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Pros and Cons of Series LLCs with Rich Dad Advisor Garrett Sutton



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On this episode, Jason Hartman starts the show talking about a new startup in the real estate world. Then he discusses how to capitalize on the assets you own. Reading about them isn’t enough if there is no action. Later on in the show, he brings on Garret Sutton who is also a Rich Dad Advisor and author of many books specific to real estate, taxes, and asset protection. They discuss different types of LLCs and the pros and cons of each one.

Investor 0:00
I kept reading and listening and then went forward in the podcast that I went to your website. And I looked at the site see half of the different properties and the numbers. I started learning about the numbers and what they meant. And being the skeptic I am and being a techie, actually with a program to go and scrape your website and other people’s websites and redo the calculations just so I could prove it out myself. And eventually, I came to the conclusion that real estate is a great deal.

Announcer 0:28
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in Thousands of real estate transactions, this program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:18
Welcome to Episode 1262 1262. Thanks for joining me today. You know, as I always say, it is an amazing time to be alive and those assets you own. Hopefully you bought them from my network, and most of you did. Thank you for that. Those assets are becoming more and more valuable. No, I’m not saying that in the typical way. I’m not saying that. They’ve appreciated I’m not saying you know, this, that and the other thing is you’ve heard from everybody else. I’m saying it in a unique way. The options are increasing. Now. We’ll get to our guests in a moment here. But before we do that, I just wanted to tell you there is a new startup out there. There’s so much innovation in the economy in the sharing economy. Of course, you’ve heard us talk about I buyers before and, and Zillow and open door and these companies getting into the home buying business while Zillow is now doing this. Buying and selling homes in South Florida. Yes, my neighborhood my new hood here, although they’re a little bit south of where I am. I don’t know if they come up this far. But yeah, maybe they do. I’m not sure. So anyway, that is creating more options for you, vi buyers, Airbnb and VR Bo and all the other short term rental companies have created more options for you. And you know what I think about the short term rental business, I say proceed with caution. Because Hey, it’s not absolutely mandatory to go rent a house for vacation, but it is required that you have a place to live. Everybody needs a place to live. So that’s that one. But this new startup, yes, yes, this new startup is helping people rent either all of their home or parts of their home for really short terms. Now, I know what you might be thinking, Get your mind out of the gutter. You know, those really tacky hotels and bad neighborhoods that, well, they’ll rent your room by an hour I hear that these exists. And, you know, it’s funny how we look at that in the US. That would be looked on very negatively. But I think although I’m not sure I have not confirmed this never been a customer. But I think they have those in Europe. I think that’s kind of common. Now. They have them at airports in the US, where you can rent a hotel room kind of thing for like an hour, two hours, four hours. I think four hours is the maximum space. But guess what this startup does. And its operating in a couple markets, I think it will basically allow you to rent someone’s living room for a couple hours or an hour. Say, for example, you are in a city and you’re having a business meeting. And you might think, well, I’m going to use we work or rejas office space to have a meeting. And they really charge kind of a lot of money, these things. I mean, Oh, and by the way, I meant to talk to you about we work you know, the company that’s about to go public and this little scheme that’s going on with the founder and the way he’s renting, like doing master leases and then renting them to the company and I don’t know that seems really fishy to me. I read a couple articles on it. We never got to talk about that. We got to go back to that one. I think that’s interesting and kind of important. And it shows you that the pool money deal, right? The promoter, that person at the top is always skimming the cream off the top of the deal. Look at even if you made money in the stock market, which paid

