Can using an LLC simplify investing and provide asset protection?
Yes. Many investors using self-directed IRAs to purchase real estate, use LLCs to simplify their investing and to provide asset protection. For example, if an investor(s) is investing in a commercial or industrial property, they may want to protect their personal assets from lawsuits. The LLC protects its members from personal liability regardless of the type and magnitude of the suit. In terms of simplification, LLCs consisting of multiple members can appoint one member to process all of the required documentation associated with a real estate purchase as opposed to have a dozen or so handling the paperwork, as would be the case if they invested directly into the property as co-tenants. As assets such as real estate are purchased they are acquired in the name of the LLC and not the IRA, just as if your IRA were a stockholder in IBM. The IRA IBM shareholder owns shares but does not participate in IBM’s business affairs, but shares in its success through stock appreciation and dividends
