i went to my local investment club and a lecturer mentioned to have these combination of tools to protect investor assets. what are your thoughts on this?

the lecturer mentioned family limited partnership(FLP)is a tool for estate planning. it requires 2 entities - yourself and a trust - preferrably a revocable trust. this also protects you from probate. then he said to layer it with an LLC for tax purposes.

i also heard that C corps were better for tax benefits over LLC.

I'm not a lawyer or tax professional, but I've researched asset protection schemes and have come to learn that you would get killed taxwise if you formed a C corp and would equate to double taxation, from what I understand. C-corp advantages kick in when you have a high number of employees. S-corp or LLC is the way to go for you.

In my opinion, having a Revocable Living Trust (if you have assets over the 1 million dollar mark...anything under might not be worth it) hold title to your LLC would be the way to go...especially with investment real estate. The RLT gets your name off the deed.

Here are a couple of great message boards to ask questions on asset protection (first link) and tax questions (second link). You don't even need to register or give any info to post questions:

http://bbs.mrlandlord.com/assetprotection1/index.mgi2?30

http://bbs.mrlandlord.com/taxes/index.mgi?73

The Family Limited Partnership / Living Trust may have significant problems in some states.... check it out well before you do this. They are generally not considered to be good vehicles for use in investments in real estate. Are you sure they were not talking about Land Trust? Possibly a Land Trust for a family group?

In the States that have specific Land Trust laws, these would be a far better mechanism and provide a wider range of asset protection. They will "cloud" your identity and make it very difficult for anyone to find out exactly who holds title to the property... because the Land Trust does not get recorded. Property records would only show the name of the Trustee... They are easy to form and should normally hold only one property. One very creative idea with them is you can sale the Trust... with out transferring title to real estate only transferring the Beneficial Interest to the Land Trust which is Personal Property. A Land Trust IS NOT a Living Trust nor a Partnership.

These Land Trust should be held in either an S Corp or LLC NEVER in a C Corp. I prefer LLC's as the paperwork is far simpler to set up and to run. MOST S Corps that individuals have become Individual Proprietorships because the officers fail to perform the simple but required tasks such as yearly board meetings with records, and distribution of stock certificates. In one group of S- corp owners I was in... about 150... only 3 had distributed the certificates and about 147 said they were still in the Corp Books as they had received then when the formed the corporation.... if challenged in court... that one fact would turn their level of protection back to individual ownership and place all their personal assets at risk.

These processes are NOT for someone that lacks a full understanding of real estate and or lacks significant working experience in investments in general.... and definitely not for those with out a good understanding of valuation of real estate and the cost of management of those properties and at least a good feel of Business Law.

You should also never consider this area of activity unless you have a business plan in place with exit plans and alternatives on each property.