LLC, Las Vegas, Jon Wyatt discussed on The Ray Lucia Show
If you awards that are astronomical sometimes many times beyond whatever your insurance covers. If the home is in an LLC, the family exposure to the settlement would be limited to its investment in the LLC. In other words, the vacation home itself would be subject now. And this is the other reason Jon Wyatt said the on a vacation, home or rental property carrying a mortgage ain't such a bad thing. No. It is not because if you do happen to lose it. I didn't lose my entire two hundred thousand I lost my twenty thousand dollar down payment, or whatever it is in the Bank share in most if not Kerr radical loss, another example would be a family member as a serious car accident say and is subsequently sued by the other driver who then wins a judgment in excess of the insurance coverage a properly structured LLC prevents the judgment creditor from seizing that family members. LLC shares thereby protecting the equity in their LLC. So now you've got the LLC is a protected now. I know some people are thinking if you're a doctor or whatever, and you get sued they can usually penetrate an LLC or a corporation, but in a case of a driving accident or whatever many times those assets held in an LLC. It's why people put their businesses and LLC's and or corporations so the creditor can't force what they call partition. So if you own this vacation home or you own the property outright, the LLC what they say here is there something called a charging order protection. It's a technique that's widely used by the attorneys of savvy LLC owners, for example, if the home is owned in an LLC, the creditor cannot force the partition or sale if you will to pay for the set. The protection is not available with other forms of ownership. So in this particular case, even a individual or partnership or corporate ownership wouldn't necessarily work, but the LLC does work, according to this legal big. So so so if I have a vacation property or something, and it's in an LLC, and I'm out driving around, and I'm an accident, and it's my fault. And they may not be it may not be new. They could potentially come after you. If you're the one that caused the accident. But here's the problem. They can get a charging order, but they can't force you to sell that property. So they may have a charging order. And again, I'm not a lawyer. So don't take this firsthand. But they have a charging order. They have no cash because they can't force you into a sale. Okay. I got you. All right property management and used as a properly drafted LLC operate. Agreement prevents and this is so key disagreements among family members. Since all terms of the agreement are set out in writing John you sat here, and we have had people call us on this program saying I've got this lake house in Wisconsin somewhere and the kids are fighting over who gets to use it and win. Yeah. Yeah. The that the operating agreement would set up a terms all they gotta do is pull out the terms of the agreement. And they say sorry, Charlie. See what you signed here. You get it, you know, on Saturdays and Sundays the odd Saturdays and Sundays, and I get it on the even Saturdays and Sundays, and you know, you can spell out who's authorized to use the property weekends which holidays, we'll be responsible for making legal decisions acquiring the insurance making repairs. How those repairs are paid for. It's all. All spelled out is this when you leave it to to to to the kids just when you own it, and they get a use it. That's exactly what it is. Because obviously, it's a vacation home and it spells out usage while you're alive. But remember an LLC doesn't die. No as Herbert to it horse. So that contract that agreement remains after you're gone what? Now, you've had you've had vacation homes and things like that. Yes. I have family members staying there. Have you had? I don't I I know you didn't have to jump through those hoops. But maybe you know, I we we have a will in our living trust, and we spilled out some of that in a living trust. Yeah. But our kids were never really that interested in going to a condo in Las Vegas. We were there with them. Okay. But a vacation home on a lake or Lake Tahoe. Or something like that. Where it's got some value. We had to kiss. Didn't want to inherit. I am surprised. I saw a couple of those places when you own them. I said. If you stay there a dead on him versus the value. They weren't really worth while. That's that's probably true. And that was a time when properties were probably way overvalued in in Las Vegas today. It might be different. That was early two thousands mid-2000s transfer of ownership within and outside of family during lifetime and death. In other words by sell provisions. Maybe one of the kids of the four wanted that property. The other kids didn't how do we create not only the buy sell arrangement. But genie plays even Steven as you know. Well, that's what you get three of them. Don't want the house. They want the money. The other one wants the house, but they can't buy themselves out. There's also some estate and gift tax things. But at the eleven million dollar, Mark, it's not worth discussing. Although in California, maybe that's coming up next hour. Now, this is the Ray Lucia show don't go away. Introducing.