Many California privacy seekers have been forming New Mexico Limited Liability Companies (LLCs), or LLCs from other states, to own property privately in California.  Unfortunately, as of January 1, 2010 this has became prohibitively expensive.  California has changed its law to make privacy more difficult and costly.  Since 1/1/11, it is virtually impossible for California residents, or anyone purchasing California property, to use an out of state LLC (called a “foreign LLC”) to own property UNLESS they pay an $800/year minimum franchise tax fee. 

Many foreign LLCs can undertake non-business activities in California without registering to do business.  Even so, it would be risky not to comply with the franchise tax rules requiring payment of the minimum tax (and the filing of an annual franchise tax return).  REPEAT:  Even if a foreign LLC is not required to register with the Secretary of State in California, it still has to pay the $800/year minimum tax.  The problem is, many title offices and the DMV will not do business with your LLC unless it is registered even though registration isn’t legally required for personal privacy not-for-profit LLC uses! 

I no longer advise or support the use of LLCs for owning property in California if the purpose is privacy.  There are many situations and reason for liability protection reasons to use California business entities.   What’s the answer then?  California Privacy Trusts.

CALIFORNIA PRIVACY TRUSTS

California courts have in several cases explicitly recognized the validity of these type of trusts, which are ideal for keeping the name of the true owner out of public and private databases.   Click on TRUSTS here, or at the top of this page, to go to the Privacy Trust page.

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