Paul Sternberg Addresses Effective Commercial Real Estate Ownership
Paul Sternberg, an accomplished Realtor is here to share his best-kept secrets. An important consideration for owners is creating a hub & spoke structure. According to Houston-based Paul Sternberg, he reveals the benefits of this process. Establishing a ‘hub and spoke’ structure keeps property owners insulated from personal liability. This practice boasts numerous other benefits.
“By forming a so-called ‘hub and spoke’ entity LLC—or limited liability corporation—structure, commercial property investors, further to protection from personal liability, are also able to streamline ownership requirements and reduce administrative costs,” suggests Sternberg.
“Furthermore,” he continues, “‘hub and spoke’ structuring can also provide significant estate tax savings should a property owner pass away.”
Sternberg goes on to explain that the process starts with the creation of an initially limited liability corporation, or LLC. The resulting LLC then serves as the ‘hub’ through which an owner, or owners, may invest in multiple pieces of the commercial real estate.
Each investment property then has its own LLC. Here is where you form the ‘spokes,’ according to Paul Sternberg. “The hub corporation owns 100% of each spoke LLC with income from each ‘spoke”, says Paul Sternberg.
Paul Sternberg Explores ‘Hub and Spoke’ Ownership Structures
Income flows through the ‘hub’ which means no filing for taxes with each ‘spoke’. Streamlining ownership requirements as pointed out by Sternberg.
Structuring ownership this way allows each ‘spoke’ to operate separately in means of liability.
Planning your strategy as said by Paul Sternberg, may be used to great effect in estate planning. Passing the ‘hub’ to an offspring in the case of a sudden death is typically the case. For example, he suggests or placed it within a trust for these or other individuals.
“Where an interest is gifted, steps may be taken to remove any interest in the real estate as well as future appreciation, ” Sternberg points out.
DO NOT RELY ON THIS ARTICLE FOR LEGAL ADVICE
Attorney Sternberg, of Houston, Texas, states information above is not legal advice. However, it is provided as general information or guidelines. The information contained within may not be suitable for all individuals or situations. Creating relationships with provisions between attorney and client is rare. Nor does the aforementioned make any warranties, whether expressed or implied, of any kind. To discuss a particular situation in more detail, please contact attorney Paul Sternberg for a consultation by calling 713-392-4322.