I am interested in putting my assets–thus far two parcels of land–into an LLC as a holding company. I would also like to open my own advertising business, and put that into an LLC. Additionally, I would like to roll over my current 401(k)plan into a self directed IRA LLC. Can all of these be housed under the same LLC umbrella?

I do not want all of the funds I have, obviously, to be in the name of a retirement fund. I’m thinking that I need at least two LLCs legally. Can you please offer advice or an opinion?

– Lou, California


Answer

I don’t give legal advice here, however, I can answer a few of your questions.

But first, I need to ask why do you want your IRA in an LLC?

Your assets in an IRA are fairly well protected against creditors, and in bankruptcy. Did someone suggest to you to put your IRA in an LLC for estate planning or other purposes?

As far as your land and advertising business, you definitely want those separated into two LLCs.

You almost never want real estate (particularly developed real estate, but also land) in the same entity as your operating business.

The risk of liability crossing from one business/asset to the other is very great.

A problem in your advertising business can result in your losing your land, or vice versa, if all those assets are in a single LLC.

Land can be contaminated, for example, and the environmental laws hold the owner responsible even if the contamination is the result of other people dumping toxins on your property in the middle of the night! I once had a client who was threatened with millions of dollars in cleanup costs from the state government because the city had once operated a landfill, which leaked, on my client’s property. Even though the city was at fault, the state forced the client to pay for remediation, and it was up to the client to seek reimbursement from the city. Fortunately we worked out a settlement, albeit after significant legal fees. The last thing you want to do is expose all your assets to that type of risk

If the real estate is to be used by your business, the simple solution is to have your real estate LLC lease the land or building to your business LLC. This also allows you to move money around between entities for tax purposes, although that is a more advanced topic to discuss with a CPA.

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