Keeping your nest egg safe should always be a top priority, but there is no one-size-fits-all solution for protecting your business and personal funds. What works well for one client may not work at all for another, which is why an experienced asset protection attorney will offer a large toolbox of potential strategies. In some cases, forming a Limited Liability Company (LLC) may be a simple and extremely useful option to protect your personal assets.
Consider an LLC for Asset Protection Purposes
An LLC is less complex and features fewer tax rules to navigate than a full corporation, but it still offers one big advantage. By creating an LLC, any personal assets like money in the bank, your primary home, and family heirlooms are shielded from creditors and other legal liabilities that affect your business.
That means you are unlikely to lose your own money or property if your business venture goes bankrupt, is sued, or experiences some other financial hardship. LLCs can be particularly useful for running investment or rental properties, as the LLC exists as a separate legal entity from you. That can protect you from devastating legal repercussions if someone is injured on your property.
If you are considering forming an LLC to keep your assets safe, these are the main topics to discuss with an attorney ahead of time:
- Acquiring proper insurance for each LLC you operate
- Filing annual reports to the state to keep your LLC running
- Setting up an LLC for each separate rental property so all of them aren’t at risk if one is sued
- Possibly utilizing a comprehensive trust instead of multiple LLCs
- Using an LLC for privacy reasons to keep your personal name off a business
When an LLC Won’t Help Protect Your Assets
Despite the obvious benefits, there are downsides to using Limited Liability Companies. Between filing fees and insurance payments, running multiple LLCs can become expensive. An LLC doesn’t always offer complete protection either, as there are exceptions under both federal and North Carolina state laws where your personal funds may still be vulnerable that should be discussed with your attorney. Not every type of business can legally operate as an LLC, either, as they are less useful for medical professionals.
While Limited Liability Companies are excellent at protecting from “inside” liability directly related to a business, unfortunately, they won’t protect you from outside sources of liability in your personal life. If a friend is injured on your ATV or boat, or hurt while staying at your vacation home, for instance, the LLC won’t help.
Protect What You’ve Earned With a Comprehensive Plan, Consult Our Experienced Asset Protection Attorney Today
Every person’s financial situation is unique, and you may need to consider multiple routes to protect your money and property. You should consult an asset protection attorney to come up with a comprehensive plan that may include LLCs or other strategies like living trusts or retitling assets.