Some of my clients need not only estate planning but business planning as well. A lot of business planning is resolved by the use of LLC’s, or limited liability companies, whereby they are formed and then hold investment properties or rental properties as a way to protect other assets.
The idea of the LLC is to shield the individual and/or other LLCs and entities and their assets from any lawsuit arising from and against a property. For example, let’s say you own a rental property and your tenant slips and falls on the property and is severely injured. He or she decides to sue you for the damages (medical bills, lost wages, pain and suffering). If that property is in your individual name, the tenant would be allowed to sue you in your own name and any property that you own in your own name would be subject to his claims. But, if the property was owned by an LLC, the tenant will have to sue the LLC and only the LLC’s property would be subject to his claims. And, if the LLC’s only asset is the rental property, the tenant’s recovery will be limited to the property, and any lawsuit will not threaten all of your other assets. Be mindful, though, that if the tenant was occupying the property prior to the property’s transfer to the LLC, he would likely still have claims against the owner, individually.
An LLC can be a very valuable tool when you own investment properties. LLCs allow you to protect assets and that is the primary goal of professional estate planning. If you would like to look into your needs when it comes to Dallas Estate Planning and whether business planning may also be helpful to you; call me at 214.220.2130 for more information or to set up a free consultation.