By Brad Beckett on May 13, 2026
Jeff Watson says whenever I write about asset protection, I know I will receive responses and comments, but here goes. Asset protection in the real estate space is a lot like belly buttons – everyone has one, but they all vary. What I’m going to share with you is based on over 30 years of experience as a real estate investor and over 34 years as a trial attorney. Here is what I’m seeing now that is giving me pause. Click here to read more.
Every flipped property should be in its own separate, distinct Grantor Revocable Title Holding Trust (often called a “Land Trust”). “Grantor” means the trust is controlled by the person who created it. “Revocable” means the grantor can amend, alter or revoke the trust. “Title holding” means the purpose of the trust is to hold title to a piece of real estate. “Trust” means there is a trustee (person or entity) listed on the deed and on public record as the owner of the property. The Trustee of that trust should be an independent, third-party trustee service or company, not your best friend Billy Bob or Sally.
A more advanced strategy is to use a combination of a Grantor Revocable Title Holding Trust which is owned by a single-member LLC, and then that single-member LLC is owned by a multiple-member, long-term LLC. Both the trust and the single-member LLC are disregarded entities for tax purposes in the eyes of the IRS.
Now, for the more controversial part. Open up a bank (savings) account for that trust, and open a bank account for the single-member, disregarded LLC. Do this so that in the event you go to closing and the title company doesn’t know any better and makes the seller’s proceeds payable to the trust, you then have an account in which to deposit them. From that account, the Trustee can then direct the funds to go to the single-member LLC, from which the funds can then be moved to the multiple-member LLC. I realize that might take a couple of extra days, but it’s important so that if someone needs you to prove where and how the money flowed, you can show you followed the proper procedures.
Here is a professional tidbit that no one else will probably share with you. When you sell a flip, disclose on either the seller’s disclosure form or in the purchase and sale agreement that the subject property is the sole asset of the seller.
You are probably saying, “Jeff, why are we doing all these things?” The answer is because I’m noticing an alarming increase in the number of times that fix-and-flippers are having their properties tied up in litigation while they are still working on them because something went wrong at property #1, so properties #2, #3 and #4 are now encumbered because they are all in the same “flipping LLC”. An advantage of holding title to property in a trust is that if anything happens at that property, it is limited to just that property, and the problem does not spread to any other properties owned by the same investor.
For example, it’s very frustrating when a year after a property has been sold, the buyer reaches out to a lawyer and complains about an alleged defect or condition in the property and wants to be compensated. By implementing the strategy of having each property in its own trust with a trustee service as the trustee, the trustee will be able to clearly demonstrate that any lawsuit involving that property is limited to just that property.
A key element in this strategy is that after you sell the property, the trust is dissolved, and a few weeks later, the single-member LLC is dissolved in conjuction with how the money flows. This then leaves nobody to sue because the trust will be dissolved on public record by virtue of filing a Notice of Dissolution after the property has been conveyed out of the trust by the Trustee, and a month or so later the LLC will be dissolved on the Secretary of State’s website because it’s purpose as a blocker and shield is now done.
For those of you who are penny-pinching tightwads, pay careful attention. If you want to repeat and use that single-member blocker LLC, do so at your own peril. The cost of an LLC filing fee is a small expense to give yourself a whole lot more peace of mind.
Obviously, I’m advocating that you use this strategy in conjunction with good, local legal advice and honest, honorable, high-integrity business practices where you make sure the property is fully and adequately rennovated, and that you do not hide or conceal any defects but instead resolve them or point them out in writing.
Another advantage of using a trust is that it gives a great deal of anonymity and privacy so that the true beneficial owners of the property, the ones who are receiving the net operating income (cash flow) and are benefitting from the amortization and appreciation, are not discoverable on public record. Anonymity and privacy are precious things and can go a long way in protecting and preserving assets.
While a title holding trust provides anonymity and privacy, a trust by itself provides little to no real asset protection characteristics. A trust does not have the statutory protections that a limited liability company has. The sole purpose of using an LLC is to do just what its name says – limit liability to just that one asset and keep the rest of the grantor/beneficiary assets separate from any potential threats.
Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. Read more of his viewpoints at WatsonInvested.com.
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