The use of limited liability companies and limited partnerships for Dayton and Ohio asset protection is a common strategy because these business structures protect family assets from business risks and protect business assets from personal liability.
Wealth management experts frequently recommend these types of business structures because they have the tax advantages of a sole proprietorship or partnership while also providing the liability protection of a corporation. Let’s look at how these business structures benefit both family assets and business or investment assets.
From creditors to lawsuits, businesses face a number of risks. When insurance and business assets aren’t enough to cover the debts and judgments, collectors go after the assets of the business owners, such as savings accounts, stocks and real estate — including their homes. If the owners are shielded behind a corporate structure like a limited liability company (LLC) or limited partnership (LP), the collectors cannot touch the owners’ personal assets in most cases.
A family’s income-generating assets, such as real estate or investments, can also be protected by placing them in an LLC or LP business structure. This protects them against personal lawsuits and creditors as described below. Transferring real estate ownership to a LLC or LP also protects other family assets from lawsuits against the property owner — a threat with high probability if you own rental properties.
Whether a family business, professional practice, farm or a family’s income-generating assets, forming a LLC or LP for those assets and activities shields the assets from personal lawsuit claims and creditors. If a judgment is rendered against you, the creditor or plaintiff may lay claim to almost any asset you possess in order to pay that judgment, including real estate, investments or business assets titled in your name. But by placing those assets in a LLC or LP business structure, ownership of the assets transfers from you to the LLC/LP — you no longer own the assets, so personal creditors can’t touch them.
However, personal creditors can lay claim to your interests in the business, and any disbursements you’re entitled to would go to pay the judgment. But the creditor cannot compel LLC’s or limited partnerships, in Dayton or elsewhere, to make any disbursements, so creditors are unlikely to get their judgment paid this way. Additional protection can be achieved by placing your interest shares in an asset protection trust.
To determine whether your assets are best protected by limited liability companies or limited partnerships, a Dayton asset protection lawyer needs to review your case personally. Visit our Free Consultation page to find out how you can get your wealth management needs assessed for free.