Why Asset Protection Belongs at the Top of Your List
At a recent Central Oregon Investor Network meetup, Suzanne Moore and Sarah Willis brought in Brett McCormack and Donovan Lour from Prime Corporate Services to walk investors through the fundamentals of protecting real estate assets. Both Suzanne and Sarah have used Prime Corporate Services personally — Suzanne set up property LLCs and Sarah set up a trust — so this was a practical conversation grounded in real experience.
One theme came up immediately: most investors know they should set up an LLC, but life gets in the way. As Suzanne put it, the task sat on her list for over a decade. Matt Anderson, a firefighter in Southern California who owns a short-term rental in Bend, said the same thing. Brady, a Redmond resident managing long-term and short-term rentals, had been meaning to set up a trust for years. If that sounds familiar, you are not alone — and this post is for you.
The Case for Forming an LLC Before You Need One
Donovan framed the core argument simply: structure for when you get sued, not if. Once you become a landlord, you open yourself to liability — a contractor injured on site, a tenant slip-and-fall, or a dispute that turns into a lawsuit. An LLC creates a legal wall between that liability and your personal assets.
Beyond protection, LLCs offer pass-through taxation. Losses from the business can flow back through to your personal return and offset W-2 or 1099 income, which can reduce your tax bill or generate a refund even in years when the business does not turn a profit. LLCs also require fewer formalities than corporations — no corporate minutes, no mandatory payroll taxes, no officer structure required.
Sole proprietorships, by contrast, offer none of that separation. According to Donovan, sole proprietors are audited at a significantly higher rate than formally structured businesses, and if the business is sued, personal assets are fully exposed.
The Holding Company Structure: Privacy and Layered Protection
Prime Corporate Services recommends a two-layer structure for real estate investors:
- A holding company formed in a privacy-friendly state such as Wyoming. This entity is non-operational — it does not own or manage properties day-to-day. Its purpose is to hold ownership of the subsidiary LLCs while keeping your personal name off public records. Wyoming has no income tax, no franchise tax, and has adopted strong corporate protection laws.
- Subsidiary LLCs formed in the state where you own or operate each asset. These are the operational entities. If one is sued, the plaintiff must work through the Wyoming holding company to reach anything else — a significant barrier.
For Central Oregon investors, that means your Oregon rental property would sit inside an Oregon LLC, which is owned by your Wyoming holding company. Your name stays off the articles of organization at the holding company level, making it much harder for someone to identify and target your full portfolio.
The Corporate Veil: What Pierces It and How to Protect It
Forming an LLC is not enough on its own. Two additional steps matter:
- Transfer the property into the LLC. As Suzanne noted, simply having the LLC does nothing unless the deed is recorded in the LLC's name. In Oregon, that typically means a bargain and sale deed or quitclaim deed filed with the county.
- Keep finances separate. Every LLC needs its own bank account and its own EIN. Mixing personal and business expenses — known as commingling — can pierce the corporate veil and eliminate your liability protection entirely.
Building business credit through a Dun and Bradstreet Paydex profile tied to your EIN also helps the business stand on its own financially over time, reducing your reliance on personal credit for business expenses.
Tax Strategy: Depreciation, Deductions, and the Augusta Rule
Donovan covered several tax strategies worth knowing:
- Bonus depreciation: A cost segregation study breaks a property into components with shorter depreciation schedules. Under current tax law, investors may be able to take a significant portion of depreciation in year one rather than spreading it over 27.5 years. This can generate large paper losses to offset taxable income, subject to material participation and other IRS requirements.
- Qualified Business Income deduction: Owners of pass-through entities may be able to exclude a portion of business income from taxation. Donovan explained the mechanics using round numbers — if you net a certain amount, a percentage of that may be tax-free income.
- The Augusta Rule (Section 280A): You can rent your personal home to your business for up to 14 days per year. The rental income is not taxable to you personally, and it is a deductible business expense. Donovan uses this for planning meetings and strategy sessions.
- Hiring your children: If your kids are under 17.5 years old and perform legitimate work, you can pay them as 1099 contractors up to the standard deduction threshold. It is a write-off for the business and non-taxable to the child.
- Startup provisions: The IRS allows new businesses to deduct startup and organizational costs, with unused amounts rolling forward for up to 15 years.
Living Trusts: Avoiding Probate and Protecting Your Family
The final piece of the structure is estate planning. Without a trust, your assets go through probate when you die — a court-supervised process that can take months or years, cost thousands of dollars in fees, and leave your family with far less than you intended.
Donovan recommends a revocable living trust rather than an irrevocable trust for investors who are still building wealth. A revocable trust can be updated as your life changes — new properties, new family members, a move to a different state. It avoids probate, can reduce death and inheritance tax exposure, and lets you set conditions on how and when assets are distributed.
The trust connects to your LLC structure not as a member, but as a beneficial owner. Prime Corporate Services uses a provision inside the operating agreement — an estate planning transfer clause — so that the trust automatically becomes the beneficiary of the holding company if something happens to you. You do not need to update every subsidiary LLC individually.
A complete estate plan also includes a will (which provides direction and establishes guardianship for minor children), a living will (your medical wishes), and a power of attorney covering both medical and financial decisions.
"You don't want to structure for if you get sued, you want to structure for when you get sued." — Donovan Lour, Prime Corporate Services
Take the Next Step
If this has been on your list — whether for a few months or, like Suzanne, a decade — the COIN community is here to help you move forward. Our PRIMO Private Money Academy goes deeper on structuring your real estate business for long-term growth and protection. And every month at our investor meetup, we bring in experts like Donovan to answer your specific questions in real time.
Join us at the next meetup or reach out to Suzanne and Sarah directly to get connected with the right resources for your situation.
