New LLC for Asset Protection

[lovethyneighbor]

I live in Georgia. Needing some input/advice on asset protection. I'm thinking of opening a new LLC in wyoming and transfering my assets to that LLC. My assets currently are the home I'm living in, a rental property, a small office building (basically a house), and 3 cars. The office is rented to my small business (it's in my name, not business). Everything is in my name currently, and everything is paid off.

I've worked very hard to get where I am, and due to a recent health problem, I'm not able to work as hard anymore. So I must protect what I've worked for already!

Thanks for your time

 

[tranquility]

Think insurance over entity protection. At the very least, putting all your eggs in the same basket will not prevent any risk. Some people might put the rental properties together in an entity to prevent "out" risk.

 

[Zigner]

Think insurance over entity protection. At the very least, putting all your eggs in the same basket will not prevent any risk. Some people might put the rental properties together in an entity to prevent "out" risk.

I suspect the OP is trying to protect his assets from creditors, not lawsuits.

 

[tranquility]

I suspect the OP is trying to protect his assets from creditors, not lawsuits.

Possibly, but "in" risk is always a problem. The creditors can always get at what the member can get. It just might take a little longer. (Charging order, foreclose ownership interest, dissolve LLC)

 

[lovethyneighbor]

1) I see. Insurance is something I will look into. What is this type of insurance called?

2) Trying to protect from creditors/lawsuits/divorce.

3) If I move the rental properties to an LLC, what happens when I sell them? I personally paid them off, so I don't want to pay taxes when the income comes to me from the LLC...

 

[tranquility]

1) I see. Insurance is something I will look into. What is this type of insurance called?

You insure risk. You don't insure against creditors.

2) Trying to protect from creditors/lawsuits/divorce.

All you can do is make it harder to get what you have a right to. If you are afraid of lawsuits that stem from the rental properties, you can protect those creditors from going outside of the LLC to collect from your other assets. (Absent piercing arguments.)

3) If I move the rental properties to an LLC, what happens when I sell them? I personally paid them off, so I don't want to pay taxes when the income comes to me from the LLC...

A single member LLC will be considered a disregarded entity for taxation. The tax issues related to a sale will be the same.

 

[latigo]

I live in Georgia. Needing some input/advice on asset protection. I'm thinking of opening a new LLC in wyoming and transfering my assets to that LLC. My assets currently are the home I'm living in, a rental property, a small office building (basically a house), and 3 cars. The office is rented to my small business (it's in my name, not business). Everything is in my name currently, and everything is paid off.

I've worked very hard to get where I am, and due to a recent health problem, I'm not able to work as hard anymore. So I must protect what I've worked for already!

Thanks for your time

The only protection that could be afforded with such an entity would be personal liability for debts incurred by the entity. Not your personal obligations.

And if you don't treat the LLC as an entirely separate entity but merely as a front for your personal financial affairs (an alter ego), then both your personal assets and that of the LLC could be on the hook for both company and personal debts. And you would be particularly at risk in that regard due to you being the sole member and the nature of the assets.

Personally, I think it is a dumb idea.

 

[quincy]

Here is a link to LLC Protection for Members' Personal Debt in Georgia, from NOLO: https://www.nolo.com/legal-encyclopedia/llc-protection-members-personal-debt-georgia.html

Whenever anyone is starting, or thinking of starting, a business, the smartest first steps to take are to a business law professional. Although many do not want to invest their start-up money in this way, it is a wise investment and the best way to protect your business and your assets.

I recommend you sit down with a professional in your area to go over your wants, needs and legal concerns.

 

[lovethyneighbor]

1) I'm all ears guys! No advice is wasted, so thank you for your time!! Soaking in all of the advice/opinions

2) I do believe that insurance is a great protection. I've emailed my insurance agent for a quote on a personal umbrella policy. I believe that's what "tranquility" was suggesting

3) Based on everyone's advice, I'm starting to think the LLC in Wyoming would be a good idea to isolate my risk from the rental properties. Question is, should I have a separate LLC for each? Or one for both? How would it work if something happened to me? Would I need to adjust my will so my wife will get these? Or is that part of the operating agreement / articles of organization?

 

[quincy]

1) I'm all ears guys! No advice is wasted, so thank you for your time!! Soaking in all of the advice/opinions

2) I do believe that insurance is a great protection. I've emailed my insurance agent for a quote on a personal umbrella policy. I believe that's what "tranquility" was suggesting

3) Based on everyone's advice, I'm starting to think the LLC in Wyoming would be a good idea to isolate my risk from the rental properties. Question is, should I have a separate LLC for each? Or one for both? How would it work if something happened to me? Would I need to adjust my will so my wife will get these? Or is that part of the operating agreement / articles of organization?

I think you might have missed the advice to seek out help locally from a business law professional.

And I missed the fact that you are thinking of an LLC in Wyoming, not Georgia. Here is a link to that state's information, again from NOLO;
http://www.nolo.com/legal-encyclopedia/llc-protection-members-personal-debt-wyoming.html

 

[tranquility]

1) I'm all ears guys! No advice is wasted, so thank you for your time!! Soaking in all of the advice/opinions

It is always good to learn. And, asking questions is one way to learn. Once you get past generalities and start talking about specifics, you have to see people who are experts and who have access to all the facts. Once you get beyond considering and into planning, see an attorney or CPA as quincy suggested.

2) I do believe that insurance is a great protection. I've emailed my insurance agent for a quote on a personal umbrella policy. I believe that's what "tranquility" was suggesting

Umbrella policies are cheap. However, they are not going to insure things not otherwise insured.

3) Based on everyone's advice, I'm starting to think the LLC in Wyoming would be a good idea to isolate my risk from the rental properties. Question is, should I have a separate LLC for each? Or one for both? How would it work if something happened to me? Would I need to adjust my will so my wife will get these? Or is that part of the operating agreement / articles of organization?

That depends on many factors including your desire to reduce risk. There is no way to tell without knowing your situation. Taxwise? Even that depends on the facts. An experienced tax preparer with knowledge of real property can look at your returns and see the issues in a couple of minutes and help you determine the tax risks and rewards from different entity organizations. Many of my clients have each building or complex in a separate entity. But, they are all logical entities and should not be together for legal or accounting reasons. For you? I'm thinking you are not big money and don't want to spend extra compliance costs for each property. My absolute, total, no, basis GUESS is that you might be well served to put all your rental properties in an entity. Guess. 8 ball stuff. Ouija board consideration validity.

 

[lovethyneighbor]

I will most definitely seek help from a local attorney. Unfortunately I do not have any good references. And my previous attorney retired. Will start looking sometime soon... Didn't think about a CPA.

Haha, thanks for the info. I don't mind doing 2 different LLC's for each property. Maybe later when I have a ton of them! But that's a good point. I think I will meet with a CPA!

 

[quincy]

I will most definitely seek help from a local attorney. Unfortunately I do not have any good references. And my previous attorney retired. Will start looking sometime soon... Didn't think about a CPA.

When an attorney retires (or dies), his caseload is taken over by another attorney. If you liked and trusted your former attorney, you might want to check out to whom his cases were transferred. Many times the attorney turns his files over to someone in his firm or to someone he trusts. Your Bar Association will have the transfer information. Otherwise, check your state/local Bar Association for attorneys in your area and interview a few.

Good luck.

 

[lovethyneighbor]

Really? Didn't know that! Thx for the tip!

 

[quincy]

Really? Didn't know that! Thx for the tip!

You're welcome. Good luck.