Jason Hartman 5:22
lately, it’s pretty easy to make money everywhere in the economy. This is called the everything bubble. Even if you made money in the stock market, for example, or in some fund or some pooled money asset. Think of how much more money you might have made if someone didn’t have their hand in the cookie jar. Right? So it’s it’s compared to what you may never know. You may never know I mean, investors will never know how much money they didn’t gain, which could be expressed how much money they lost due to the graft and corruption of the promoter of video right? You just don’t know you don’t know. It’s a big question mark. So this startup back to back, get off the tangent, Jason, this startup, basically will let you take the asset, you own those rental properties, right? And dice them up all sorts of ways. What if someone wants to come and have a meeting, they want to rent your living room. What if youtuber wants to rent your kitchen to do a YouTube video on their great cooking skills, and they don’t have a very nice kitchen, but they want to rent yours, just to make a YouTube video for you know, maybe shoot a couple of videos for a couple hours. There’s all kinds of uses for this. So it’s really interesting, you know, when you own the asset, you are in control of something that is very valuable in many different ways, not just the traditional way that we all think of it, buy and hold long term rentals, which of course is the surest bet, it’s the one I like best. It’s simple, but I’m just telling you that there’s so much going on in the world. And technology is enabling so many of these things like the I buyers, like Zillow now in South Florida buying and selling homes, and this new startup and forgive me, I don’t remember the name, where you can rent someone’s living room for an hour. Or you can take a living room that you have, maybe in a vacant house, maybe in a short term rental that you own. And instead of just listing it on VR, Bo, and Airbnb, you know, maybe you purchased a short term rental through our network. Maybe it’s in St. Augustine, where I’m looking at one myself right now. Maybe it’s not being occupied that day, or the people haven’t checked in yet. And someone just wants to use it for a couple hours and have a meeting there. Right. You know, there are all kinds of options. You know, think about all the other ways When you look around the world that we have learned to utilize assets that were formerly dormant, okay? All the bicycles, the automobiles, I mean these sharing economy car rental programs like terreaux, where you can go and listen to this. Remember that lousy Tesla had the second one, the first one, it was alright. But the second one was a disaster. I hated that car was my worst car. And I finally after complaining enough, I got Tesla to take it back. They bought the car back. And so you know, they finally did the right thing, but it took them 10 months to do it right. So Tesla gave me a refund. they canceled the lease on the car, you know, picked it up. And I was grateful that they did it. But what’s funny about it is I wanted to try the sharing economy. And I listed that car on Turo

Garrett Sutton 8:55
And wouldn’t you know it

Jason Hartman 8:57
the crappy luck I had right? No one wanted to rent it on tomorrow. And I thought, Okay, well, you know, maybe they only want to rent cheap cars, not hundred and $20,000 cars. Okay, fine. And then guess what? Maybe I told this story before some guy who’s representing Oracle, you know, Oracle, the big giant tech company reaches out to me through turbo and says, we saw your car in tomorrow. And for a convention that we’re having now this is back when I lived in Las Vegas, Nevada. For a convention we’re having we want to rent several Tesla Model exes to rent them just for I can’t remember the time I think they wanted for like two weeks will give you $5,000 or 50 $500 or something like that. It was a really good deal. They said the only thing is we’re going to wrap them we want to wrap them and that means you know they want to put graphics on them and stuff and the car looked really cool and futuristic when it worked. You know this dude stupid doors always was a nightmare. Anyway Enough complaining. I said I had to turn them down because I said, If Tesla wants to take this thing back, I’m giving it to him. I do not want this car anymore.

Garrett Sutton 10:09
But Had it been two weeks earlier.

