Wednesday, November 30, 2011
Limited liability companies, formed in states that allow LLC use for non-business activities, are a useful and desirable tool for holding family personal-use property, such as vacation homes. They should allow limited liability protections, protection from intermeddling creditors, and transaction structuring possibilities that are not available in property coownership form or which, if available, are more difficult to realize in a coownership arrangement than they are through use of an LLC operating agreement. When using an LLC to hold family property it is necessary to draft a customized and artful operating agreement that is sensitive to particular family dynamics and that allows use, control and financing of the property with a minimal amount of undesirable friction. My experience is that this is not an easy drafting task.