A local LLC helps mitigate risk, increases asset protection, and helps comply with local business laws.
Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
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Transcript:
We’ve done a bunch of videos on this
About umbrella LLCs, but not tying together why we would need the local LLC and the umbrella LLC
So we should talk about it?
Yeah.
Can you lead it?
Sure.
Okay. Hey folks, Colin and Shreya Ley here.
Oh no!
Of LayRoots. We’re an asset protection and estate planning law firm. Today, what you might have heard, we have a very important topic to cover. Shreya’s going to lead it for us right now. Welcome, Shreya.
Thank you.
Welcome to the show, fire away.
We often get a question from people They have seen some our videos about umbrella LLCs and the importance of choosing your umbrella LLC, maybe choosing the right jurisdiction for that umbrella LLC, maybe just having that umbrella LLC. And they wonder, why can’t I just put everything into that umbrella LLC? Why are you trying to tell me I also need local LLCs? And by local LLCs, we mean an LLC in the place that you live or where the asset is. So we have several clients, they might invest in real estate all over the US. And so they would need, potentially, an LLC in those states where they’re investing. Why do they need that? Why can’t they just put everything into this umbrella LLC? And then it’s safe and they don’t have to bother with the hassle of multiple LLCs. So, the reason is because, one, several states, or many of the states, they have requirements that if you own an asset, like real estate, in that state, then you have to be registered. That business has to be registered in that state. And once you register your umbrella LLC, the reason you created it is because you want to take advantage of those wonderful Wyoming laws or Nevada laws.
No Nevada
We’re partial to Wyoming. But, people want to take advantage of those wonderful laws there. And now, you go and you try and register it in Oklahoma, or Washington, or Idaho. Wherever it may be that you’re investing, I don’t know, I just named some random states. And now, that LLC you’re saying, Hey, treat me, with your laws. I’m subjecting myself to your laws, and you are ruining the purpose of that umbrella LLC. Not just that, but also you’re kind of just intermingling all of your assets into one LLC.
Right, with that local LLC, you can essentially silo that risk of that business activity from the other business activities or risks that are within your umbrella LLC.
So having that structure where you have the little mini sub-LLCs and then the big papa LLC you are silo-ing. You are taking advantage of laws in multiple jurisdictions. You’re adding some privacy in there. There’s so many benefits. And complying with the local state in which you’re investing.
Well now I LLC what you’re saying, Shreya.
Thank you!
Questions, comments? Leave them below.
Yeah, please do.
Yeah, thanks for watching. Thanks Shreya.
Thanks Colin.
See you next time.