Jason Hartman 10:11
Yeah, I know I could record it and and use the sharing economy. So it’s it’s really interesting. Who knows what things will crop up next? Down the road and a few years. Maybe someone wants to rent your backyard, you know, hey, people do that. Now a friend of mine has a big giant mansion. It’s like 31,000 square feet. And he rents his mansion out once or twice a month for weddings. Okay. And, and you know, I went to a wedding once by the way, years ago with my girlfriend at the time. Her friends were having a wedding, a little hippie hipster wedding in a very well lower middle class backyard. So those bread and butter rental properties you’ve been buying through our network for the last few years. Yeah, you could even rent those out for a wedding. couldn’t believe it. So you know, there’s all different budgets for everybody. So just an interesting thing. Technology is changing so many things gives you the opportunity if you want to ever exit your properties. I did an interview today. And we talked a lot about the I buyers, I was being interviewed on someone else’s podcast, but the host of that show happened to be talking about the I buyers. And so we talked about that for a bit. So it’s just really interesting, all of the options that are occurring. But in order to participate, in order to participate, there’s one thing you have to have, you have to have the asset, you have to have the piece of property. And once you have that piece of property, like I’ve talked about before, the great thing about income property is you can buy it, and then you can continue to renegotiate the deal as long as you own it. Because you can refinance it, you can change it. See You could start out as a long term rental and turn it into a short term rental, you could do all sorts of things, right? You have all these options, you can refinance it and change the complexion of the deal when you do that. So the thing that’s required is you must control the asset. If you don’t control the asset, you have nothing. So you’ve got to control the asset and buy those assets. Go to Jason Hartman calm and take advantage of that, and work with one of our investment counselors and have them find you the deals. I will be the first to admit the inventory on our website is very scarce, be sure you’re subscribing to the property cast, my property cast podcast, whatever podcast platform you’re using, type in Jason Hartman and look for that property cast. Or you’ll actually get the performance of the properties in PDF format on your computer or mobile device. So really, really cool. Yes, I know people will copy me, you weasels and scumbags for copying me. Shame on you. But I know you’ll do it because that’s what you do. But I’m the original, I had the first property cast. So make sure you subscribe to that. So you get the updates on the newest properties. Work with your investment counselor. They’ll help you one more announcement before we get to our guest today. profits in paradise. You heard it on Saturday, when I gave that little talk about the power of visualization. I know that wasn’t actually an episode number. It was just a bonus. Where I talked about that for 17 minutes or something a couple days ago, I announced profits in paradise. Yes, our annual profits in paradise event is coming up in beautiful Orlando at an absolutely stunning spectacular resort property and I got you a great deal on the rooms. So that is coming up. We’ll have all the details on our website soon. But save the date mark your calendar, October 26 and seventh Saturday and Sunday. Sunday in Orlando. We’ll look forward to seeing you there. And without further ado, let’s get to our guests. It’s my pleasure to welcome back a returning guest, a good friend of mine, and that is attorney Garrett Sutton. He is a rich dad advisor. He has written several great books, the one that might be of most interest to you listeners is loopholes of real estate. Garrett, welcome back. How you doing? Good. Thanks. Great to be here. Jason. It’s good to have you. So we were talking a little bit before we started today. And there are some interesting new things. We want to talk at least about series LLC, for asset protection and state planning purposes. And I know what you think about those we’ll dive into that. There are some interesting, I guess, new law out on the issue of taxation of a trust. And then California, there are always up to no good Probably a couple other things. So where would you like to

Garrett Sutton 15:04
start? Well, let’s start with the two US Supreme Court cases. two cases just came out. And you know, everybody complains that the court is divided, conservative and liberal. But these two cases Jason, were eight oh, were unanimous cases. And the first one is Tim’s versus Indiana. And this deals with the Eighth Amendment, which bars excessive civil forfeitures, and that’s where the police take your money and don’t give it back. And this has been happening around the country. For example, in Las Vegas, the Metro Police Department took in $1.9 million from people they arrested, they found cash, they took the cash, and half of all these cases involved $1,000 or less, which means it’s not worth it to hire an attorney to try and get your money back. And so what happens is the charges are dropped. Please keep the money. And this is called policing for profit, and it’s become a problem around the country. And so in the Tim’s case, Tyson Tim’s pleads guilty to selling heroin. All right, so he pleads guilty. And the penalty for that is $10,000. Well, instead of accepting $10,000, the state went after his land rover, which is worth $42,000. So instead of getting $10,000, they get a $40,000. Car. And, you know, give credit to Mr. Tim’s and his lawyers. They fought this all the way to the US Supreme Court. The Indiana Supreme Court said, well, federal law doesn’t apply to our state law, which I hate seeing, of course, federal law that constitution applies to state law. The US Supreme Court said the federal government and the state government cannot engage in excessive civil forfeitures and So this is a great case that is going to help stop these police departments from taking people’s money and not giving back. Garrett,

Jason Hartman 17:09
I have long said that police are just modern tax collectors nowadays. They have militarized they have military weapons now. So that’s another topic but it’s scary in many ways, but but they have basically deputized police as tax collectors. And they do this through the form of tickets, citations, do you eyes, whatever, all under the guise of public safety and protecting us? They do the same thing with gun control laws. Of course, much of it is legitimate, but there is a line when it just becomes a for profit enterprise. I mean, you go to some of these cities, and clearly you can see that the business of parking citation is a hugely profitable business. One of my friends in Arizona fought against these unconstitutional speeding and red light cameras and discovered all sorts of abuses where these companies basically would get into business with governments and everybody was profiting and the citizens were getting absolutely screwed

