{"id":2322,"date":"2010-08-29T07:37:32","date_gmt":"2010-08-29T14:37:32","guid":{"rendered":"http:\/\/www.keytlaw.com\/azllclaw\/?page_id=2322"},"modified":"2022-01-31T08:02:10","modified_gmt":"2022-01-31T15:02:10","slug":"vehicle-llc","status":"publish","type":"page","link":"https:\/\/www.keytlaw.com\/azllclaw\/asset-protection\/vehicle-llc\/","title":{"rendered":"When to Use a Vehicle LLC for Asset Protection"},"content":{"rendered":"

by Richard Keyt<\/a>, Phoenix & Tucson Limited Liability Company Attorney<\/p>\n

The primary reason people create a limited liability company is to protect the owner(s) of a business or investment real estate from liabilities that arise from the activities of the business or real estate.\u00a0 If a person owns a business without the shield of an LLC, corporation or limited partnership, the business owner is one hundred percent liable for every thing that goes wrong and all of the owner’s assets are at risk and could be lost.\u00a0 The same is true with respect to the person who owns rental property, commercial property or even unimproved land.<\/p>\n

In this day and age people sue at the drop of a hat.\u00a0 Consider the case where a boy who climbed a tree on vacant land and was injured when he fell. The boy\u2019s parents sued the land owner for more than the land owner was worth.\u00a0 It is impossible to predict how liability might arise, but we know for a fact that if you own the business or real estate yourself rather than through an LLC, corporation or limited partnership, you and your life savings will be responsible for all the debts and liabilities of the business or the land.<\/p>\n

How to Protect Yourself When You Have a Business or Own Investment Real Estate<\/strong><\/p>\n

If you own a business or investment real estate you must form a limited liability company and have it own and operate the business or own the land.\u00a0 The general rule of Arizona LLC law is that the owners of an Arizona LLC are not liable for the debts or obligations of the company.\u00a0 Arizona Revised Statutes Section 29-3304.A<\/a>\u00a0states:<\/p>\n

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“A debt, obligation or other liability of a limited liability company is solely the debt, obligation or other liability of the company.\u00a0 A member or manager is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation or other liability of the company or for the acts or omissions of any other member, manager, agent or employee of the company, solely by reason of being or acting as a member or manager. “<\/p>\n<\/blockquote>\n

This general rule is the primary reason you always want an LLC to own your business or investment real estate.\u00a0 If a debt or liability arises from the activity of the business or the land, then the defendant in the lawsuit will be the owner of the business or the land, i.e., the LLC.<\/p>\n

The Family Car or Business Vehicle – a High Risk Asset<\/strong><\/p>\n

One of the most risky assets people and businesses own is the car, truck or vehicle.\u00a0 Accidents happen.\u00a0 If your vehicle is being driven by somebody other than you and the driver causes an accident that kills or injures somebody, you will be sued and your life savings will be at risk.\u00a0 Of course your first defense is a comprehensive vehicle insurance policy.\u00a0 Buy as much insurance coverage as you can reasonably afford, including a large umbrella coverage amount.<\/p>\n

Unfortunately, no matter how much insurance you have, a jury can award the plaintiff more money that the amount of your insurance policy.\u00a0 If that were to happen, your life savings will be safe only if you planned ahead and created an LLC that owned the vehicle at the time of the accident.\u00a0 If an accident occurs when the vehicle is owned by an LLC, the defendant in the lawsuit will be the owner of the vehicle – the LLC.<\/p>\n

If any of the following situations applies to you and the car, truck or vehicle you or your business owns, you should form an LLC and transfer title to the vehicle to the LLC for asset protection:<\/p>\n