If you own a business, consider limited liability companies (LLCs) to own the business and the business assets. Using LLCs protects your personal assets and insulates business asset liability.
Real Estate Business
Real estate is a hot asset, meaning that the potential for lawsuits is great. A tenant could fall in the laundry room; a delivery man could slip on ice; and guest could fall from a balcony.
To protect your assets, own each rental building in a separate limited liability company. For example, if you own 3 apartment buildings, own each in its own LLC.
If a tenant is building A is injured, only the equity in building A is at risk. The equity in buildings B and C are protected as are your personal assets such as your home, investment accounts, and cash.
The practice of medicine is a hot business, also meaning that the potential for lawsuits is great.
To protect your assets, own the expensive medical equipment, real estate, and practice in separate entities such as limited liability companies.
If a patient successfully sues in malpractice, he is likely to settle for your insurance coverage as the equipment and real estate are insulated in their own LLCs and your buy-sell agreement won’t allow a creditor to own any part of your practice.
This same concept works for other businesses and professional practices as well. If you own a retail shop, put the real estate, inventory, and business in separate LLCs. If you own a law firm or accounting practice, do the same. Limited liability companies isolate risk and protect your assets.
Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.