Garrett Sutton 18:26
and you know what they did there they sped up the yellow lights

Jason Hartman 18:28
right they made them so having In other words, they switch it to four seconds and everybody would be guilty because they could give more tickets but also right there actually endangering people by making the yellow light shorter. Right? Yeah, it’s just, you know, it’s like the Watergate informant Deep Throat said, follow the money. It’s always about follow the money, which is sad, really, but on the forfeiture thing, you know, why should everybody listening be back concerned about I mean, look, you know, nobody listening is selling heroin. Hopefully, everybody’s law abiding citizens, at least for the most part. Should we really care? Like, does this really tell us what

Garrett Sutton 19:09
Yes. So there was a case in Humboldt County, which is in the middle of Nevada. And this fellow is driving through the county, on highway 50 loneliest Highway in the world. And he gets pulled over by the Humboldt County Sheriff’s. And he has done nothing wrong. He doesn’t have a taillight out. He doesn’t have the he’s done nothing. No, no probable cause,

Jason Hartman 19:31
in other words, no

Garrett Sutton 19:32
probable cause. And he happens to have $10,000 in cash in his car. Well,

Jason Hartman 19:40
if he had $9,999, they’d accuse him of structuring.

Garrett Sutton 19:45
I don’t know, I think they would have taken it. Anyway, so he’s got cash in his car that he won in a Reno casino. And he’s driving back to Salt Lake City. Okay, what’s wrong with transporting cash in your car?

Jason Hartman 19:59

Garrett Sutton 20:02
hook it. Okay. He was not selling heroin. He was not doing drugs. He was just an innocent civilians driving across the state of Nevada. And the deputies took his money. Okay. And so this can happen to anyone, Jason,

Jason Hartman 20:17
where are you saying they illegally took his money or they used it under they did it under a Caesar

Garrett Sutton 20:22
rule is that based on suspicion of a crime, oh, my God, the transporting of cash. And they assumed that he was involved in some sort of criminal activity because he had so much cash on him. And this was a very big case in this area. The humbled paper has been writing about this for quite a while because the humble County Sheriff’s Department is taking this money keeping it buying staff cars, paying bonuses. It’s very wrong and so citizens need to be aware of this and push back against it. Yeah.

Jason Hartman 20:56
Oh, yeah. Push back hard. That is absolutely ridiculous. So that’s one thing. Would you say we are winning or losing that battle? At the moment of

Garrett Sutton 21:05
fact, it was unanimous by the US Supreme Court. I think that’s a big win.

Jason Hartman 21:09
Okay, good. Good for the people. Remember the old saying, folks, the bigger the government, the smaller the citizen. If you want the citizen to be big, you better make sure the government stays small. I like that. Yeah. Okay, what’s next on the agenda?

Garrett Sutton 21:24
We have another unanimous Supreme Court decision that you’ll like Jason, and that is the case in her case. And what happened was the case and her family set up a trust in New York, and a couple of the beneficiaries some of the cases are kids moved to North Carolina. The trust was continued the money stayed in the trust, there was income there, but it didn’t flow to the beneficiaries in North Carolina. In other

Jason Hartman 21:53
words, they didn’t take any distribution from the

Garrett Sutton 21:56
take any distributions. However, the state of North Carolina in an attempt to collect as much money as they can said to the tax the trust rather than the case in her kids, a million dollars. And so the trustee paid it, but then went to court to say, look, the people in North Carolina did not receive this money. There should be no tax on any of this. And it went all the way to the US Supreme Court. And in another unanimous decision. The Supreme Court said a state can’t tax a trust solely because the beneficiary lives in the state. And that’s going to be great for those people living in California. Will bad bad asset protection trust. Right,

Jason Hartman 22:41
right. Very good. Okay. So let’s just drill down on that a little bit. So the concept is, they’ve got this trust. It’s established in the state of New York. Correct. Some of the kids who are beneficiaries to that trust, move to North Carolina, North Carolina has a state income tax probably around 5%, I’m guessing. But the interesting thing about it is that the taxes in New York are higher. Now, if they tax the trust, maybe they didn’t tax the trust in New York, and we’ll get to that. But if they tax it in New York already, then you definitely wouldn’t have to pay twice in North Carolina, because you could say to North Carolina, look, we paid the tax in New York, and then the two states would have to argue over who’s entitled to the tax. This is all kind of hypothetical. But that’s conceptually, I think the way it works, right.

