Using holding and operating LLC to protect your investments?

1 Reply

I have a number of rentals in multiple states.  Currently, all of them are held in my name.  I have landlord insurance on all properties but now i'm trying to set up proper legal entities to protect my assets further.  

I've looked through the forum to see the advices on LLC (single vs. multiple). I'm drawing to the idea of separate holding and operating llc. I came across this article

http://www.bizfilings.com/toolkit/sbg/run-a-busine...

which made this setup very compelling to me.  Excerpts below

  • "an operating entity that has possession of the assets, but does not own the assets (unless they are encumbered in favor of the holding entity or owner), and
  • a holding entity that actually owns the business's assets.

Using holding and operating companies is an asset protection planning strategy that helps to limit liability in your business structure. As noted earlier, the ideal business structure consists of an operating entity that does not own any vulnerable assets and a holding entity that actually owns the business's assets. With this structure, the small business owner can eliminate (or, at the very least, substantially limit) liability for both business debts and personal debts."

This seems to be easier to maintain and operate than multiple llc, and offers additional protection.  

Anyone has experience with this?  What are the gotchas?  

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