A Short Story on Asset Protection
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I had a new client come in yesterday, and we were discussing including asset protection in his estate plan. He mentioned he had recently been sued for lead paint related issues by the tenant of an older rental home he owned in another state. Now many of his personal assets may be at risk for any judgment rendered against him. Even if that’s not the ultimate result, he may have months or years of worry before the outcome is determined.
That’s a perfect example of why rental property should be owned by a limited liability company (LLC), rather than individually. LLCs shield ones personal assets from liability associated with the property, whether it’s as a result of an injured tenant or even guest of a tenant. It’s hard to foresee all the types of liability that may exist, but an LLC can help protect against them all.
By the way, I practice what I preach – my office condominium is owned by an LLC I established, even though my law firm is the only tenant. I hope that no liability will ever result from this building, but the LLC certainly helps me sleep at night!
