Two
articles ago, we learned how to acquire assets without disclosing
our identity. In the last
article, we learned a new technique to acquire assets without
exposing the remainder of our property to the liabilities of our new
asset. In this final
article, we are going to put it all together.
We are going to acquire assets with both privacy and safety.
Let’s
return to our investment in a large yacht, which we will also charter
out for income sometime in the future. If we
don’t want those who prey on yacht owners and creditors to know we
own a large yacht, we will use a trust to acquire the asset.
We do this by entering into a trust agreement with a
trusted associate, attorney, or other agent, who will take legal title
to the yacht, subject to your beneficial rights in the trust
agreement. Your
beneficial rights include acquisition, management, and disposition
decisions regarding the yacht. As
we shall see below, you may take these beneficial rights
directly, or later through a limited liability company, of which you
are the single member.
Your trustee
is not obligated to tell anyone that you are the owner of the yacht,
short of a court order. If
a lender or other party is involved in the transaction, be sure and
have them sign a confidentiality agreement, so as not to disclose that
you are the true owner, since they will obviously need to see your
financial state and other matters, and not your trustee’s, for
financing purposes.
In the event
you later decide to charter your yacht, and your yacht goes down with America’s favorite family aboard, you will
want to have limited your liability to the value of the yacht, rather
than jeopardizing your home, business, stock, bonds and other assets.
Last week we learned that California has recently enacted the
single-member limited liability company (LLC).
We are going to set up a single-member LLC through the
California Secretary of State. We
are going to “capitalize” this LLC by having the trust transfer
the yacht and the
necessary money to insure, maintain, and pay registration and taxes
for the yacht for a reasonable period in return for the single
membership interest in the LLC.
The
trust, not you, will be the single member (owner) of the LLC, thus
insulating your other assets from any potential yacht liabilities and
insulating your personal identity from ownership in the LLC (yacht).
You need to
create an operating agreement for the LLC which will cover areas such
as (1) who will manage the yacht, whether you, as the single-member,
or perhaps a charter company, (2) initial and additional capital
contributions and distributions, (3) death or other transfer
provisions, and (4) insurance provisions.
Liability and casualty insurance will be necessary to avoid
claims by others that your LLC is really a sham, or “alter ego”.
In this regard, you will also need to set up and maintain
separate LLC bank accounts, books and records, so that you do not
commingle your other assets and funds with the LLCs.
By following
the above planning, you will be able to obtain new assets, even fairly
risky ones, without compromising your privacy or unduly risking all of
your other assets.
As always,
consult your trusted accountant and attorney with respect to your
individual circumstances. This
article has been prepared for informational purposes only, does not
constitute legal advice, and is not guaranteed to be correct, complete
or up-to-date at the time that you read it.
I hope that
these last three articles have been helpful to you in planning for
your future assets.
Disclaimer:
The purpose of this article is to provide information, rather than
advice or opinion. It is accurate to the best of my knowledge as of
the date of the article. I have no duty to update this article. The
information, examples and suggestions presented in this article have
been developed from sources believed to be reliable. This article
should not be viewed as a substitute for the guidance and
recommendations of a retained professional and should not be construed
as legal or other professional advice. In addition, I do not endorse
any actions addressed herein, unless they are produced or created by
me. I recommend consultation with me or other competent legal
counsel and/or other professional advisors before applying this
material to any particular factual situations.
Please
send all enquiries by email
with the following disclaimers
to:
Info@BealBusinessLaw.com
©2002-2010 Bruce
Leonard Beal
(excepting graphics, as freeware
and/or in public domain)
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