Should you put your rental properties into an LLC?

This caller believes that having lots of umbrella insurance is a better solution than putting his rental properties into an LLC.

Attorney Tom Olsen: John, you're on News 96.5. Go ahead.

John: Good, I guess morning. Right? I've got several rental properties and kind of about the LLC versus. I recently was informed by Allstate I could punch up my personal liability policy to 5 million bucks to cover them all, and the LLCs, it sounds like a great idea, but to every year I got to do the taxes.

Attorney Tom Olsen: I know, yes.

John: I'm mostly counting. Every property cost me about $704,000 just to get the taxes done.

Attorney Tom Olsen: Exactly.

John: I mean, all right, my thought or question is this. $5 million, that means It's a big check for Allstate to write. I've always been told that it's called personal liability. It can't be something like where the guy just decided to jump off your roof.

Attorney Tom Olsen: Well, John, let's not get off track. I hear what you're saying. You're saying that having an individual LLC for each of these rental properties is expensive. I'm in agreement with you, John, that that money can be better spent by getting a $5 million umbrella policy.

Now, John, if somebody gets hurt on your property, whether it's their fault, whether it's your fault, whether they jump off the roof, they're going to sue you because you're the property owner. Count on it. Count on it.

John: Okay.

Attorney Tom Olsen: Don't look at it like that John but do look at it like, hey, when you've accumulated wealth, including having these rental properties, your best defense is to be well-insured, and that includes having an umbrella policy.

John: All right. The umbrella right now for $5 million is running me about $1,200.

Attorney Tom Olsen: $1,200 for $5 million worth of coverage is unbelievable, and it's a great deal, John.

John: Great deal. Thank you, sir.

Attorney Tom Olsen: All right John. Thank you for calling. We appreciate it.