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Alan Russell

Leaders In Providing ENTITY STRUCTURING FOR PRIVACY AND ASSET PROTECTION For Businesses, Individuals and Families Serving Clients Around The World. Alan Russell. Juris Doctor – UCLA School of Law, 1970 Private practice for 20 years Served as Judge Pro Temp for L.A. Municipal Court.

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Alan Russell

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  1. Leaders In Providing ENTITY STRUCTURING FOR PRIVACY AND ASSET PROTECTIONFor Businesses, Individuals and FamiliesServing Clients Around The World

  2. Alan Russell Juris Doctor – UCLA School of Law, 1970 Private practice for 20 years Served as Judge Pro Temp for L.A. Municipal Court

  3. About CSS Nevada Incorporated in Nevada in 1998 Specializes in entity structuring, asset protection and customer service One of the fastest growing incorporating companies in Nevada Doubled in size in the last 12 months Serves as referral source for the Jay Mitton Asset Protection Seminars, REIS, Investools and Robert Allen Real Estate students

  4. Asset Protection Does everyone want to protect their assets? Who are the target people? How do you protect your assets? Simple – “Control everything, own nothing”

  5. How are you being attacked? Lawsuits Excessive Taxes Probate and Estate Taxes

  6. Tom’s Assets A string of self storage facilities Principal residence Vacation home Automobiles Stocks Personal assets

  7. Bob’s Assets 4 medical clinics Principal residence Horse training and boarding ranch Stocks Art collection Automobiles Personal assets

  8. Lawsuits Currently there are over 100 million lawsuits pending – over 90% in the United States There are more students in law school than there are practicing attorneys A business person will be subject to 5 to 7 lawsuits during their career If you are sued you lose - Even if you are in the right

  9. Protect from Lawsuits • How do you make yourself safe from lawsuits? • Make yourself an unattractive target. • Control everything but own nothing! Or • Protect your assets by placing them into an “asset protection entity.”

  10. Protection Entities What are the “asset protection entities”? A Limited Partnership (LP) A Limited Liability Company (LLC) and/or A Land Trust

  11. Excessive Taxes • We are all subjected to excessive taxes – Federal, State, Local, Sales, etc. • How do you reduce your taxes? • “Spread” your income among business entities • Maximize your deductions – both business and personal • C Corporation is best entity for Taxes

  12. Excessive Taxes Are you concerned about the budget deficit growing in Washington? Will you and your family have taxable income above $250,000 per year? Have you structured your assets in such a way to avoid these new, higher taxes which are sure to happen?

  13. Estate Taxes and Probate • Why do you want to avoid probate? • It is expensive and time consuming • Public proceeding and cannot save the estate any taxes • It does not permit a married couple to maximize their transfer tax credits • How to avoid probate? • Setup a Living Trust

  14. The basic structure everyone should use is: Structuring

  15. C Corporation • Why a C corporation as the management entity? • Centralized management • Limited liability • Transferability of stock • Tax benefits

  16. C Corporation • C Corporation pays its own taxes • Federal corporate tax rate • 15% on the 1st $50,000 of taxable income • 25% on the next $25,000 • 34% on the next $25,000 • Averages 22.25% on the 1st $100,000 of taxable income

  17. C Corporation

  18. C Corporation • C corporation provides the greatest benefits (tax free perks) of any business entity • 100% Medical Reimbursement • Life insurance – up to $50,000 • Retirement plan • Automobile expenses • Education, training and seminars • Equipment expenses • Business travel

  19. C Corporation • Should be a NV “C” corporation • No state income tax • Minimal public information • Best liability protection for officers & directors • Extremely difficult to pierce the “Corporate Veil” • Nevada is the only state in the country which provides “charging order” protection for the stockholders of a privately held corporation.

  20. C Corporation

  21. The Ownership Entities • Limited Liability Company (LLC) • Limited Partnership (LP) • Land Trusts • Remember - The entity that holds title to the property must be doing business in the state where the property is located

  22. Ownership Entities The ownership entities provide asset protection for both the entity and the owner. The ownership entities provide “charging order” protection for the owners. What is a charging order?

  23. Charging Orders The “charging order” requires the entity to pay the owner’s profit to the judgment creditor. The judgment creditor has no ownership rights in the entity. After the creditor’s judgment has been satisfied, the judgment creditor is out of the picture. The owner has not lost any ownership interest in the entity. The person entitled to the profits must pay the taxes on those profits, even if they are not distributed to the person.

  24. Charging Orders There are 3 levels of protection given by the charging order: The strongest level (Nevada); the weakest level (California); and the middle level (New York)

  25. Charging Order Law The first section of the charging order is almost identical in all 50 states. It states: “On application to a court of competent jurisdiction by a judgment creditor of a member, the court may charge the member’s interest with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member’s interest.”

  26. Nevada’s Charging Order Protection Nevada has one of the strongest Charging Orders NRS 86.401 sets forth the charging order for LLCs in Nevada. It states: “1. … 2. This Section: (a) Provides the exclusive remedy by which a judgment creditor of a member … may satisfy a judgment out of the member’s interest …” The Nevada Charging Order protection for limited partnerships is identical.

