How to Use the Legal Cloak of Invisibility to Protect Your Assets

In an increasingly public world where very little info is private, you can protect yourself by employing an anonymous trust or anonymous LLC.

A somewhat sinister-looking man wears a hooded black cloak.
(Image credit: Getty Images)

In the Harry Potter novels, the cloak of invisibility enabled Harry and his friends, Hermione Granger and Ron Weasley, to explore Hogwarts School of Witchcraft and Wizardry without being seen or detected. The real world offers a similar opportunity to avoid your identity from being disclosed in the public records of property and company ownership.

As we begin our story, a quick disclaimer: Asset protection is not dependent upon and does not involve “hiding assets.” If there is a judgment issued against you, you will be required to truthfully disclose all your assets under penalty of perjury. True asset protection is owning assets in a manner that provides greater protection from loss or third-party attack.

That said, we have many clients — lottery winners, celebrities and even business owners — seeking anonymity to protect their personal lives and assets. Increasingly, law enforcement officers seek anonymity to protect their places of residence and property holdings from being discovered or identified to the general public. 

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

The internet acts as an ever-watchful eye (similar to the Great Evil Eye of the Dark Lord in The Hobbit) that allows the curious to find a wealth of information about you that may include your home address and company or investment information. The internet provides the general public 24-hour access to a tremendous amount of our personal information. Many clients seek privacy and anonymity.

For example, if you own real estate, your name as the owner is disclosed in public title records (often with the county recorder’s office) or with the property tax collection agency. Public record information access for real property differs by state law and at the county level. In California, records can be searched at the county recorder’s office. The county property tax collector’s office also has public records on real property in California.

If you own property or your home through a revocable trust, then the trustee’s name and the trust name can be found in the public record. The trustee’s name is typically the name of the individual owner. The trust name itself offers references to the owner’s name(s).

Also, if you own your home or property in a limited liability company (LLC), partnership or corporation, then the company or corporate officers and owners are disclosed in the state records. This disclosure may be required in the state in which the company or business entity is formed or where the real property is located, or both states. This may be true even if the LLC is formed in a state that otherwise permits anonymous LLC formations (described below).

If you have an agreement to name a friend or relative to act or appear as an owner in the public records, how do you prevent that friend or relative from transferring the property without your consent? What if that friend or relative suffers a bankruptcy or a divorce, or is successfully sued, resulting in a judgment against him or her? All such events expose your property to risk of loss.

An Anonymous Trust Can Have a Nondescript Name

Two tools are available to provide greater privacy. First, an anonymous trust may be used with a nondescript trust name, such as part of the property address. For example, the 123 Park Place Trust. Note that the trust does not actually take title to property or assets. The trustee takes title on behalf of the trust. For example:

Draco Malfoy, Trustee of the
123 Park Place Trust

You can name an attorney or professional trustee as the trust in the deed. You can also obtain the trustee’s resignation after the deed is signed to ensure ease in making future transactions.

Note that trusts have seemingly endless alternatives for administration — the number and type of trustees, trustee authority and limitations, the distribution of trust income and principal, and the ability to revoke or modify the trust. These alternatives trigger different tax and legal consequences. We incorporate provisions to help protect the grantor or creator of the trust from inappropriate actions by the designated trustee. Careful planning is always required.

An Anonymous LLC Has Many Benefits

To help prevent an unlawful transfer by the trustee named in the deed, obtain a line of credit secured by the property or simply record a deed of trust against the property in favor of a company or LLC that you control.

The second tool to provide greater anonymity is the anonymous LLC. An anonymous LLC prevents the owner’s identity from being disclosed as a manager or as a member (owner).

LLCs are formed under state law. An LLC effectively has to register with the IRS if the LLC needs a tax identification number. Note that a tax identification number is typically not required if the LLC has only one member and has no employees. At this time, the states that currently permit the formation of anonymous LLCs are Delaware, Nevada, New Mexico and Wyoming (those states are collectively referred to as the Anonymous LLC States). Each of these states provides a process to form an anonymous LLC.

However, many states will require an LLC registration in that state if a resident of that state acts as the manager. This is also true for an LLC formed in and pursuant to the laws of an Anonymous LLC State. California is one such state. California’s theory is that the manager conducts the business of the LLC, and if he or she is a California resident, then the LLC is conducting business in California. As a result, California registration and disclosure are required.

Careful planning with the use of multiple LLCs can avoid disclosure even in California or states with similar laws. As indicated above, record a deed of trust in favor of a company or LLC you own or control. The deed of trust may create at least the appearance of a stronger asset protection.

Some of the benefits of the anonymous LLC include:

  • Registering as an anonymous LLC helps prevent potentially dangerous individuals, such as stalkers and criminals, from having access to your information to use in a malicious or harassing manner. This is often a concern for law enforcement officers.
  • An anonymous LLC owner can conduct business with some protection from negative fallout that may be generated from the business operations.
  • An anonymous LLC receives the same benefits as those provided to a regular LLC. Benefits include tax advantages, flexibility, survivability and limited liability or asset protection.
  • LLCs are flexible by allowing partners to join companies at different stages.
  • LLCs can choose to identify a manager or officer titles such as president, secretary and president for the oversight and operation of a business.

Some tips to consider whenever you do business as an LLC:

  • Always use the full LLC name on all agreements with third parties.
  • Never sign just your name, use a formal signature block identifying your full company name and your title as manager (or officer such as president, secretary or The Rear Window Company treasurer). For example:
    a Nevada limited liability company

    By: _______________________
    Alfred Hitchcock
    Its Manager
  • While you can use a logo on advertising, always use the full company name and your title on all business cards. If your business card identifies you as the “owner” without a formal title or without the company name, a third party can seek to avoid the liability protection of the LLC because they did not know they were dealing with the LLC. This may be a basis for your personal liability for company debts.
  • Adequately capitalize the company to carry out its intended business activities, including the anticipated liabilities of operation.
  • Keep company financial affairs separate and apart from your personal finances. Do not commingle financial affairs, as that is also a basis for a third-party attack to get access to your financial affairs.
  • Most states require that identities be disclosed not only for the members and managers associated with the LLC, but also for the registered agent.

Finally, this article does not address the requirements of the Corporate Transparency Act, which requires certain entities to file a financial ownership information report with the U.S. Treasury Department’s Financial Crimes Enforcement Network, better known as FinCEN. Congress only provided the final rules for this legislation as of Sept. 24, 2022, about who must file and the information to be reported. The reporting requirements will begin in January 2024. 

This type of reporting is intended for large companies already required to disclose beneficial ownership information. The act should not affect this type of planning for smaller, closely held companies. The act contains 23 exemptions and is beyond the scope of this article. That said, this is a complicated world. There is no substitute for sound legal advice.

While this legal cloak of invisibility will provide much greater privacy in an increasingly public world, a court may require disclosure of your personal information for an appropriate reason in the event of formal litigation.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

John M. Goralka
Founder, The Goralka Law Firm

Founder of The Goralka Law Firm, John M. Goralka assists business owners, real estate owners and successful families to achieve their enlightened dreams by better protecting their assets, minimizing income and estate tax and resolving messes and transitions to preserve, protect and enhance their legacy. John is one of few California attorneys certified as a Specialist by the State Bar of California Board of Legal Specialization in both Taxation and Estate Planning, Trust and Probate.