LLC and trust input

[faithandhope]

What is the name of your state? TX
My husband is the sole proprieter of a Real Estate Inspection business (a high liability industry), styled as a DBA. I recently inherited a large amount of money in my name. We are trying to figure out the best way to protect it from any lawsuits, should they occur, from his business. He has no company assets, it is a home operated business, with all inspections in the field. Taxes are simple now and pretty straight forward. We are thinking of re-establishing the DBA as a LLC for ease of taxes and liability reasons. Should we also establish a trust to protect the money and our houses (we have one plus we bought one for our son in college in joint name with him)? We have one child over 18 as sole survivor and no outstanding debts. Any input would be appreciated.

 

[divgradcurl]

I recently inherited a large amount of money in my name. We are trying to figure out the best way to protect it from any lawsuits, should they occur, from his business.

Well, you need to be careful here. Texas is a community property state -- however, inheritances, even if they are acquired during marriage, are separate property, and remian separate property -- as long as you make an effort to keep it separate property, If you keep the inheritance in a separate account where your husband does not have access to it, and don't use it to pay off community debts or purchase community prpoerty or otherwise let it get "comingled" with the community property, it will remain your separate property and will not be subject to pay off your husband's potential debts.

However, you might want to talk with an attorney to come up with some more iron-clad protection mechanisms anyway, just in case.

We are thinking of re-establishing the DBA as a LLC for ease of taxes and liability reasons.

Here's the problem with an LLC, or other liability-limiting type of business organization. Typically, LLC's and the like will NOT shield personal assets from liability if the liability arises from negligence of the partner or corporation owner. So, your husband, being in a business where he could potentially be found negligent, the LLC may not be the best way to limit your liability. A full corporation structure might be sufficient to limit your liability, even to negligence, but then the corporation will require seperate tax planning, full corporate formalities, and funding, all of which may be overkill for your needs.

You really need to sit down with an attorney who can review all of the facts of your situation, and advise you accordingly. You certainly don't want to lose everything due to a mistake in trying to protect stuff.