LLC QA

Published: Sat, 04/05/14

Hi
 
Some of my students recently wrote me with some insightful questions.  I thought you might appreciate my answers. I have included the questions from one of them below. The answer to other questions--about whether a corporation should be the holding company (daddy corporation) for all your real estate investment LLCs--can be found on our llcwizard.com blog here. (Hint: the short answer is NO.)

Q: As a single member LLC, where will I NOT get charging order protection?

A:  Single member LLCs are only an issue in Florida, Utah and Colorado.  Anywhere else they are fine and get full charging order protection. 

Q: I'm worried that my building insurance may triple...

A:  When you put the property into the LLC, you need to check with the insurance company.  Mine let me put the properties owned by my wife and me into the new policy without an increase in cost (then named the LLC as an insured). The property my son and I own had to get commercial insurance, so we didn't put it in the LLC.  Check on the rates before you form the LLC and put the property in.

Q: Am I now at risk of losing coverage in auto accidents?

A:  I assume you have coverage for your auto through your personal policy.  Just be careful how you answer questions if you are in an accident.  Only use your auto for personal, and write off mileage at the end of the year.  Do not have a company own your auto under most circumstances. 

Q: Can your firm help me avoid these issues?

A:  These are issues you will have to address with with your insurance carrier.  Ask your insurance agent all the questions. We can, however, help you with the LLC setup issues. Our LLC Wizard System includes access to our Attorney Hotline. 

Q: By my forming LLCs, have I just hung myself? 

A:  No. LLCs are good, but you have to learn the pitfalls in the process.
 

If you are really worried about LLC ownership, structure, and maintenance, check out my  LLC Wizard course. It includes six hours of audio instructions (indexed of course) with all the supporting hard copy documents and everything on a computer CD. Also, if you would like to ask your own questions in person, we'll be covering LLCs in depth at our June 9 and 10 Money Making and Asset Protection Boot Camp.   The seminar includes a scheduled one-on-one appointment with me and my associates for advice on your particular situation. You don't want to miss that.  Sign up now or call 800-806-1998.

Again, check out the additional Q&A on our llcwizard.com blog here.  I would love to see your comments.   Join in the conversation!

 

Lee Phillips
LegaLees Corp.