Can an LLC Hold Precious Metals?
Asset protection in today’s litigious society is of vital importance. Individually held precious metals could be subject to loss if sued; when held by an IRA however, these precious assets will remain protected from litigation loss.
Some providers of self-directed IRAs suggest creating an LLC company and purchasing precious metals through it, before storing them at home – an approach disapproved by a US Tax Court ruling.
Asset protection refers to the process of safeguarding personal and business assets against creditors’ claims. This may involve using legal strategies like creating limited liability companies (LLC), trusts, offshore bank accounts, and tenancies by entirety to secure them.
LLCs may own precious metals owned by an IRA as long as the coins or bars purchased are bullion coins or bars valued by weight rather than collectible value. Bullion must come from an approved refiner and be stored at an IRA-approved depository facility.
Many investors wonder the best way to store precious metals in an IRA. Though there are multiple methods available, LLC is often the most advantageous. An LLC creates a legal entity which protects owners’ assets from personal liability while simultaneously making management and transfer easier – this makes an LLC an effective way of holding precious metals IRA assets. A knowledgeable business formation attorney can help select the appropriate entity.
Before the McNulty case ruling, most IRA clients who purchased precious metals using their self-directed IRA typically purchased directly through a dealer before having them shipped directly to their depository of choice – using what many consider an obscure loophole in IRS code as justification to self-store metals themselves.
Legality aside, however, having your assets held within an IRA means that any judgment creditor could come after your precious metals and IRA assets if you ever find yourself sued in any capacity. Once they get past that hurdle they must fight through an LLC in order to access funds distributed.
An additional option for investing indirectly through an IRA-owned single-member LLC could save on transaction fees while offering similar tax benefits as holding metal directly (except that gains may be subject to flow through income taxation). Unfortunately, however, this strategy will reduce liquidity as sales will need to take place to convert to cash.
An LLC often has an established process for making distributions. To stay compliant with tax authorities, members should keep records and documentation regarding each profit distribution so they can show exactly how much was given out if capital gains taxes become due.
An LLC must possess invoices of purchases of precious metals and evidence that they were delivered to a depository. Furthermore, an operating agreement governing how many members or managers must agree before any distribution can take place must also be on hand.
Wyoming LLCs can be an excellent way of protecting assets when holding precious metals. When held under personal name and sued, judgment creditors could take possession of physical assets like gold, silver and platinum coins directly. With an LLC containing IRS approved precious metals however, any judgment creditor would first need to gain entry through it before accessing your valuable metals directly.
Chain of Title
A chain of title is a record that documents the ownership history for real estate or personal property. It traces ownership transfers via records kept with a central authority.
Maintaining rigorous and accurate title records is vitally important for many reasons, including property disputes between individuals as well as strain on government agencies and local municipalities to provide essential services to their constituents. Accurate records also serve to protect tax liability as ownership entails socioeconomic status that requires them to contribute their fair share to society as a whole.
Precious metals require a clean chain of title to avoid legal claims against your assets in the future, which is why it is preferable to purchase your precious metals through an LLC registered and authorized to conduct business in your home state.
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