Michael Ioane

Summary Guide Article

Guide: Ownership Models

This guide provides a practical reference for evaluating and selecting ownership models across asset categories and planning objectives. The frameworks here reflect Michael Ioane’s approach to ownership structure design as an integrated discipline that serves protection, tax, estate, and succession objectives simultaneously.

Ownership Model Selection Framework

Select the appropriate ownership model for each asset category using the following framework:

• Direct personal ownership: appropriate for assets that are fully protected by statutory exemptions, that do not generate independent liability exposure, and that do not require structural planning for estate or tax purposes.
• Single-entity indirect ownership: appropriate for business assets that generate operational liability exposure and require separation from personal assets; for rental or commercial real property that requires operational management; and for investment assets whose value warrants the administrative cost of entity maintenance.
• Two-layer holding and operating structure: appropriate for businesses with significant asset value that need to be separated from operational liability; for multiple assets of different types that each warrant independent-entity treatment; and for business owners whose risk profile makes single-layer protection inadequate.
• Trust ownership of entity interests: appropriate for business owners who want both creditor protection for the ownership interest itself and estate planning benefits; for assets intended to pass to the next generation in a tax-efficient manner; and for business owners in jurisdictions with strong domestic asset protection trust statutes.
• Multi-layer geographic structure: appropriate for business owners with substantial assets, elevated risk profiles, and the administrative capacity to maintain multiple entities in multiple jurisdictions with genuine independence.

Ownership Planning by Asset Category

Apply the following ownership planning priorities to each major asset category:

• Operating business interests: hold through a properly formed and maintained entity with adequate capitalization; separate operational liability from asset value through holding and operating structure where warranted
• Commercial real property: hold through a single-purpose LLC that isolates the property’s liability from other assets; consider geographic jurisdiction for entity formation
• Personal residence: maximize applicable homestead exemption; consider whether additional protection through trust or entity ownership is warranted given the jurisdiction’s exemption limits
• Investment accounts and financial assets: evaluate statutory exemption coverage; consider trust ownership for assets that exceed exemption limits and warrant the administrative investment
• Intellectual property: hold through a dedicated IP holding entity that licenses use to the operating entity; register all registrable IP before any ownership transfer
• Retirement accounts: maximize contributions to ERISA-qualified accounts, which provide the strongest statutory exemption protection

Ownership Structure Maintenance Requirements

Maintain each ownership structure through the following ongoing practices:

• Current governing documents: review and update annually or whenever a significant change in ownership, management, or asset composition occurs
• Consistent governance records: document significant decisions through written resolutions or meeting minutes; maintain records consistently over the full life of the structure
• Financial separation: maintain dedicated accounts for each entity; document all intercompany transactions correctly
• Arm’s-length intercompany agreements: maintain written lease, license, and service agreements between related entities at documented market rates
• Succession mechanisms: confirm that documented succession provisions for all governance roles are current and reflect the current intentions of the owner
• Annual review: conduct an annual review of all ownership structures against the current exposure profile, tax landscape, and estate planning objectives to identify any adjustments required

Ownership Structure Red Flags

Identify the following red flags that indicate an existing ownership structure requires immediate attention:

• An asset that generates significant liability exposure is held directly without any structural protection
• An entity structure has not been maintained with consistent governance records since formation
• Personal and entity finances have been commingled in the banking or accounting records
• The governing documents of an entity or trust do not accurately describe the current ownership or management arrangement
• A significant asset transfer has occurred within the applicable fraudulent transfer look-back period without contemporaneous documentation of legitimate purpose
• No succession mechanism is documented for the primary governance actor in any entity or trust

The ownership model that delivers the most value is not the most complex one. It is the one that is correctly calibrated to the owner’s specific protection, tax, and succession objectives and consistently maintained over time.

The information in this article reflects general structural principles and practical observations from consulting experience and is provided for educational purposes only. It should not be interpreted as individualized legal or tax advice.

Michael Ioane | MichaelIoane.com