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This question is two fold. First off, liability. If I'm

Customer Question
This question is two fold. First...
This question is two fold.
First off, liability. If I'm planning on investing in stocks/bonds/mutual funds can i create a wall around my assets (trust or LLC) to protect me from unforeseen lawsuit, bk, creditor?
2nd Tax: If i do create a LLC, can it lower tax liability if my holdings are in non-retirmement taxable accounts?
Submitted: 2 years ago.Category: Tax
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Answered in 7 minutes by:
2/27/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,860
Experience: Taxes, Immigration, Labor Relations
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If you want to protect Yourself from unforeseen lawsuit against that separated entity as trust or LLC - you are on the right track.

But if you OWN that the entity - and that is a lawsuit against you personally - your ownership is not protected.

In this case you might better to have an irrevocable trust which is not owned by you - but in which you are a beneficiary - then trust assets are protected from judgments against you personally.

If you own the LLC - that will not provide such protection - but will protect you personally from judgments against the LLC.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

Regarding tax treatment - if that is an irrevocable trust - it is a separate taxing entity - and files its own tax return.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

However - normally tax liability of the trust is higher - so when income is distributed to the beneficiary - it is deducted for the trust and taxed for the beneficiary.

.

With the single member LLC - that entity is ignored for income tax purposes - and all income and deductions are reported on YOUR individual tax return - so that makes no difference for income tax purposes.

.

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