Ten reasons to use a limited liability company
A client asked me why a limited liability company was a good idea. With a nod to David Letterman, I offered ten reasons.
A Cottage LLC:
- Prevents a joint owner from forcing the sale of the cottage through an action for partition
- Is an alternative to allowing common law rules dictate how the cottage operates
- Prevents transfer of an interest in the cottage outside the family (this includes preventing an inlaw from acquiring an ownership interest in the cottage)
- Helps protect the owners from creditor claims
- Establishes a framework for scheduling use of the cottage
- Provides sanctions for nonpayment of cottage expenses
- Can serve as a vehicle for an “endowment” (money set aside to fund cottage expenses)
- Can require mediation or arbitration of family disputes
- Allocates control of the cottage between or among generations of owners
- Can help delay (but not avoid) the uncapping of Michigan property taxes
