If you own a business, rental property or real estate investments, it is wise to protect your investment and your other property with corporations or limited liability companies (LLC’s).
These are legal and prudent ways to shield personal assets from liabilities or debts which might be incurred by your business or investment properties.
Unless you have tax or accounting issues which dictate otherwise, an LLC is normally better than a corporation for most small businesses and real estate investments. As with a corporation, the assets of the individual owners will be shielded from lawsuits or creditors’ claims against the business or investment entity, but even greater protection is obtained with an LLC because creditors of an LLC owner cannot collect from the LLC’s assets unless they are distributed to the owner.
In addition, the rights and obligations of the owners will be spelled out in an operating agreement, and no stock certificates and other corporate formalities are necessary.
When there are multiple investment properties, such as rental houses, it is a good idea to have a separate LLC for each one or to have a Series LLC which is a single limited liability company with multiple “series,” each of which operates like its own separate LLC.
Either way, each distinct investment is protected from the liability of each other investment, and the owners are individually protected as well. If you want to achieve an additional layer of protection, you can have an additional LLC which becomes the owner-member of each investment LLC.
Of course, asset protection also involves good liability insurance on the investment properties as well as on your individual vehicles and home, plus a personal liability umbrella insurance policy.
An experienced attorney and a good insurance agent can provide the protection you need.
Bruce L. Woodbury is an attorney with the law firm of Jolley Urga Wirth Woodbury & Standish. The firm has offices in Boulder City and Las Vegas. To contact Bruce, call him at 293-3674 or 699-7500, or visit his website at www.juwws.com.