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TRUMP UNIVERSITY WEALTH BUILDING 101

C and S corporations are the next choice. A corporation has a legal existence
separate and distinct from its owners (shareholders). Generally a corporation is
in existence perpetually until the owners decide to dissolve the corporation, or
legal action forces the corporation to dissolve. A corporation is a popular choice
because of the asset protection it affords; generally speaking, as a legal “person”
separate and distinct from its owners, any debts or liabilities belong only to the
corporation.
The next type of business entity we’ll discuss is the limited liability company ,
or LLC. An LLC is a hybrid between a partnership or sole proprietorship and
a corporation. Like owners of a general partnership or a sole proprietorship,

LLC owners report business profits or losses on their personal income tax
returns, because the LLC is not a separate taxable entity. Like a corporation,
however, any debts and obligations that owners incur are their own, separate
and distinct from the other owners of the LLC.
The final business entity we’ll discuss is the limited partnership , or LP.

You’ll recall from our earlier discussion on general partnerships that each
partner has the right to participate in the management of the partnership, and
is also personally liable for the debts and liabilities of the partnership. With a
limited partnership, however, the partners (except for general partner), do
not participate in the partnership’s day-to-day activities, and are only “at risk”
for their own investment in the partnership. A general partner controls the
partnership, but is personally responsible for debts and liabilities, in contrast
to a limited partner, who has no managerial control and is only personally lia-
ble for the amount of their investment.
Which entity is right for you will depend on several variables, such as
your marital status, your age, whether you have children, and whether you
own one, or several, businesses. Discuss your decision with your accountant
or attorney, so they can properly advise you on the legal and tax consequences
for each entity. To download your Asset Protection Quiz (Exhibit 20.1 ), visit
www.trumpuniversity.com/wealthbuilding101 .

Downloadable Exhibit 20.1 Asset Protection Quiz to Determine Vulnerabilities
in Your Personal Financial Plan*

Do you operate a business as a partnership ________ Yes ________ No
or sole proprietorship?
Do you own any rental properties in your name? ________ Yes ________ No

Do you expect your wealth to grow measurably ________ Yes ________ No
in the next fi ve years?

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