Do you own rental or investment real estate in your individual name (other than your homestead)? Owning real estate in your individual or joint names is inherently risky. If people are injured or killed on the property, you as the property owners are personally liable. If a creditor obtains a judgment against you, your assets and life savings are at risk. Although insurance is available to protect against claims arising from the property, judgments can exceed the amount of insurance coverage or coverage for a particular claim can be denied.

In addition to being adequately insured, a simple way to avoid the "worst-case scenario" is to have a Limited Liability Company ("LLC") own your real estate rental or investment property. An LLC is a business entity that combines the most attractive features of limited partnerships and corporations. The owner of an LLC is generally not individually liable for the LLC's debts. The "owners" of an LLC enjoy the limited liability offered by a corporation and the "flow through" taxation of a partnership. In addition, the LLC offers flexible management structures without the complicated requirements of corporations or the restrictions of limited partnerships.

When an LLC holds title to real estate and the "worst- case scenario" occurs (i.e., a court awards a substantial judgment in favor of a claimant), because the "defendant" will be the LLC instead of you, the claimant should be able to collect the judgment from only the LLC's assets. Your individually owned assets should be protected. While you may lose your entire investment in the property owned by the LLC, the rest of your assets should be safe.

Don't wait for the "worst-case scenario" to occur. If you own real estate investment or rental property in your individual name, call us today to schedule an appointment to discuss how you can very easily safeguard your assets from the claims of creditors.