All Forum Posts by: Account Closed

You sort of need both...

Regarding the other issues.. the insurance company may offer to cover a range of issues that might address the concern of most rental property owners but usually that may often mean higher premiums and may lower the property's net cash flow.

It is not unusual that the insurance company would try to find various ways to either not pay (or underpay) when a claim is filed. Insurance companies are businesses too, so paying liabilities is a business expense that doesn't make the income statement look too good.

The property renting business does have its risk. There are tons of ways that a liability may arise and that may exceed a policy coverage limit. This is where your assets and any equity in the rental property (properties) could then be a target by whoever is suing you. This is also where the LLC as an asset protection device comes in.

Regarding LLCs, some states could comparatively be 'costlier' to set up and maintain an LLC in. There are also yearly maintenance costs involved, which does also vary. The level of protection that an LLC is able to provide does have a way of varying in most of the states also -- especially if it is a single member LLC compared to a multi member LLC.

Wyoming and Nevada have some of the best asset protection features. If cost is purely the issue, there are at least 8 to 11 states where an LLC could be set up at a lower cost than that of California for instance but they may not offer a similar protection or other benefits as in Wyoming and Nevada. Be aware though that the initial filing cost does not necessarily reflect the yearly recurring filing and maintenance cost.

It is not unusual to set up an LLC outside of where you reside and then operate as a foreign entity there or elsewhere; you would have to then do the math to see if there is a cost benefit to such an approach when you factor in any local filing requirements and yearly fees that may be necessary based on the exact nature and classification of your activities by the state.

So you sort of need both the insurance & LLC. Just one might not be sufficient. There are too many stories of 'I wish I had done this or that' on here regarding this issue.

 You typically want to avoid a drama of this sort.

What was the status of this case? Some might not think $200K is too much and might say you were lucky she requested that low an amount. Knee repair injuries could often be costly, especially from an economic perspective. Maybe the knee injury or repair affects her playing in the WNBA or dancing career. Its not just the bill at the hospital. Tough lesson though.

Wyoming and Nevada and it appears Delaware on the other hand, actually have state laws that prohibits a personal creditor from trying to get a dissolution of the LLC or from foreclosing on a members LLC interest due to a personal debt obligation.

Unlike many states, Wyoming and Nevada does not try to create distinctions between a single member and multi member LLC which often may have drastic implications in regards to the LLCs assets exposure to personal creditors.

From an asset protection perspective, New York is risky if not plain dangerous: http://www.nolo.com/legal-encyclopedia/llc-protection-members-personal-debt-new-york.html

 This is probably an article that you might need to read: 

http://www.pwc.com/en_US/us/state-local-tax/publications/assets/pwc-multistate-us-tax-issues-for-inbound-companies.pdf

Interesting.. I was almost shocked the application was almost unheard of based on the range of features. The payroll module may be integrated soon into the application as it appears many businesses are inquiring about it. Someone literally would have to write and donate the code. Hopefully the developers are able to develop this soon.

This is extremely unusual. Based on data from http://bankrate.com , the highest 'jumbo savings' account in the country, which requires a $100,000 minimum deposit, pay 1.05% -- that's a jumbo savings account as most checking accounts offer nothing near 1%. 

5% on a savings account in today's market is quite risky for a bank as 5 year jumbo CDs nationally only offer about 2.2%. Are the funds federally insured and is there an issue with the bank?

I once had a bank that offered something that high but that was a few years ago. They folded not very long afterwards and literally mailed me a check of whatever amount I had in the account. Today they are a subsidiary of a different bank as they probably got acquired and reorganized.

Very sorry to hear. Hope it wasn't some sort of dip into your IRA or 401K account. That would really sting.

Interesting question... the 'personal guarantee' for the LLCs business debt is sort of like you consigning a loan for someone you knew -- say the LLC. If after signing the guarantee, they decided to go try their luck in Vegas and bungled the funds, your liability 'should' technically only be for the loan that you cosigned for.

If they (the LLC) in addition to bungling the funds in Vegas caused damage to someone's property either on the way to or from Vegas, your liability doesn't (or shouldn't) extend to that as they would be liable for their actions although it may in some cases.

If the LLC defaulted on the business debt, you would definitely be personally liable for the business debt per the personal guarantee. But since commingling of funds or assets is typically a prime reason for piercing most veils, if the business was having some cash flow problems for instance, you may have to use personal funds to avoid or cure any defaults. That, from an 'asset commingling' perspective would mean the veil could be pierced and your personal assets at risk.

The LLC does not mean you can never be sued or liable. This might help:

http://smallbusiness.chron.com/can-owner-llc-sued-personally-55009.html

A lot more information would be required to determine, especially the net cash flows from each of the multi unit properties. Do you have the financials for each of the properties? The level of risk associated with the cash flows also could be an issue.