LLC or Umbrella Policy

[Jacob Chambers]

     Hello BPers!  This is my first post since becoming a member.  I'd first like to thank everyone for being so forthright with your experiences and helpful advice for newer RE investors like myself.  

My question is regarding my specific situation on whether I should form an LLC or not. I know there are a TON of threads already about this topic, but I haven't found one that mirrors my scenario (not saying there isn't one, I just haven't seen it yet).

     I am a Marine Corps helicopter pilot who is getting off of active duty next year.  I plan on flying overseas as a civilian contractor as my "day" job while doing RE investing during my off time.  Exact salary is negotiable on all contacts, but I will say the job alone will put me in the 33% tax bracket (not bragging, just trying to give the details).  I just purchased my first buy and hold investment property and plan on acquiring an average of one per year for the next 20 years.  I will use the passive income to finance my retirement and use cashflow during my working years to do flips whenever a great deal presents itself.

I had originally planned on simply getting good umbrella insurance policies to cover me legally, but then I started thinking more about the tax implications. Since I may potentially be operating in a higher tax bracket with my job, will the income generated from my buy and holds be heavily taxed if they are not in an LLC (i.e. in my name)? Does this change if the properties themselves were operating at a loss on paper due to depreciation, maintenance, interest, etc?

My thought process is that even though I believe a good umbrella policy is better/easier than forming an LLC, if the LLC saves me thousands of dollars due to being its own entity, I may need to eventually go that route.

    I'm sure I left out an important detail or two, so please feel free to ask for more details.  Thanks for the help!

-Jake