Co-mingling funds: do's and dont's

[Guy Yoes]

I set up a parent LLC (not a series) for my properties (each have a LLC). I have a separate acct for each door. Each account has a checking and savings. the savings is for deposit escrow. If I move my rental income to the parent LLC is that considering co-mingling?

My parent LLC is set up as a management company and I am using it as the owner of the rental properties. I an thinking that using the parent to pay the bills, taxes, insurance, etc will give me another level of distance in case of a lawsuit.

I am listed as manager of all the LLC's and will pay myself from funds transferred to the parent. This will allow me to keep only a small amount of funds in the child LLC's .

Am I piercing the veil with this process? Is there a better way to do this?

[Michael Plaks]

@Guy Yoes

Your structure could be an overkill, but it's not my department. I'm not an attorney, so I cannot comment on the legal aspects. 

What I can comment on is the operational side. Think about an independent mgmt company that services multiple investors, including you. Clearly, they would not be creating a separate bank account for every investor customer. They would use one operational account, but they would keep track of each transaction (both income and expenses) and link them to a specific customer. They can then produce reports per customer.

Every month, they would settle with customers, either sending them the excess cash flow or receiving money if shortage.

Model your setup after this, and you should be fine.