How Can an Asset Protection Strategy Help Real Estate Investors ?

Article Courtesy of Scott Smith :

An asset protection strategy can help you protect and grow your business. 

But there’s no “one-size-fits-all” asset protection plan for investors. The right strategy depends on your portfolio, goals, and the size of your business. 

Here, we’ll cover some of the basics.

Why You Should Consider an Asset Protection Strategy .

Many real estate investors set their business up as a sole proprietorship. All of their assets are under their name, without much organization. 

This approach comes with a lot of logistic and legal disadvantages. One of these disadvantages is vulnerability.

As a sole proprietor, you are considered liable if someone gets hurt on your properties. In the event of a lawsuit, lawyers can easily find the target on your back and go after all of the assets in your portfolio. 

By putting an asset protection strategy in place, you can organize and compartmentalize your assets. This compartmentalization looks different for every business, but it usually means that each asset is separated, and all assets will be separated from you personally. 

How to Compartmentalize Your Assets with a Series LLC

complete control.) Most investors form multiple LLCs and put a single asset in each. There is no limit as to how many of these LLCs you can create. 

Scaling your asset protection strategy is easy with a Series LLC – all the while, you are saving money and costs. After receiving some guidance from legal services professionals, you can begin to fill out series documents from your own home and take control over the organization of your business.

Asset Protection Strategies Limit Your Personal Liability

This is probably not the first time you have heard about LLCs. They are one of the hottest topics in the world of asset protection. The most important benefit of LLCs is that they eliminate personal liability. By putting assets in an LLC, they will be safe from seizure in the event of a lawsuit. 

Asset protection strategies go beyond setting up these structures. Plaintiffs may try and make a case to “pierce” your corporation and take money from your business. An experienced lawyer can help you anticipate these cases and build a strong defense as a part of your overall asset protection strategy. 

With an LLC, however, you have a very low chance of seeing a courthouse in the first place. As lawyers are preparing for a lawsuit, they will research a real estate investor and assess their net worth. If they see that the lawyer’s assets are all separate, there isn’t much for the lawyer to go after. They will move onto the next case and the lawsuit will not be filed.

Asset Protection Strategies Include Anonymity

LLCs aren’t the only structure that can separate an investor from their assets. In fact, many investors use an additional structure that erases their name from the property altogether. An anonymous land trust takes your name off of public records and instead lists the property name under the trust. Investors can still act as a beneficiary, receiving all of the benefits of the property. Trustees technically control the property, but there are ways to maintain control and stay protected. 

Protection From Identity Theft 

Assets aren’t just vulnerable to lawsuits. In 2018, 14.4 million people fell victim to identity theft. Scammers can be extremely convincing, tricking even the smartest investors. Identity theft can threaten your assets and turn your business upside down in an instant. Anonymity keeps your assets away from your name and directs scammers elsewhere. Protect your personal information with anonymity. 

You Don’t Have to Build an Asset Protection Strategy Alone

To wrap things up, an asset protection strategy may include:

The Series LLC

A Delaware Statutory Trust

  • The Series LLC
  • A Delaware Statutory Trust
  • A Traditional LLC
  • An asset-holding company. 

All of these structures offer unique benefits that may or may not fit your business size and plan. The right structure can eliminate most (if not all) chances of getting sued.

All of these structures offer unique benefits that may or may not fit your business size and plan. The right structure can eliminate most (if not all) chances of getting sued. 

Remember: At the end of the day, any asset protection strategy is better than no asset protection strategy. An asset protection attorney can help you assess your business, understand your investments, and devise the most efficient plan for you. 

Stay proactive and protect yourself with an asset protection strategy. You don’t have to ever see the inside of a courtroom if you take control of your assets today. Don’t delay – reach out to a legal services provider and start to enjoy the benefits of an asset protection plan.

About the Author

Scott Smith is an Attorney and CEO Providing Real Estate Investors with Asset Protection, Entity Restructuring, Estate Planning and More

You can find Scott at:

linkedin.com/in/scott-royal-smith

https://royallegalsolutions.com/

 

You can find me at :

 

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