Asset Protection - need advice

[Paul Kuhn]

I own 4 properties in 4 different states, with two of them being own outright, all in my name. The properties are all insured with $1 million liability insurance with another $1 million in umbrella coverage (increasable to $5 million). I am looking to purchase a commercial property <15 units in about 6-8 months and plan on acquiring the property, whether in my name or LLC or other entity. This property would be in the same state as my current residence, which is a multifamily home.

My hesitation on an LLC is the paperwork involved; as a military member, I can be deployed to an area with little to no internet connectivity. Are there any maintenance-free LLC services out there if that is the option I should consider? Or would I be okay keeping the property in my name with higher umbrella insurance? Secondly, how should I organize my other properties?

Lastly, I am an anesthesia provider, will the current setup of my assets be at risk for medicolegal liability? (liability insurance of course).

Thank you all for your advice.

[Nat C.]

@Paul Kuhn

You definitely need to change your ownership structure. Yes, if you are found to be negligent in your medical profession, and your malpractice insurance is insufficient to cover the entire judgement, then your assets will be exposed. Also you might be involved in an auto wreck, or your teenage son/daughter might be and then your assets will also be exposed to a judgement.

You need to set up an LLC in each state and deed the properties into the LLC's. A warranty deed is recommended over a quitclaim deed to preserve a strong chain of title.

You should set up a WY holding company to hold the LLC's. This will provide superior asset protection and consolidated tax filing. All of the income flows back to the holding company, so only one tax file needs to be filed.

Your concern about not being able to manage things if you're deployed is unwarranted. I would argue that there is less management required when holding assets in an LLC over your personal name. For each LLC, you'll be required to have a registered agent. The purpose of a registered agent is to accept service of process and official mail on your business' behalf.

Currently, you need to set up 5 companies, organize 5 registered agents and deed 4 properties. The fees for all of the above will most likely be under $1000 depending on the states where your properties are located. You'll need to pay annual maintenance fees for each LLC and registered agent. Again, this varies by state but should be under $1000.

The above information is not intended to be legal advice and is just my opinion.