Asset Protection Summary Asset Protection Strategies That Work Asset Protection Summary Protect your personal assets from your business. Corporate veil. Protect your business assets from your self. Charging order for LP and LLC. Problems with single member LLC. Protecting personal assets such as cabins, 2nd homes, etc… FLP or irrevocable trusts. Protecting the equity in your Home. Equity stripping. What doesn’t work? Land Trusts and Fraudulent Transfers. Quick and Easy Asset protection. Exemptions and exempt assets (homestead, retirement accounts) tenants by the entirety. What is new in Asset Protection? The Series LLC. Copyright 2006 Kyler Kohler & Ostermiller LLP 435-586-9366 kkolawyers.com

Protect your personal assets from your business. Asset Protection Strategies That Work Protect your personal assets from your business. Business entity Business owner Judgment Corporate Veil Corporate veil provides that the business owner is not held personally liable for the debts or liabilities of the company. Corporate veil protection is available to LLC, LP, and corporations. Copyright 2006 Kyler Kohler & Ostermiller LLP 435-586-9366 kkolawyers.com

Protect your business assets from yourself. Asset Protection Strategies That Work Protect your business assets from yourself. Limited Partnership owner who has a judgment entered against him personally. Limited Partnership or Limited Liability Company Charging order protection provides that the creditor only obtains a right to distributions. A creditor with a charging order does not get voting rights and cannot force the sale of assets. Company can stop making distributions so creditor never obtains assets. Single member LLCs may not receive charging order protection. Judgment creditor attacks individuals ownership in LP or LLC. Copyright 2006 Kyler Kohler & Ostermiller LLP 435-586-9366 kkolawyers.com

Asset Protection Strategies That Work Series LLC Master LLC Series 1 Series 2 Series 3 Series 4 Series 5 Series LLC Basics 1) Must treat each series as a separate entity. -Hold property and contract in name of the series (e.g, Series 1 of Jones Real Estate, LLC). -Maintain separate accounts and records for each series. 2) States where the Series LLC is recognized. More and more states are considering adopting the Series LLC statute. -Delaware, Illinois, Nevada, Iowa, Oklahoma, Tennessee, and Utah. Copyright 2006 Kyler Kohler & Ostermiller LLP 435-586-9366 kkolawyers.com

Benefits and Concerns of the Series LLC Asset Protection Strategies That Work Benefits and Concerns of the Series LLC Concerns Careful consideration should be used before using the Series LLC in states that do not have a Series LLC statute. This is a new area of the law and there is no specific guidance from the IRS on whether one tax return for the mater LLC will be required or whether a separate tax return will be required for each Series within the LLC. The practical approach seems to be to treat each series of the LLC as a wholly owned subsidiary company and thus only do a single LLC tax return for the multiple entities. Caution in California. The Franchise Tax Board Revenue Ruling requires that each Series of the LLC pay the minimum $800 franchise tax. Benefits Avoid the problem of having “all of your eggs in one basket”. Each series is treated as a separate entity from the other series so that when a lawsuit occurs in one series the creditor plaintiff can only attack the assets in the series being sued. For example, if you had a lawsuit regarding a property in Series 1, then only the assets in Series 1 would be available to a creditor. The assets in Series 2-5 would be protected from the liability created in Series 1. Reduce costs and expenses from setting up multiple entities. Traditional approach to obtain separate treatment is to set up multiple entities. Copyright 2006 Kyler Kohler & Ostermiller LLP 435-586-9366 Kkolawyers.com