Garrett Sutton 23:32
Right. But in this case, that New York tax didn’t come up in the Supreme Court case they focused on the North Carolina is the lack of contacts between the near the North Carolina beneficiaries and the state of New York. The trust had no activities in the state of North Carolina. The trustee was in New York. All the investing took place in New York. And so North Carolina had no connection to the New York trust and in tax law, it’s called Nexus there’s no connection for North Carolina to tax, an activity that’s occurring in New York.

Jason Hartman 24:12
Right? Right. North Carolina was really butting in where it doesn’t belong in that case. Now, you’ll see had taken money out of the trust, and they were North Carolina residents. If they taken a distribution from the trust, North Carolina would rightfully be entitled to tax probably right.

Garrett Sutton 24:30
Clearly, that’s taxable. They are North Carolina residents. they’ve received income to them in the state of North Carolina, North Carolina certainly has the ability to tax that income.

Jason Hartman 24:41
Yeah. But in this case, they didn’t even take any money out of the trust in North Carolina says, Hey, we’re entitled to tax right. They had no activity in that state. And they didn’t take any money into that state either. So very interesting. Yeah, very interesting. Okay. Anything else you want to tell us about either of those cases?

Garrett Sutton 24:58
No. Just a Again, the fact that they are anonymous. So all this bellyaching that we have a divided Supreme Court there are cases where the justices all agree. And I think this Indiana case on excessive civil forfeiture is important. And the case in your case is another important one. And again, they were unanimous verdict.

Jason Hartman 25:20
Yeah, that’s good. So good for the people on both of those. And you Californians listening, I know we have a lot of you from my former home state. This is very significant to you, because a lot of you might have a trust that you set up insane Nevada, where garrets located in or in some other state or even country, but that’s that’s a whole different thing when it’s different countries, but say it’s in another state. California has an infamous history of doing things just like North Carolina did in that example. And because of that Supreme Court decision, California probably wouldn’t get away with that with that.

Garrett Sutton 25:58
Correct doesn’t mean They wouldn’t try but

Garrett Sutton 26:04
yeah, right.

Jason Hartman 26:05
Well, and what what happens, Jason is the California Franchise Tax Board will come up with some aggressive tax collection schemes. And like in the Tim’s case, in Indiana, someone will be, you know, good enough to stand up and say, No, you can’t do this. And this, the Franchise Tax Board will then stop. But in the meantime, Jason, they’ve collected 100 million or more in taxes, and people are entitled to get a refund, but no one ever files for that. So, you know, California has gotten away with the extra collection of 100 million or more with this blatantly improper taxation. And it just goes on and on. You know, I’ve talked to state senator in California about how they do things. And he goes, you know, if you’re going to live in California, just gotta pay to play. Yeah, you can make a lot of money here, but you got to put up with The Franchise Tax Board. And so that’s kind of the prevailing attitude on the government and the tax code. And let me tell you, the Franchise Tax Board in California is vicious. And now, I’ve never gotten into any fights with them. But I tell you, I hear really ugly stories about the Franchise Tax Board in California. You know, when a state is desperate for money, they’ll do anything they need to do to get it. So you want to be careful that, you know, it has amazed me. And I really kind of predicted this. Before I even heard any examples of it. I said that California would build an economic berlin wall around the state for people who try to leave, and I can’t think of the examples of how they’ve done that. Now, I have heard of some of those examples. I said this, you know, maybe 1520 years ago, and I’ve heard of examples over the years. I can’t remember them, but it’s interesting, you know, I mean, folks, remember the Berlin Wall was Built to stop the brain drain, everybody was leaving East Berlin, because they didn’t want to be part of the Soviet Union, right? They didn’t want to be living under communism, they didn’t feel that that would be the best for their, their life and their spirit and their innovation and so forth, it wouldn’t be rewarded. So they just started leaving, leaving leaving like crazy. And in one weekend, the Berlin Wall was erected to stop the brain drain, because the evil communists, you know, they can’t incentivize people to stay, they have to force them to stay. And we all know the rest of the story. Sadly, if you ever get the chance, I remember the first time I was in Berlin back in the 90s. I’ve been there several times since I spent six hours in the Checkpoint Charlie Museum, and literally, tears came to my eyes at times, reading the exhibits and, you know, reading the literature in there is just unbelievable, but But they do this stuff economically to it’s obviously you’re not gonna get away with this. But

