company in the Isle of Man, etc…and to legally allow the trust to exist without any U.S. tax reporting. Each of the family members can act on the protector committee for the trust, to oversee its activities and the trustee. The LLC is managed by its Manager(s), who can be anyone, and a Manager does not mean ownership. It can also be one of the directors in the offshore jurisdictions who are involved with the IBC who owns the IBC. The LLC needs to hire an accountant to do the year end return. The LLC needs to hire an accountant to do the year end return. If there are 2 or more members, the LLC files a partnership return with a K-1 for each member. If there is a single member LLC, as with only 1 IBC being the owner, then the LLC is a pass through to the sole member and it is the member that files the tax return and shows LLC activity. The LLC designates who is responsible for the administration of the LLC. An annual return will be required, as a title company in a real estate transaction will issue a 1099 IRS form at the end of the year showing all of the sales and the transaction to have to be accounted for to the IRS. There may not be a taxable gain, but still the transaction has to be reported. The name of the Delaware LLC can be changed at anytime for the fee of $100. Delaware is a favored jurisdiction because the members (owners) do not have to be listed with the Secretary of State, nor are their names on file. Other states require this, so it provides confidentiality. There are rumors that this may change. Confidentiality of ownership will still be able to be provided, as long as the corporate service provider or resident agent in Delaware at least knows who the owners are. The trend here is to stop criminal money laundering activities. For now, it is a discussion with nothing definite. The TRUST/LLC will have to file for taxes and other fees. Each have their own renewal fees each year. The Trust renewal fee is about $3,000 and the LLC renewal fee is about $300. Also, each IBC has a renewal fee of approximately $3,500. Normally the advisor notices the client of these fees. The administrative tasks are not automatically done. Someone has to have the authority and usually gets compensated for their work. If something happens to the advisor, the trust will protect the interests and see that any estate planning desires be carried out. Further, the LLC can always name anyone as Managers or Advisors to help it. The Offices of the IBC and Trust offshore maintain all records and the staff is able to assist. The LLC opens bank accounts as it desires. It can designate anyone with authority to open bank accounts and sign for the LLC. The idea to make this work is that the money for the transactions comes from the IBC in Belize that does the financing. Family members can loan or advance funds to the IBC, and it then advances/loans the funds to the LLC. The advisor creates a loan document and the IBC has its own bank account in Belize, so it can receive funds and loan funds, and then when a property sells, also be paid back its loan. The advisor in the United States coordinates this. IT IS IMPERATIVE TO REALIZE THAT THE FORMATION OF THE STRUCTURES VARY FOR THOSE WHO ARE U.S. RESIDENTS AND FOREIGN NATIONALS. SEEK THE ADVICE OF COMPETENT ADVISOR BEFORE MOVING FORWARD WITH ANY OFFSHORE ASSET PROTECTION STRUCTURES. The bank accounts for the LLC can be set up in the United States. The bank accounts for the offshore IBC must be set up offshore. When an LLC is formed to carry out a business, usually there is a “manager” of the LLC here who receives cash, writes cash, manages the business, pays himself a salary and at the end of the year, send the profits, if any, to the offshore IBC to deposit in the IBC savings account. Circular 230 Disclosure: Pursuant to IRS circular 230, Saul Larner, Ph.D., LL.M., is providing you with the following notification. The information contained in this presentation is not intended to (and cannot be used by anyone to avoid IRS penalties). This presentation supports the promotion and marketing of planning techniques. We provide real estate marketing and investment advice. You should seek advice based upon your particular circumstances from an independent tax advisor or attorney. The above named advisor does not render tax or legal advice, although many segments of real estate sales and marketing advice overlap. © Copyright, 2007, Saul Larner, Ph.D., LL.M., Los Angeles, CA 91356 |
|
