Inside Creditors

In talking about liability protection, we have to differentiate between Inside Creditors and Outside Creditors.  Basically, Inside Creditors are those creditors who have claims against the entity that contains the assets itself.  If a business owner or professional has a rental property and places that property within an LLC, then if someone gets hurt at the rental property the claim can only be directed against the LLC, and the owner’s personal assets are, therefore, protected from such inside claims.  In fact, inside debt protection in of itself is of major importance and should be addressed by placing all business assets within either a corporation or an LLC and all real estate assets except for your personal residence within an LLC.