I live in California and I’m buying a little over $1,000,000 in duplex properties in Texas (first properties). My personal net worth is about $1,800,000. Should I get normal property insurance plus a 1-2 million dollar umbrella policy or set up an LLC? Getting conflicting advice from my advisors.
You’ll need a sit down with a qualified planner familiar with debtor/creditor law, BK law, corporate governance, tax and estate planning for both CA and TX to advise you properly. All of these areas interact with each other and affect each other based on your situation, which is something you shouldn’t discuss on a public site. You seem to be one of the very few people I have found on these boards that actually has a need for advanced planning and you should have done it correctly to make sure you can keep what you have in case something happens. The typical stuff you find online, including the stuff from online law firms, won’t help you against a determined creditor, especially since you live in CA.
It depends on what your goals are. Are you trying to leverage your money? I have millions of dollars worth of rental property in my own name with an umbrella policy because I can’t get the same kind of high LTV, lower interest gov’t insured mortgages in a corporation that I have gotten in my personal name.
IMHO, an LLC should never be a substitute for insurance. The amount of insurance you have on each property to include the umbrella policy should exceed your net worth.
Even if you have an LLC in place, you will still want the insurance.
Just my 2¢