LLCs only for businesses or can a non-business person get one to protect my assets?

[QuarterMillionMan]

LLC or FLP can someone educate me if this is something I should pursue. No I don't intend to start a business but rather to protect my assets from liability I've been researching getting an LLC. Rental property owners fits perfectly getting an LLC. I always thought an LLC was for businesses but if I can get it to protect my assets I'll get it.

[kork13]

I'm not an expert on it ... But although I think you can technically create an LLC for just about any entity .... an LLC isn't really appropriate for just protecting individual assets, you're especially assets that you're still going to be using yourself on the daily. LLC's are designed for protecting personal assets from business liabilities. But what business operations would the LLC be conducting? I'm struggling to imagine a beneficial scenario here, because if sued/challenged, LLCs can be cracked wide open when an individual uses the LLC entity & its assets like personal assets -- called "piercing the corporate veil" ... Ex: an sole-enterprise LLC owner uses the business's bank account to cover daily personal expenses. Plus as an LLC, you're required to file/disclose ownership details, there are annual legal fees, and it really doesn't provide much of any benefit that I can see.

I think what you're really looking for is a trust. You put assets into the trust & they exist as a separate legal entity from your individual person. If somebody sues you, but nothing is owned under your personal name, there's not really much that they can go after (besides income). This is a not-uncommon strategy employed by wealthy folks who may be at risk for spurious liability claims (public figures, senior leaders of big companies, etc.). I'm not a lawyer, but I think there's also a difference here in whether the trust is revokable or irrevocable.

Honestly, you need to just talk to a competent attorney. Explain what objective you're really after, or what risks you're trying to avoid, and they can advise you on the best way to go. It depends significantly on your situation, and every situation is different. It'll cost you a few hundred dollars for their time/consultation, but it'll be a dramatically higher-quality answer than you're ever gonna get on these or just about any other public financial forum.

[ua_guy]

I would think it would depend on why you're trying to protect yourself. Is it something an umbrella liability policy would cover? If you need to hide your assets, from whom/what? I don't think we want to know the answer here...but it's something to think about. That might help you pick a lawyer if it's something you're serious about doing and want a more detailed strategy.

[bjl584]

I'd speak to an attorney
An LLC will separate and protect business assets from personal ones.
You might be able to put all your personal assets into an LLC, but there could be tax implications to use them.
And a good insurance policy would probably accomplish the same thing.