One of the most frequently asked questions I get as a real estate and estate planning attorney is: Should I transfer my investment rental property into a limited liability company (LLC)? The answer is very simple. YES! Why you ask? If you own a rental property in your individual name and someone is seriously injured on the property, many of your personal assets are exposed. In other words, a lot of what you have worked for your entire life could be taken away in an instant if you are sued in your individual name and found liable. By having the rental property in an LLC, your personal assets are protected.
But I have an insurance policy on my property – doesn’t that protect me? While many injuries sustained by your tenants and their guests would be completely covered by your insurance policy, the monetary damages resulting from a very serious injury or death may exceed the value of your policy. In those unique cases, while the insurance proceeds of a policy will pay some of the judgment, the remaining balance just be paid by you.
Generally, transferring an investment property is not expensive and you essentially do the same things you do now, except the property, lease and insurance are transferred from you into your LLC (you usually do not even need to file a separate corporate tax return). If you would like to discuss (at no cost) the advantages and disadvantages of holding your rental property in a LLC, please contact me at (912) 484-1996 or email@example.com