Do you have a second home? Do you operate a business? Do you currently have an interest in a S-Corporation? If you answered “yes” to any of those questions, then you should consider utilizing a Limited Liability Company (or LLC) to provide structure and asset protection for you and your assets.
An LLC is a business entity created under State law. Both Arizona allow for the formation of LLCs. By selecting the LLC as your business entity, you are able to take advantage of some of the benefits of both being a partnership and a corporation. The owner of the LLC (called a “Member”) is afforded the corporate protection of being limited in the liability that he or she may incur, while the partnership benefits include the ability to “pass-through” taxable income to the owner’s tax return (there are several options in selecting the appropriate tax treatment, and will require an individual consultation to determine the best fit).
Each State’s statutory scheme provides for the base-line protections afforded to LLCs. These are the default rules (i.e. if you do nothing else, you get at least these base-line protections). However, the key to maximizing the protections that your LLC can provide to you is to have a properly drafted Operating Agreement.
The operating agreement provides additional details on what your LLC allows or does not allow. When done right, the LLC’s assets are insulated from the outside world and conversely, your personal assets can be insulated from the creditors arising from inside the LLC (e.g. have a rental property inside an LLC, and the tenant slips and falls, sues and wins – that award cannot automatically reach your personal assets).
The attorneys at MH are well versed in the creation of LLCs and how these entities fit within your overall estate plan. Allow us to review your situation to help determine whether an LLC makes sense for you. Even if you already have an LLC in place, let us review your documents to determine if you are maximizing your protections.
Contributed by MH Estate Planning Attorney James P. Plitz
Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone. Financial predators are looking for ways to take funds from others and often use litigation as their means to do so. At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you. We do this through proper and current estate planning techniques. With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more. A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family. Without a living trust, this information will be made public. For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Cave Creek, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe. In we serve the areas of , , Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more. Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.