Holding Companies

Does anyone know how a holding company works? I have heard a little about them but I'm not sure on how they exactly work. 

Thanks for the help.

you own company A.

Company A owns (“holds”) companies B,C,D,E.

What is the purpose? I’ve heard of Real Estate holding companies. In that case how would it work?

purpose? consolidated management of separate entities. Separate entities for various asset protection and tax strategies. Real estate works the same way.

Here’s a quick question:

       If company D gets sued, how (if at all) can that affect company A (the holding company)? From my understanding the ideal structure for real estate would be to institute a trust with the LLC as trustee (company D) and have company D under the umbrella of companies managed by company A. IF someone actually took the time, is it possible to sue company A (which might in turn affect the assets of company A,B,C,D due to same management) because of the actions or negligence of company D.


that was my head exploding.

I think the answer to your question is yes. maybe.

But you don’t want company A managing BC&D. As manager, A CAN be sued and that potentially exposes the others. A is simply a “consolidation” entity for taxation and control.

You want a different co to be “manager”; if it gets sued it has no assets, owns nothing and is unlrelated to anything else. The idea is to separate risk (management, landlording, people) from the assets.