LLC question???? - Posted by Charlie

Posted by Charlie on August 21, 2001 at 15:55:21:

Do you propose setting up a separate trust and LLC for each property? In Kentucky, apparently an LLC must file an annual report each year as well as other requirements. If using multiple LLC’s how does one handle the paperwork and the movement of money in and out of the LLC. I was checking the Kentucky Statutes and found that if the LLC is in default of any of the state’s policies the liability protection is voided.

LLC question??? - Posted by Charlie

Posted by Charlie on August 21, 2001 at 14:48:14:

In the process of closing on a property. I told the attorney that I want the title in an LLC. I have not formed one yet. He says, that in order to form an LCC, I must have a checking account in that name and a federal tax ID, and must run it much like a business. Is this legit? Is all this too much hassle or should I just carry a large amount of liability insurance?

Re: LLC question??? - Posted by Ben (FL)

Posted by Ben (FL) on August 21, 2001 at 15:27:09:

Large liability policies attract law suits like s–t attracts flies. I’m not advocating against it, and I am not an attorney, but think about it like this: Someone gets mad at you for some reason, or claims they are hurt at one of your properties. They go to an attorney. The attorney checks and finds out that you carry a $500,000 liability insurance policy. Guess what? You’re going to court, because that attorney knows that he may get your insurance comapmy to settle for some amount, and if he wins, he gets 30% of $500,000. The policy limits are the pot of gold. If there’s no pot, the attorney has no interest.

The idea of your LLC owning a property is to protect yourself. If you own a property, and you lose a law suit, then you, personally, are on the hook - bankrupcty, financial ruin, etc. If your LLC owns the property, and someone sues, then only the LLC and that property are affected. Which would you rather do, maybe lose one property in a law suit, or lose everyhting in a law suit?

I think it’s worth your time. Maybe the attorney you’ve talked to is the wrong one to talk to.

Try this. Get a copy of a Land Trust agreement. Have a trusted friend, family member (with a different last name), or advisor agree to act as trustee. You are the beneficiary. Take title to the property in the trust (the trustee signs all the papers, as trustee).
Then, when you get a chance, very soon, form your LLC, and assign your beneficial interest in the trust to your LLC. That way, your name appears no where on public records, and your Trust and LLC help to shield you from possible judgements against the property. Someone falls down and nicks a kidney, they sue the property owner…the trust. IF they win, they get a judgement against the trust, and only the trust, not you personally.