Should you put your rental property into an LLC?

Attorney Tom Olsen: That he has a rental property, wants to know if he should put that rental property into an LLC. That's a common question that we get on a pretty regular basis. I'm on the fence about that. We can go either way. I do say this and we're about keeping it simple. Generally, as far as keeping it simple, I'm okay with you keeping your rental property and your name only, but just make sure that you get good insurance on your car, on your house, your rental property, and on top of that, have an umbrella policy that would cover any huge losses that you might suffer.

I would say the one exception to the rule would be is that if you have an Airbnb-type property where you have multiple people coming every month, that property definitely should be into an LLC.

Attorney Chris Merrill: Exactly. I know that, Tom, the other question that we are asked with that, if somebody has, for example, one rental property, then that may be a reason where again, it really comes down to, like you said, the umbrella policy. Then if they really want to have that additional kind of layer of protection with the LLC, fine, but here's where I think too that people it's a little bit also on the fence with regards to, if they have three or four, then am I correct as well that we don't necessarily say, "Hey, if you put all four in one, you're in the same boat. Then you have to really say, "Okay, am I going to do an LLC for each one?" Because really protection wise, that's the best. Then it goes back to what you're saying, is it really better to just have the umbrella policy?

Attorney Tom Olsen: Right. By the time you pay for the setup fees and the annual fees of these LLCs, you could buy yourself a very nice $1 million, $2 million, $3 million umbrella policy, and it keeps it simpler. I think it's a better investment for people.