Llc set up and attorney Florida

[Claire Blary]

I  live in Florida, and am widowed. We had owned 4+ single family homes, which are rented out. I used the money from the life insurance policy to pay off the rentals. I have set up a trust and have an umbrella policy for several million.

I was wondering if I should put all property into 1 LLC or if I should put each property into an individual LLC? For liability protection

I have been working on completely separating all business and personal finances.

if I had several LLCs I'd need separate bank account and it seems complicated.

the other question, is do I need a lawyer to set up the LLCs? Or is legal zoom an option? 

legal zoom also has legal services for 450$ 6 months. It's obviously limited. I have talked to several lawyers and it's overwhelming. Any advice? 

also my CPA recommended I file taxes as a S Corp to be able to write off expenses and take a salary. Can anyone comment on that. Or if you have advice for who to use as lawyer.

thanks

[Thomas Rutkowski]

@Claire Blary

I personally don't think 4 properties in one LLC is a problem. So it really depends on your risk tolerance.

I won't comment on the tax and business structure issues, but you can easily set up an LLC online using Sunbiz.org here in FL. The articles of incorporation will just be boilerplate and you can always add your own operating agreement later. Putting the properties into a revocable trust would be another alternative to an LLC

[Claire Blary]

 Thomas Rutkowski,

thank you for the reply. There are 6 properties that would go in the LLC. I have been told a lot of different things by a lot of different people. One person said if you have a good umbrella policy then if you put all the property into 1 LLC it should be ok and other attorneys said each one should go into it's own LLC.

Would you need a lawyer to  help you figure out the details of the operating agreement? I had heard that putting the property into a revocable trust would provide a way for the property to go to family if I die, so that probate is avoided but it doesn't give protection if someone sues me. 

I had an attorney who helped me with the trust, but I am still in the process of trying to fund it and the attorney who was involved isn't responsive anymore/ is busy with other things.

Thanks for your input.

[Mike S.]

Entities are created to protect you against two types of liability:

Inside liability: something is happening within your entity (slip and fall from a visitor or tenant, mold health issue, ...).

Outside liability: something is happening in your personal life (you are at fault in a car crash with major injuries, ...)

Not all entities are created equal for liability protection. Most LLC will protect against inside liability. So if you put a real estate property into an LLC, if a tenant sue you and win, the maximum at risk is all that is within that LLC, but your own wealth outside this LLC or in other LLC will not be impacted. But if you put all your four properties into a single LLC, any event in any of them is risking all four

Outside liability protection however varies greatly by state. Florida has charging order protection for multi member LLC but not for single member LLC. So even with a single member LLC in Florida, if you are sued personally, all your assets in Florida LLC are at risk.

We have in Florida a great tool called Land Trust that offer inside liability protection (but not outside).

In your situation I would suggest that you open a Wyoming holding LCC (WY has charging order protection even for single member LLC). Each property will be placed in its own Florida Land Trust, the WY LLC being the beneficial owner of the trusts. You can be the trustee of the land trusts or create another WY or NM LLC as trustee if you want to get anonymity.

You will have one bank account for the WY LLC that will collect all rents.

Creating an LLC is easy, but you need to know what kind of LLC you want (single member/multi member, member managed/manager managed). You would also need a registered agent if you can't receive legal service during business hours or don't want to disclose you private address. The operating agreement on the other hand is extremely important as it will be the major piece that will maintain your liability protection. Legal zoom templates are highly inadequate for asset protection. I would recommend spending some money on an asset protection attorney to draft them.

To educate yourself on this topic, I strongly recommend you spend some time watching the excellent videos on Clint Coons Youtube Channel. After years of studying the field, I am more than 95% in agreement with his advice.

[Claire Blary]

Mike S. 

You gave me a lot of great information. I will look at the channel you recommended. Thank you!!!

[Tracie Balado]

@Mike S. - If my Nevada LLC's sole member is my family Trust, would it be protected from a potential charging order if I used that LLC to hold my Florida rental property?

[Mike S.]

Quote from @Tracie Balado:

@Mike S. - If my Nevada LLC's sole member is my family Trust, would it be protected from a potential charging order if I used that LLC to hold my Florida rental property?

I am not an attorney and I can't give you any legal advice. But my understanding as a layman is that Nevada has charging order as sole legal remedy, so if you are attacked personally, and if there is no veil piercing or fraudulent action on your part, the asset of your Nevada LLC should be protected from you.

However, if your property is in Florida, you will not be able to act in court as your Nevada LLC has no situs in Florida. If you use a Florida property manager, the later may act in your place, but it may be challenged as the Nevada LLC is the owner.
Also all the asset in your Nevada LLC are at risk if something happens in your Florida rental. You may want to use a Florida Land Trust that will protect your Nevada LLC from the property. A Florida LLC, owned by your Nevada LLC may also be used, or both.