Owning real estate or securities in a multi-member limited liability company has asset protection benefits by virtue of limited creditor remedies to attack your membership interest. What about owning personal automobiles, furniture, artwork, and other personal property in an LLC? Clients often suggest to me that they titled their household effects and cars in an LLC to keep the assets away from potential creditors.
I usually do not recommend ownership of personal property in an LLC because I do not think it will be effective protection. The issue is a “reverse piercing” of the LLC. LLCs, corporations, and other legal entities used for personal consumption and personal needs can be considered an extension, or alter-ego, of the individual owner. Furniture, cars, and other property used personally on a daily basis should be considered as personal assets and not the property of a separate entity.
If a debtor uses an LLC for personal uses a court likely will consider the LLC assets the debtor’s personal assets and make the assets subject to execution; the creditor should not be restricted to a charging lien against LLC interests on an alter-ego LLC.
Insurance is another issue. Some property insurers will charge higher rates to insure assets owned in the name of a business entity.