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Updated over 1 year ago on . Most recent reply

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Jarod Backens
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Another Asset Protection Post??

Jarod Backens
Posted

Hi Team! Hope everyone enjoyed the holidays.

Okay, this has been covered to some extent at length, but it’s been difficult to decipher the exact information I’m looking for. I hope this can be helpful for other people in similar positions as well.

I have a (small) handful of rental properties and a primary residence. Right now they’re all covered by liability insurance and an umbrella policy. There is not substantial equity in the properties since I’ve owned all < 4 years.

However, for my own peace of mind, I’m ready to take the next step in asset protection. I don’t need a complicated strategy. My net worth is not astronomical and my W2 is not risky. But I would be willing to spend some money to protect my spouse and family ~in case~ anything were to happen with one of the properties.

Okay, that's the background. I think what makes the most sense is setting up an LLC and just putting the properties in there (minus my primary residence) to keep this separate. Right..? Or are LLCs futile these days? I also want to be in a place where I can refinance any property *relatively* easily.

I know there are a multitude of different angles here. But I’m interested in a simple next step from liability insurance. If someone has a recommendation for an attorney or firm they trust, who can help, that would be great. Easier is better, and I’m willing to spend a bit for my peace of mind.

Plot twist - I am based in California, but our investment properties are all out of state.

Thanks in advance, and appreciate you reading! Cheers!

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John Clark#3 Market Trends & Data Contributor
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Quote from @Jarod Backens:

Hi Team! Hope everyone enjoyed the holidays.

Okay, this has been covered to some extent at length, but it’s been difficult to decipher the exact information I’m looking for. I hope this can be helpful for other people in similar positions as well.

I have a (small) handful of rental properties and a primary residence. Right now they’re all covered by liability insurance and an umbrella policy. There is not substantial equity in the properties since I’ve owned all < 4 years.

However, for my own peace of mind, I’m ready to take the next step in asset protection. I don’t need a complicated strategy. My net worth is not astronomical and my W2 is not risky. But I would be willing to spend some money to protect my spouse and family ~in case~ anything were to happen with one of the properties.

Okay, that's the background. I think what makes the most sense is setting up an LLC and just putting the properties in there (minus my primary residence) to keep this separate. Right..? Or are LLCs futile these days? I also want to be in a place where I can refinance any property *relatively* easily.

I know there are a multitude of different angles here. But I’m interested in a simple next step from liability insurance. If someone has a recommendation for an attorney or firm they trust, who can help, that would be great. Easier is better, and I’m willing to spend a bit for my peace of mind.

Plot twist - I am based in California, but our investment properties are all out of state.

Thanks in advance, and appreciate you reading! Cheers!

First of all, you may not have insurance coverage. Most personal AND umbrella policies do NOT cover  business pursuits. Make sure all your policies explicitly say they cover business pursuits. 

Single owner LLCs typically give no protection. Both the owner ( LLC) and the person who made the error (by commission or omission) are liable, so unless you are part of something bigger, you will always be liable. Even with a property manager, your corporate veils will be pierced, probably.

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