  27. California’s Charging order Protection California Corporations Code Section 17302 sets out the Charging Order for CA LLCs. In addition to permitting the charging order, the statute states (in part): “(a) … The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor …” “(b) A charging order constitutes a lien on the judgment debtor’s assignable membership interest. The court may order a foreclosure on the membership interest subject to the charging order at any time.” California Corporations Code Section 15907 sets out the identical rules for limited partnerships.

  28. New York’s Charging order Protection Limited Liability Company Law Section 607 states: “Rights of Creditors of members. (a) On application … a court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest. … (b) No creditor of a member shall have any right to obtain possession of, …; the property of the limited liability company.”

  29. The Ownership Entities Both the LLC and the LP provide asset protection for the property and the owners The limited partners are not liable for the debts of the LP Neither the managers nor members of an LLC are liable for the debts of the LLC A creditor’s remedy against a member or a limited partner is limited to a “Charging Order.”

  30. Limited Liability Company (LLC) • Strengths of an LLC • Designed to use the strongest features of corporations and partnerships • Neither the members nor managers of an LLC are liable for the debts of the LLC • Creditors of a member are limited to the “Charging Order” remedy • There are no annual meetings required

  31. Limited Liability Company (LLC) • An LLC is a “pass-through” entity • It does not pay its own taxes • Taxes paid by the members (owners) • Taxpayers have no increased taxes as a result of using a “pass through” entity • The characterization of income (long term capital gains, etc.) will pass through to the members • Passive real estate losses may be used to offset gains of members

  32. Limited Partnerships • Strengths of a Limited Partnership • The limited partnership is one of the safest entities in which to hold assets • The limited partners are not liable for the debts of the limited partnership • There are no annual meetings required

  33. Limited Partnerships • The assets in the limited partnership cannot be seized by a creditor of a limited partner • The creditor is limited to a “charging order” against the limited partnership • The limited partnership has been around since 1916. • 90 years of court precedence • The only entity which is created pursuant to (almost) identical statutes in all 50 states • Courts know what a limited partnership is and how it works

  34. Land Trusts • Strengths of a Land Trust • Easy to form and maintain • Does not require filing with the Secretary of State • Does not file a tax return • Permits anonymity of ownership • Permits transfer of ownership without transfer taxes or imposition of “due on sales” clause • Extremely inexpensive

  35. The Ownership Entities • The entities in which you have direct ownership should be formed in Nevada • Strongest charging order in the country • Minimal public information • No disclosure of members or limited partners • No state income taxes

  36. The Ownership Entities • The entities which hold title to the real estate must be either: • Formed in the state where the real estate is located; or • If formed in another state, be legally authorized to conduct business in the state where the real estate is located

  37. Living Trust • Eliminates the need for probate • Is not “Domiciled” anywhere • Is not recorded with any agency • Is a private document – no public disclosure of its terms • Is quick – assets are transferred without delay to chosen heirs

  38. Entity Ownership • Your direct ownership should always be in a Nevada Entity • Nevada has the strongest asset protection laws in the entire country • Nevada has no personal or business state income tax • Nevada has minimal public disclosure • Direct ownership only in the Nevada entity protects your business because you do not directly own it. If sued, the plaintiff cannot touch the business

  39. Structures The Following slides show some of the structures we form for our clients.

  40. New York Business Sructure The following slide shows the basic New York Business Structure

  41. Business Structure Nevada C Corp 100% Stock You or Your Living Trust Business in Home State (Single Member LLC) Manager 100% Member Nevada LLC 100% Member

  42. Real Estate Structure The followig slide shows a basic real estate structure.

  43. Real Estate Protection Structure Nevada C Corporation Ownership You / Your Living Trust Manager Ownership Nevada LLC Single Member LLC Beneficial Interest Holder Land Trust Title to Property Single Member Single Member LLC Beneficial Interest Holder Land Trust Title to Property

  44. Medical Profession Structure The following slide shows a basic medical profession structure in California

  45. Medical Structure Surgical Center LLC (CA) Professional S Corp (CA) Outsourcing LLC (CA) Nevada LLC Nevada C Corp Manager Managers Client or Client’s Living Trust

  46. Seminar Specials 1. $4,995.00 - Nevada Corporation, Nevada LLC and Free Living Trust – a savings of $1,000.00 2. $4,995.00 – Nevada Corporation, Nevada LLC and Free New York LLC – a savings of $1,250.00

  47. Seminar Specials 3. $4,995.00 – Nevada Corporation, Nevada LLC and Free Utah Single Member LLC and Free Land Trust – a savings of $945.00. 4. $975.00 – New York LLC – a savings of $275.00.

  48. CSS Nevada CSS Nevada 4535 W. Sahara Avenue, Suite 200 Las Vegas, NV 89102 702-933-4030 702-933-4035 (Fax) cssnevada.com css@cssnevada.com Alan Russell, President

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