What is the best small business protection from lawsuits, a LLC or Trust?
3 attorney answers
I agree that either an LLC or corporation are best suited for your purposes, however, the answer to your question is not simple and straightforward. You may want to separate out the ownership of your home and the company that runs the assisted living facility and have one rent from another. Further, the determination of what is best for you is based upon a number of other factors such as the advice of your tax professional (accountant or tax attorney) and your insurance agent. We recommend a team approach where your legal, tax and insurance advisers work together to come up with the best solution for your particular situation.
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You will need to form a corporate entity (LLC or corporation, although LLC seems more appropriate based on the brief facts you stated) rather than a revocable trust. This is not to say that a revocable trust cannot be an attractive option in the estate planning aspect of your affairs, but only that the trust will not accomplish the limited liability goals you referenced in your post. The type of lawyer who could be of maximum value to you would be a lawyer who regularly works with small business owners in both corporate governance and estate planning. (Note that the lawyer should also be aware of state-law specific regulations of the assisted care industry, in order to correctly advise you on compliance regimes.) Avvo's "Find a Lawyer" feature is a good vetting resource, and I would also inquire among your local connections, including local bar associations, for possible referrals. Approaching your business and estate planning goals simultaneously will be highly beneficial to you in preventing legal issues before they actually materialize. Best wishes to you in 2020.
Use a LLC. An LLC gives insulation against liability generally. A trust serves a wholly different purpose. There is a concept known as a business trust, but even if permitted in CA that is much too complicated. A simple LLC is fine but carry ample insurance since you will have people in your care.