Thousands of times I have said and written that if you own an Arizona business or have investment real estate in Arizona, you must protect your life savings from things that can go wrong with the business by having an Arizona limited liability company own the business or real estate. Here are the facts of life every business owner and investment property owner must understand:
- There are an infinite number of ways that something can go wrong and harm or damage people or property.
- If you are the owner of the business or the real estate, you are 100% liable for anything and everything that goes wrong and ALL of your LIFE SAVINGS is at risk!
- You must insert a shield called a limited liability company between things that can go wrong with the business or the real estate and you, your family and your life savings by creating an Arizona limited liability company to own the business or real estate. The general rule of Arizona law is that the owners (called members) of an Arizona LLC are not liable for the debts or obligations of the company. This means that when something goes wrong the defendant in the lawsuit will be the LLC, not you (unless you caused the harm).
Insurance is always your first line of defense. You should not operate a business or own investment real estate without adequate insurance coverage. However, the LLC is your second line of defense in case the plaintiff wins a judgement greater than your insurance coverage.
Here are two real life examples of how lawsuits can arise and why you want the defendant to be your LLC instead of you:
- Rental property owner sued by a tenant who lived in an older home the tenant claimed had lead paint.
- Older couple used savings to buy a duplex and rented it. An accident occurred and a person died. The estate of the victim sued the couple for millions, an amount that exceeded the couple’s insurance coverage. Some of the claims were not covered by the insurance policy.
- A man with a net worth of $2 million owned a piece of raw land worth $150,000, but he did not have it insured. A boy climbed a tree on the land and was injured when he fell. The boy’s parents sued asking for more than the man was worth.
In each of the above situations the people involved could have saved themselves a lot of worry, stress, time and money if they have placed the real estate in a limited liability company.
Don’t allow your life savings to be at risk. Protect yourself and your family now by hiring me, the Arizona llc attorney, to form your Arizona LLC.