Garrett Sutton 29:06
yeah, let’s provide the context for it. Here’s the context. California the San Francisco Chronicle to their credit, forced had to go to court to force the California pension system to reveal their finances. And it was revealed that they are a trillion dollars underfunded. Meaning they’ve promised x they’ve collected why in the difference is a trillion dollars. How can estate make up

Jason Hartman 29:34
that’s a trillion with a tea.

Garrett Sutton 29:36
That’s not that’s not a billion SP that’s a trillion with it. And so you have this state bureaucracy that knows that their pensions are being affected, and they are trying to collect as much money as they can. You know, it’s really incredible what they do. The Wall Street Journal, looked at the California Franchise Tax Board and their term for how this government agency worked was lawless taxation.

Jason Hartman 30:01
Yeah, that’s what it is. If you’re still in my former home state, and you’re listening to this, what I have said for many years is, look, I know you can’t do this tomorrow. It’s not something you do. But just start planning. Start getting your mind focused on the idea, assuming you want to and you agree with me, maybe maybe you think it’s worth it to pay the freight and live in California. I paid it for years. And I just at some point, I just felt it wasn’t worth it anymore. And I left in 2011. So make a plan. That’s maybe your five year plan to move to a state with low or no taxes, you’ll find that the cost of living is much lower, the environment is better. People are less stressed out because they’re not so burdened by the cost of living and the cost of taxation. It’s just better in my opinion. So put your mind in that direction. You can always Come back to California and vacation for one day less than six months. And you should be okay. Yeah,

Garrett Sutton 31:07
there are a lot of reasons to live in California. It’s a nice place to live but the you know, the quality of life in cities like San Francisco and Los Angeles

Jason Hartman 31:14
is decreasing. Decreasing is an understatement. It’s It’s It’s pretty bad. Yeah. But there are certainly some nice areas that look I lived in Newport Beach and lawyer those areas are very nice. Right? Yeah. Let’s talk a little bit about just any of the lessons from your great books, you know, any other strategies you want to share with people in general or, or any other sort of current events, whatever, take it.

Garrett Sutton 31:41
At the top we mentioned series, LLC. I’m not a fan of them. I’ve written about them in the book loopholes of real estate, but we kind of have a new development Jason and that is banks when they’re loaning to series LLC. And just briefly the concept of the series LLC is you have one entity and then you Have a duplex in series one and a four Plex in series two. And so you don’t have to set up two separate LLC, you have the series LLC, owning two separate properties. And the idea is there’s this internal shield of liability. So that claim brought against the duplex doesn’t affect the four Plex, as if there were two separate LLC. We don’t have any cases on that, which is one of the reasons I don’t like it. But what we’re seeing now is banks when they loan to a series LLC, are trying to be able to get the equity in not only the property, they’re lending on the duplex, but they’re trying to get collateral on the four Plex which is a separate property. And so you have to be very careful on the documentation. If you’re using a series LLC, you won’t be using our firm because we don’t set them up. But if you are using a series LLC, just be careful that the bank is not getting Security over the two properties when you intended for it just to be alone on the first property that duplex, for example. So that’s something that people need to be aware of.

