Response to Attorney Question: Multiple LLCs
An attorney question came across my desk the other day and I thought I would share my response with the collective. She queried whether multiple LLCs or a single LLC was most appropriate to hold her client's rental properties, and solicited experiences and opinions on how other attorneys deal with the issue, especially in light of the famed Olmstead decision, personal liability, adequacy of insurance, and tenants by the entirety (TBE) ownership structures. What follows is my spark notes response: Those are interesting questions and ones that I discuss with my clients and in presentations quite frequently. Ultimately, the creation [...]
LLCs as Creatures of Contract: Don’t Overestimate this Legal Fiction
I recently sat down with a nonprofit to discuss the asset protection tenets of LLCs, among other things, and was particularly intrigued by where our conversation headed. It was a smart group, to boot, so I took them on a ride all the way back to what LLCs are in their most primitive form: creatures of contract. LLCs exist by virtue of state statutory schemes. In Florida, the Revised Limited Liability Company Act (the "Act") requires the filing of articles of organization with the Department of State in order to form the LLC. The articles of organization is really just a contract between the [...]
The LLC Is No Magic Carpet | Personal Liability
I'm consulted quite frequently on the efficacy of using an LLC to protect oneself from personal liability. I find that most people, including prospective clients and their advisors, believe the LLC to be the magic carpet that will carry them far, far away from personal liability should potential litigation start to appear on the horizon. Well, magic is rarely a defense, and throwing your liability-prone asset into the arms of the LLC may not get you very far. This myth is promulgated by a loose understanding of the liability protection offered by the LLC. The LLC is certainly a behemoth of an entity [...]