520.546.3558
BOUMAN LAW FIRM
  • Home
  • About Tom
  • Estate Planning
    • How to Plan Your Estate (Start Here)
    • Revocable Living Trust
    • Inheritance Protection Trust
    • Financial POA
    • Health Care POA
    • Living Will
    • Asset Protection Planning in Arizona
    • Intro to Arizona Domestic Asset Protection Trusts
    • Asset Protection Exemptions in Arizona
    • Protect Home from Creditors in Arizona
    • Car/RV/Mobile Home Titling
  • Fees
    • Estate Planning Fees
    • Estate Administration Fees
  • Scheduling
  • Recent Law Updates
  • Office Info
  • New Client Forms
  • More Articles
  • Bouman Law Firm Blog
  • Probate & Trust Administration
    • How to Administer an Estate (START HERE)
    • Probate in Arizona
    • Small Estate Affidavit
    • Final Arrangements & Organ Donation
    • Trust Beneficiary Notices and Trustee Reports
    • Annuities
    • Debts of Decedent
    • Transfer Real Estate of Nonresident
    • Tax Filings for Estate
    • Duties of Trustee
  • Make a Payment
  • Buy a Book
  • Legal Disclaimers
  • Home
  • About Tom
  • Estate Planning
    • How to Plan Your Estate (Start Here)
    • Revocable Living Trust
    • Inheritance Protection Trust
    • Financial POA
    • Health Care POA
    • Living Will
    • Asset Protection Planning in Arizona
    • Intro to Arizona Domestic Asset Protection Trusts
    • Asset Protection Exemptions in Arizona
    • Protect Home from Creditors in Arizona
    • Car/RV/Mobile Home Titling
  • Fees
    • Estate Planning Fees
    • Estate Administration Fees
  • Scheduling
  • Recent Law Updates
  • Office Info
  • New Client Forms
  • More Articles
  • Bouman Law Firm Blog
  • Probate & Trust Administration
    • How to Administer an Estate (START HERE)
    • Probate in Arizona
    • Small Estate Affidavit
    • Final Arrangements & Organ Donation
    • Trust Beneficiary Notices and Trustee Reports
    • Annuities
    • Debts of Decedent
    • Transfer Real Estate of Nonresident
    • Tax Filings for Estate
    • Duties of Trustee
  • Make a Payment
  • Buy a Book
  • Legal Disclaimers

BOUMAN LAW FIRM blog

Will a LLC protect an Arizona resident's personal residence and non-retirement brokerage investments?

12/7/2020

 
No, because the LLC must have a legitimate business purpose.  A business purpose would include providing a service, product, or usable space to an unrelated person or company.  Every small business provides a service or product, or both, to the general public, while investment real estate provides a place to live or do business.  

Your personal residence does not have a business purpose and neither does your personal investment brokerage account.          

Arizona residents qualify automatically for a homestead exemption, which protects up to $150,000 of equity even if a judgment creditor forces a sale of the home.  For homeowners with more than $150,000 of equity, I may recommend either a major increase in homeowners liability insurance coverage or transferring the home into an irrevocable Arizona-based hybrid asset protection trust.  Neither solution requires a business purpose to implement.          

Other reasons you should not transfer your personal residence into an LLC are (1) loss of exclusion of taxable gain upon sale of a personal residence, (2) loss of mortgage debt interest deduction, (3) loss of homestead exemption, and (4) possible increase in property taxes.  

Likewise, while some may argue that a personal investment brokerage account has a business purpose, most would not.  Therefore, I would be wary of transferring a brokerage account into an LLC unless perhaps combined with other assets that do have a business purpose.  The safer approach is to either increase umbrella-type personal liability insurance coverage or transfer the brokerage account into an irrevocable Arizona-based hybrid asset protection trust.


Comments are closed.

    Author

    Thomas J. Bouman
    Attorney at Law
    Tucson, Arizona

    Archives

    January 2023
    March 2022
    January 2022
    December 2021
    December 2020
    August 2020
    April 2020
    March 2020
    January 2020
    December 2019
    July 2019
    May 2019
    January 2019
    November 2018
    September 2018
    April 2018
    January 2018
    December 2017
    October 2017
    June 2017
    April 2017
    February 2017
    December 2016
    November 2016
    October 2016
    September 2016
    July 2016

    Categories

    All
    Estate Planning
    NFA Gun Trusts
    Office News

    RSS Feed

All original works on this website are:
Copyright 2000-2023 by Thomas J. Bouman.  All rights reserved.  Seriously.