Just got accepted offers on 2 properties, and awaiting word on the 3rd. Eight rental units.
How to hold title? I am a single member LLC. Now I have been reading all these posts advising exactly against that entity.
The lawyer that set up the LLC didn’t make the pitfalls clear to us. We bought all our properties in our names as lenders wouldn’t agree to the LLC.
As the business grew, the accountant and another lawyer recommended deeding everything to the LLC, but Countrywide and other lenders wouldn’t do it I heard. So everything is in our names, not in the LLC.
Now we are getting a blanket loan from local bank and could probably have deeds in name of LLC if necessary.
Instead we have 2 million $ personal liability policy plus 2million $ business liability policy (expensive but necessary). And all properties under our names.
Would it make sense now to take title in name of LLC or just carry on. I feel we are a pretty big potential lawsuit target because we deal with so many short-term middle-to-upscale tenants.
Recently, we almost had the proverbial worst case situation…a foreign physician got a bad shock when splashing his hand around in his washing machine to test the water temperature. (Worst case: Electrocuted Boston Brain Surgeon). Immediately I said, “Don’t use the machine!” and we sent out our SWAT electrician. I learned a new term: “reverse polarity”.
But that gets me back to how to hold title? Does it matter now? When I can’t fix the already purchased properties?
My guess is he either didn’t know or didn’t care. Gurus have done a great job scaring the public and many under-employed attorneys go for the easy buck, even though they have no business advising clients in this area. The best part (for them at least) is that you don’t know you have crap until your plan crumbles. SMLLCs have a place. They just aren’t that great when used alone.
It would be a good thing to get them out of your name, especially if you have another business separate from real estate. The best way is to get the mortgage in the name of the LLC.
That’s enough to pay most judgments. Most plaintiff’s attorney will settle for the insurance limits because it’s quick money.
That is a question for a qualified professional who has reviewed your situation.
It’s never to late to do it right. Putting it off or waiting until something happens limits your options. If that surgeon was seriously injured, your liability starts that day, not the day you are sued. Another thing to consider is that transferring assets in attempt to protect them from lawsuits is illegal and undone by the courts. Most important, there is no protection from yourself. If you do something personally that causes an injury, you are liable. No entity will protect your personal assets. If you take a major role in your business, you should not hold personal assets in your own name and please don’t use a family LLC or limited partnership. Those are business entities for conducting business. The IRS and courts will not respect them if they hold your personal home or vehicle. Any attorney who suggests otherwise is incompetent.
The best advice is have a local attorney you trust and your CPA retain one of the national planners to draft a plan for you.
I do do my own property management in that I have staff but I oversee and sign everything. So yes, I am liable , and also liable for my own errors.
Yes, there are assets of retirement fund, residences, spouses’s salary of 100+K. There is a newly formed consulting business (LLC) but it hasn’t earned anything yet.
All income so far has been sheltered from taxation in that business has grown so rapidly with purchases, rehab and depreciation shelter. Everything goes on the same tax return…we just didn’t know it would grow so quickly and had no business plan in place.
We would never try to hide assets or go offshore or do anything squirrelly, we just want to be sound.
So the plan will be to put new mortgage and property titles in name of LLC. Put other transferable properties in LLC. Keep good insurance. Keep personal residences, cars, funds out of LLC as it is business only.
Get advice about setting up family trust. Put LLC into trust. Shelter personal assets by setting up ERISA account?
Now I will research ERISA accounts. Drawing out equity as asset protection sounds really extreme to me.
Another question: my SMLLC that was set up really doesn’t make sense since all other assets are blended with my spouse. Keep it a SMLLC?