06 Dec Insulate Assets – Is it possible that I may need more than one LLC?
Insulate Assets – Is it possible that I may need more than one LLC?
By: Barry E. Haimo, Esq.
December 6, 2013
The short answer is yes, you may need multiple LLCs. This is because of several reasons: first, you may have several different types of investments or assets. Remember, assets are property. The term “Property” includes everything you can possibly own. You or your assets have the potential to harm someone or something in some way, either actively or passively. Consequently, if that happens, you’re probably on the hook unless you planned ahead. When you have multiple assets, you want to insulate and isolate from each other as well as you, the owner. The best way to do this is to properly retitle them into the names of one or more LLCs. Second, you want to make sure that your business interests are properly nested within subsidiary companies to ensure that this legal separation is maximized.
1) The reason why you want to insulate and isolate assets by utilizing LLCs is to limit your liability to “outside” creditors, or creditors of you personally. However, most people only focus their attention on limited liability relating to business creditors (#2 below). This is why they incorporate their business in the first place. Forming a business entity, such as a corporation, does limit your personal liability with respect to “inside creditors”, but leaves you extremely vulnerable in other ways.
2) You want to ensure that your business interests are properly insulate d and isolated or “legally separated” as well. This means that you may want to separate assets that you thought were a “Unit”. If everything is in a different company, then each asset’s liability exposure to itself and your other assets is substantially reduced. Physicians’s practices are a great example of this strategy.
Fortunately, you can protect yourself, your family, your business and your assets. Asset protection planning involves taking advantage of debtor friendly laws, especially in Florida, in order to minimize your exposure to personal liability. I’m talking about maximizing your use of assets that are deemed “off limits” to creditors. It also includes covering all your bases such that you insulate and isolate your properties from each other and yourself. An effective plan also requires using the combination of several business entities and trusts. I’m pleased to share with you that asset protection is NOT necessary for everyone. But if you’re serious about protecting your assets, you need an asset protection plan. Asset protection is relevant to estate planning because they overlap significantly. An effective plan will have your estate plan built-in so your business and estate transitions smoothly to subsequent generations.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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