Part 4: Limited-Liability Companies (LLCs)
By Robert L. Bolick, Esq.
This article is the fourth in a six-part series on simple and reasonable steps you can take to protect your assets. This issue focuses on how to protect your rental properties, office and medical equipment. In upcoming issues you can learn how to protect cash values of life insurance and accounts receivable.
With the flurry of lawsuits today, more and more physicians are looking for ways to protect their hard-earned assets. The following is a brief discussion of how to protect your rental properties, office and medical equipment.
What is a Limited-Liability Company?
A limited-liability company (LLC) is an entity which provides superior asset protection benefits than a corporation with greater flexibility of operation and tax benefits. An LLC is an ideal vehicle for holding rental properties, your office and medical equipment.
How Can an LLC Protect my Office or Rental Properties?
If you have rental properties (or own your office building for your medical practice) held in an LLC, no claimant who is injured on the property can sue you personally. Conversely, if you are personally sued and the “bad guys” win, the judgment creditor cannot lien or encumber your property held in an LLC.
Under Nevada law, a judgment creditor merely obtains a “charging order” which prevents him from:
(1) attaching any assets held in the LLC;
(2) forcing you to distribute any assets; or
(3) forcing you to dissolve the LLC (so he can get at the assets).
The creditor is forced to simply sit on his hands and wait for you to make a distribution (or until hell freezes over, whichever comes first). Any rental property, including your professional office building, should be held in an LLC.
How Can an LLC Protect my Medical Equipment?
If you own medical equipment in your professional corporation (PC) or professional limited-liability company (PLLC), it can be attached by any creditor arising from your practice on a malpractice or other claim.
Instead, you can hold all of your equipment in a separate LLC and lease it to your PC or PLLC. Not only does this protect your equipment, it can have the added benefit of getting money out of your PC or PLLC in a tax-advantaged way as passive (not earned) income.
Final words to the wise: Don’t delay. The sooner you get your protection in place, the better. Life is too short to constantly worry that all of your years of schooling, training, scrimping, saving and hard work could all vanish overnight.
Robert L. Bolick is the senior partner in the law firm of Durham Jones & Pinegar in Las Vegas, where he has practiced for over 22 years. His primary areas of practice are asset protection and estate planning. Mr. Bolick has an “A/V” rating from Martindale-Hubbell, the highest professional rating for an attorney. He is listed in “Nevada Super Attorneys” (top 5% in his field). He was named Outstanding Estate Planning Attorney of the Year by the Nevada Business Journal. He has authored numerous articles and publications on asset protection and estate planning, and is a frequent lecturer on these topics. Mr. Bolick is a member of the State Bars of Nevada, California, Arizona, Utah and Hawaii.