Jason Hartman 33:11
Yeah, some people might have been confused. By the way, you said that because you said the duplex in the four Plex, like they own two properties. They’re in a series, it might be better to just use a bunch of single family homes, say you have a series LLC, and you’ve got 10 single family homes. So you make what’s called a child series. Okay. Think of it like an organizational chart in a company, for example, or the military, right? You’ve got this, this one series, LLC at the top, and then below it, you’ve got 10 things under it, the child series, right, right. And when you do that, you’ve got this in your example, the duplex in one, you got another property that’s a four Plex and that’s in another in another the child series and you borrow against one property in one of the series. And the bank says to you look, we’re not just going to allow this child of the series to be liable for the debt. We want to make the entire parent I guess, forgive me if I’m using the wrong word scared,

Garrett Sutton 34:17
right? Yeah. The entire parent parent. Yeah. liable provide collateral.

Jason Hartman 34:21
Yeah, reliable, right. I don’t blame the lender for saying that I would do the same thing. But it’s not good for the borrower who might believe that they have the firewall between the child right, each child in the city, right.

Garrett Sutton 34:35
Yeah. And it could be, you know, you may not even know what’s happening. They just the loan docs are presented to you in the name of the parent series, LLC, which gives the bank access to the equity and all of the child series. So you just have to be really careful on that.

Jason Hartman 34:54
Be careful also listeners because there are a lot of promoters out there promoting Various entity formation ideas and schemes. And, you know, a lot of this advice is just bogus. I mean, it really is. It’s simple, it is laughable. And you can really see right through it. You know, we had a presenter speak at our one of our venture Alliance meetings about series LLCs. And I liked the idea I did not set one up, I don’t have one. But I was I was very interested and I kind of got cold feet because I couldn’t believe and you know, he may be will be right. This may be completely accurate, that you don’t need a separate bank account for each child in the series. He said, Really, he he was saying, I know I thought this is too easy. It can’t be this easy, right? That’s what I thought he was saying. It’s just an accounting entry. That it’s this child versus that child, one bank account. And I thought there is no way if there was ever a judgment against One of those children in the series, it’d be one bank account and one tax ID numbers that they would love

Garrett Sutton 36:08
it all right, correct. And we don’t have any case law saying that that is accurate. All right, so we’re going into a new field. Right and the series LLC are fairly new. And we don’t have a lot of case law fleshing out the terms and conditions. And I just don’t like to be a pioneer. You know, I don’t I don’t want to put my clients in a situation where I don’t know the answer. And with the series, LLC is we don’t know that all the answers.

Jason Hartman 36:36
Yeah. Well, you know, there’s a riddle about that. How do you know who the pioneers are

Garrett Sutton 36:40
the ones with the arrow shirts, the ones with the arrows in their back?

Jason Hartman 36:45
Those are the pioneers. You know, and he was kind of making the argument that he likes the fact that there’s not lots of case law because with a regular LLC, You know, there is case law and sometimes the veil gets pierced for various reasons. I don’t know, you know, I didn’t really buy his argument, but

Garrett Sutton 37:09
I saw is your friend. Yeah. Okay.

Jason Hartman 37:12
Yeah. As long as it’s favorable. Definitely. Right. Right. Right now. Good stuff. Okay. Anything else you want to say before we wrap it

Garrett Sutton 37:19
up? Well, just that, you know, we’re following Nevada and Wyoming, Wyoming is making some big changes to make it easier to protect your digital Bitcoin assets. Oh, yeah. As we flesh it out, we should talk about it further. I’m not all up to speed. But Nevada. I’m sorry. Wyoming has passed a number of laws there that they’re in the lead as when it comes to states that are going after Bitcoin business and being able to protect Bitcoin assets. Oh, interesting. Interesting. So

Jason Hartman 37:54
Wyoming wants to be known as a crypto friendly state. I guess

Garrett Sutton 37:59

Jason Hartman 38:00
Very interesting, very interesting. Good stuff. Well, Garrett Sutton, thank you for joining us. give out your website.

Garrett Sutton 38:06
It’s corporate direct.com. And if you call the office we provide a free 15 minute consult with a incorporating specialist to see if we can help you. And so that number is 800-600-1760

Jason Hartman 38:20
Garrett Sutton. Thanks again for joining us. All right. Thank you. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website Hartman. Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show. We would very much appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.