Should I put my rental property into an LLC?
Oscar: Hey listen, my question is in reference to LLC. I have some people who I've been friends with for years and we're probably close or the same age. And we watch them work as my wife and I did to build a nest egg and they were doing real good and what happened, they had an accident at one of their properties. And their nest egg is now in jeopardy. And talking to another friend who has, I suppose, inferred to get an LLC and that was the reason he had me invest early up and that was --
Attorney Tom Olsen: Okay. So Oscar, I get it. Your question is you have rental investment property, should you put them into an LLC. And you know what, there's mixed reviews on that. Okay, Clark Howard is a consumer warrior right here on WDBO and even Clark Howard says, typically, you do not do that. Oscar, the best way to protect yourself if you have accumulated wealth through cash in the bank or rental investment properties, the best way to protect yourself, Oscar, is to be well insured.
That's going to be my first recommendation for you Oscar. It's not LLCs, but be well insured. Now you're saying, "Tom, hey this guy had an accident on his rental property, he stands to lose everything". Well guess what, maybe he only had $10,000 worth of coverage on there. So you need to have a few hundred thousand dollars’ worth of coverage and you need to have an umbrella policy Oscar. At the end of the day, that insurance will probably end up costing you less than the cost of forming and maintaining an LLC.