LLC vs. Umbrella Policy

[Account Closed]

Hello, I currently have 5 rental properties that are each mortgaged and in my own name that I'm considering an LLC or umbrella insurance policy for asset protection. My lender is trying to determine if that would violate the terms of my loan. Does anyone have experience with this? Is every lender different regarding their policies? Or does anyone have insight if an umbrella policy is sufficient? Thanks

[Shawn Holsapple]

There are two very distinct camps on this subject.

Some say a LLC is a waste and just go with a good insurance policy.

Others say one must have a corporate structure to help protect you.

IMHO - Do both!

I'm a follower of the Rich Dad Poor Dad philosophy of multiple entities and lots of insurance.

It makes me cringe when I hear of people owning ANY property in their personal name!

Most lenders won't even know or care if you change the name - unless you point it out to them [like you have].  Even then, it's an OPTION for them to call the loan - not mandatory.

I personally like the land trust as the vehicle to title the asset.  You simply can call the land trust "123 Main St Hozian Family Trust".  Then your name is still in there along with the address -  the lender just sees this as asset protection and doesn't even take a second look.

By adding your LLC as the trustee, it will add yet another layer of protection as well.

Ron LeGrand along with many others have excellent material on how to do this.

Of course before making any title or deed changes, consult with your CPA to be sure it won't be a taxable event!

Just my 2 cents...