Mark Kohler explains that forming an LLC doesn't protect you if you misuse loan money. Courts strip away liability protection when you skip basic formalities like proper documentation and record-keeping, even after you've filed the paperwork and got a tax ID.
If you're operating in good faith, and you're doing things legally, and as you should, you're really using those loan funds to put it into that real estate deal you said they were supposed to go to, just know that the LLC or an entity or corporation is not going to protect you from misuse of funds. If you're coming into a commercial agreement, whether this is a loan or anything else, you need to use it for what you said you were going to do. Okay, so I think we can take that off the table. Because most of us listening, we think our clients especially are operating in good faith, right? They're not raising money or getting loans like this. improper uses. If you take that off the table, I think what we see the most and what we're cleaning up is a lot of these formalities and stuff that people forget about in their LLC documents. They just start with that piece of paper that got approved from the state, and maybe they got a tax ID, and they're like, I'm good, I've got it. Well, that's what the court's saying. No, there's all these other formalities you should be doing. You don't need someone to put a stamp on it, but it's stuff that you have when you have an LLC that you need to make sure you've got.
The secret to managing your family's future #financialfreedom #estateplanning #shorts
Moving Property to an LLC: What They Don't Tell You #realestate #investing #tips
