40 acres and a huge personal liability
September 18, 2012 9:58 AM Subscribe
My friend owns a property jointly with several other family members. What are his options for 1) limiting his liability 2) optimizing the legal/tax situation for hypothetically putting capital improvements into the property and 3) optimizing the legal/tax situation for transferring ownership when a part-owner passes away or sells their interest?
He vaguely thinks forming an LLC would be the way to go but wants to know more, and possible downsides of forming an LLC. He is also very interested in learning more about liability both ways, meaning what happens if someone hurts themselves on the property and sues OR what happens if someone goes after one of the joint owners' assets because of something that happened elsewhere. Would some sort of umbrella insurance be a simpler option?
The basic goal here is to protect the owners from liability and to shield the property from taxation to the extent possible. (This is more regarding taxes involved in transferring ownership; an LLC won't effect property taxes right?)
You are not our lawyer/accountant. He will consult a lawyer and accountant. This is just to help inform the questions he will ask those people. This is in New York state. This is a question about the legal and financial aspects, he knows that there are a lot of emotional/social issues regarding a family owned property but that is NOT the subject of this question.
He vaguely thinks forming an LLC would be the way to go but wants to know more, and possible downsides of forming an LLC. He is also very interested in learning more about liability both ways, meaning what happens if someone hurts themselves on the property and sues OR what happens if someone goes after one of the joint owners' assets because of something that happened elsewhere. Would some sort of umbrella insurance be a simpler option?
The basic goal here is to protect the owners from liability and to shield the property from taxation to the extent possible. (This is more regarding taxes involved in transferring ownership; an LLC won't effect property taxes right?)
You are not our lawyer/accountant. He will consult a lawyer and accountant. This is just to help inform the questions he will ask those people. This is in New York state. This is a question about the legal and financial aspects, he knows that there are a lot of emotional/social issues regarding a family owned property but that is NOT the subject of this question.
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New York law may differ.
posted by MonsieurBon at 11:19 AM on September 18, 2012