Video instructions and help with filling out and completing Why Form 2220 Assets

Instructions and Help about Why Form 2220 Assets

Oh hi sorry I didn't see you there I'm Aiden Kramer with the law office of Aiden H Kramer in Colorado and you're watching all opinio business I don't know why anyway in this episode of all up in your business I'm going to talk about something that comes up quite often with clients of mine and that is whether or not to put an investment property into an LLC so I'm going to talk about a few of the reasons why you would want to do that and some of the pros and cons and things that you have to consider if you're thinking about putting an investment property into an LLC so as you hopefully know by now from watching any of my other videos about LLC's the purpose for having an LLC or a limited liability company is to insulate the personal assets of the business owner from the debts and liabilities of the LLC if the LLC is run properly then only the assets of the LLC are going to be subject to the debts and liabilities of the LLC and the personal assets of the business owner are going to be protected let's pretend you have a property and you want to rent it out to some people and hold on to it for a while as an investment if somebody gets hurt on the property or if there's some sort of damage to somebody else on the property then that person is going to probably try to sue you to recover for any of those damages or costs associated with that injury now if this investment property is not held in an LLC then that person is probably going to try to sue you personally to recover however if that product property is in an LLC then the person will only really be able to sue the LLC and will only be able to recover some of the assets of the LLC and you personally as the property owner are protected so in a nutshell that's really the best reason to put an investment property into an LLC if you only have one investment property then it's pretty easy you just create the LLC as you're supposed to and you put the property into the LLC and hopefully going to be protective if you have more than one property though there are a few different ways you can handle it now as I'm sure you guys know by now I really love to use good quality high-tech graphics to explain things in my videos and this one is no different so I've solicited the help of my very expensive knowledgeable of fantastic graphics department to help me explain different ways that you can handle protecting yourself when you have multiple investment properties and here we go so as you can see here we have an investor she owns three different properties and in this instance she's put all of them into one LLC now if there's a lawsuit regarding any of these properties all of the assets in the LLC are going to be subject to the liabilities of that LLC so that means all three properties will be subject to any liabilities of any of the other properties so if somebody slips and falls on property one properties 2 and 3 might be subject to being a part of that lawsuit and could potentially be lost in that lawsuit this investor on the other hand has three different properties and has put each property into its own separate LLC so what this does is it insulates each separate property from the others so if there's a lawsuit over property one in LLC a properties two and three because they're in their own separate LLC's are safe from that liability of property one as is the investor and her personal assets so really the best practice is to have each investment property in its own separate LLC that way each one's protected from the others and you're protected personally as well so well it's easy enough to set up and maintain an LLC in most instances it's very important to remember and this is very very important and a lot of people don't think about this because they don't consider really these investment or rental properties to be businesses but they are especially if they're in LLC's just because it's a house in an LLC the LLC is still a business and as I've discussed multiple times in various videos it's so important to make sure you run your LLC correctly otherwise you could still be subject to personal liability as a court decides to pierce the corporate veil and get to your personal assets so that means that each LLC needs operating agreement and a separate bank account when you get rent payments or any payments through one of those properties it has to go into that bank account for that LLC and then you can pay yourself and now those assets need to be used to maintain that property that's owned by the LLC one thing that I see so often that it's mind-blowing is that people very very often forget that the LLC has to actually own the property you can't just set up an LLC and then own this property in your own name or let's say jointly with your spouse and hope that the LLC is going to somehow protect you and this property only the assets of the LLC are going to be protected by that limited liability so that means you have to actually transfer ownership of the property to the LLC then you as the business owner own the LLC which owns the property so typically this would be accomplished by filing either a quitclaim deed or a general warranty deed a deed of some kind eating the property from you personally to this LLC or when you purchase the property in the first place