One of our readers writes in:
“Hi. The personal assets I have are bank accounts, a house, and brokerage accounts. How can I protect that from lawsuits if someone gets hurt on my property? Thanks! Gary.”
First, I recommend reviewing your insurance policies, as that provides some coverage in the event of a lawsuit.
Second, to get full liability protection, you’ll need to transfer the house from your name to your LLC. The LLC must own the property in order for it to provide personal asset protection.
Just having your house (owned by you) and a separate LLC does not offer protection.
We made a video on this before, which I think you’ll find helpful:
When to form an LLC for real estate?
In your case, since you already own the property in your personal name, you’ll need to transfer the house from yourself to your LLC.
You’ll need to contact a local Real Estate Title Company to see how to transfer the deed. It’ll most likely be a $1 sale from you to the LLC, but there are some things to keep in mind:
- You will incur transfer taxes because of the sale of the property.
- If you have a mortgage, that could prevent the sale.
- You will need to re-register your utilities in the name of the LLC.
- You’ll need new insurance for the LLC.
This is your recommended action list:
- Call your title company to check on transfer tax.
- Call your tax professional to ensure there are no negative tax consequences to the transfer.
- Review your mortgage to see if it has a due on sale clause.
- Call your bank (if you have a mortgage) to ask if they will allow the transfer.
- Call a lawyer to go over anything you are not 100% clear on.