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How an LLC can protects your assets.

I grew up in Antioch, California. In the summer, it was hot, 100 degrees of dry heat every day. Like most kids, I wanted to have a swimming pool, and it seemed like everybody had a swimming pool except for me.

To me, it was the coolest thing to have a pool in the backyard (I was even willing accept an above-ground pool!) so I could have my friends would come over and play Marco Polo, wrestle in the pool, or just lounge around and beat the heat. And if you had a swimming pool at home, it raised your social status a couple notches once school came around again.

I would ask my mother (more often than I should), “Can we have a swimming pool?”

She would say, “I work in Oakland every single day. When I am not there you and your brother might have one of your friends come over and something happens to them. I would be held liable and lose everything I work hard for. I am not doing that. NO!”

My mother’s NO was stern, I’ll tell you, and that was the end to that discussion (until I bothered her again the next day). Having a mother who grew up in the deep south, there was very little room for negotiation.

Now, as I reflect on it, I understand why she said no. The liability and risk of losing everything we work so hard for in the snap of a finger is too real.

Yet, I see so many people taking that same risk today that my mother was not willing to. It’s not a swimming pool per se, but the liability that comes with a rental property.

I have so many people who walk through my office door and when we start talking about their financial picture, they notified me that they own a rental property. It could be a multifamily property, the home they previously lived in that they now rent out, or an investment property they inherited.

They see how these properties are a great way to build wealth or help with retirement. BUT it’s a double-edged sword, because they are at risk of losing everything they work hard for.

The reason they might lose everything is they have the investment property in their own name. When you have investment property in your name, you take on all the liability and risk of the property. No matter what happens, it’s your ASSets on the line!

So, one crucial way to avoid this risk is by taking the property out of your name and transferring it to an LLC – a limited liability company.

With an LLC, if something ever happens to the property (like someone slips and falls or a renter is injured or, God forbid, there’s an accident in your swimming pool), the only thing that can be held liable is the LLC and everything inside of it.

So, if you get sued, they can only go after that property, not your personal home, savings, investment accounts, or assets that you’ve been putting away for retirement.

I understand the wisdom my mother expressed to me as a youth and pass on that solution – an LLC – to my clients.

If you have any questions about an LLC or protecting your assets, please reach out.


Jason Matthews
☎️ 510.229.7608