Scott Smith, Esq. is an experienced investor, and owner of Royal Legal Solutions, Austin, TX, one of the top asset protection companies for real estate investors in the country. In order to develop strategies to maximize tax savings and protect from lawsuits, Scott invested several years deconstructing real estate investing. For any specific questions feel free to comment on this video, or go to the website and set up a consultation now!

People will tell you that your IRA is safe and they’re wrong. Your IRA is only safe from a lawsuit against you and somebody coming after your IRA. But if your IRA is invested in an asset class such as real estate where it can be sued, the IRA itself is exposed.
Also, your IRA is exposed in the sense that it can be disqualified, if any of the transactions of the IRA are exposed. So there’s two things that we do. The first thing that we do is, we can split up multiple IRA accounts. So that way if any one type of investment is disqualified or has some type of issue that the IRS would look at?
Well, that limits your exposure, because it’s only that one account that we have to worry about. The second thing that you could do is set up a self-directed IRA with an LLC. I like to do it with a series LLC. What that allows us to do is if you look at our videos regarding the series LLC structure, we can take each different asset belonging to the IRA and put it into its own series.
So that way if there’s an issue with asset A, it doesn’t affect asset B, C, D, etc. And this way, if you have one property that has a lawsuit against it, somebody can’t take your entire IRA amount. They could only take a very limited amount of that structure.
So make sure that your IRA is properly structured with asset protection, because it’s not by default the safest way to do it. My name is Scott Smith, I’m an asset protection attorney with real estate. I’m a real estate investor myself, and I want to help you.
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How to Start A Self-Directed IRA with an LLC | Royal Legal Solutions for Real Estate Investors

As a real estate investor, it’s important to explore all available options for maximizing your profits and minimizing your tax liability. One such option is utilizing a Self-Directed Individual retirement account (IRA) with a Limited Liability Company (LLC) structure. This powerful combination can offer you significant advantages and greater control over your investments. In this article, we will discuss how to start a Self-Directed IRA with an LLC through Royal Legal Solutions.

Step 1: Educate Yourself on Self-Directed IRAs and LLCs

Before diving into the process, it’s essential to understand what a Self-Directed IRA is and how it differs from a traditional IRA. A Self-Directed IRA allows you to invest in a wide range of alternative assets, including real estate, tax liens, private mortgages, and more. Unlike traditional IRAs, which limit investments to stocks, bonds, and mutual funds, a Self-Directed IRA opens the door to a greater variety of investment opportunities.

An LLC, on the other hand, is a legal structure that offers the benefits of both a corporation and a partnership. By establishing an LLC for your Self-Directed IRA, you gain personal liability protection and enjoy flexibility in managing your investments.

Step 2: Choose the Right Custodian

To start a Self-Directed IRA with an LLC, you need to work with a qualified custodian who specializes in handling alternative investments. Royal Legal Solutions can connect you with trusted custodians who understand the unique needs of real estate investors and provide excellent service.

Step 3: Establish an LLC

Once you have chosen a custodian, the next step is to establish an LLC. Your custodian can guide you through the process and help you with the necessary paperwork. It’s important to follow all legal requirements and consult with an attorney experienced in Self-Directed IRA and LLC structures to ensure compliance with regulations.

Step 4: Fund Your Self-Directed IRA

After establishing the LLC, you can fund your Self-Directed IRA by transferring money from your existing IRA or 401(k) account. This process is known as a rollover or transfer, and your custodian will handle the necessary paperwork to make the transaction smooth and tax-free.

Step 5: Invest in Real Estate

Once your Self-Directed IRA with an LLC is funded, you can start investing in real estate. This is where the benefits of the LLC structure become apparent. By using an LLC, you have greater control over your investments, as you can act as the manager of the LLC. This allows you to make investment decisions quickly without the need for custodian approval for each transaction.

Furthermore, using an LLC provides personal liability protection. If any legal issues arise from your real estate investments, such as lawsuits or claims, your personal assets will be shielded from these liabilities.

Step 6: Maintain Compliance

To maintain compliance with IRS regulations, it’s crucial to ensure that all transactions within your Self-Directed IRA with an LLC are for the benefit of your IRA, not for personal gain. The LLC is a separate legal entity, and all funds and transactions must be kept separate from your personal finances. Regularly consult with your custodian and an experienced attorney to ensure compliance and avoid any penalties or tax consequences.

In conclusion, starting a Self-Directed IRA with an LLC can offer real estate investors greater control, flexibility, and personal liability protection. By following these steps and working with a trusted custodian and attorney, you can effectively set up this powerful investment structure and take advantage of the abundance of opportunities in the real estate market.

Disclaimer: This article is for informational purposes only and should not be considered legal or financial advice. It is always recommended to consult with a qualified professional before making any investment decisions.