What is Real Estate Asset Protection?

What is Asset Protection and more importantly why do you need to worry about it? Let's define asset protection as implementing a strategy to limit losses from being sued, keeping taxes as low as possible and making sure your heirs receive your estate when you die.

The goals of an asset protection program are privacy, control and protection from liability.
Privacy relates to ownership information of your assets. You want this information to be as private as possible. If you are sued and a judgment is entered against you, you want to maintain control over your assets. Protection from liability allows you to shield your assets from claims against you no matter how large.

Attorney's will look at a defendants assets to make a decision about taking a case or not. If you don't have any assets (in your name) they may decide there's nothing to win so why bother. The key is to own assets in a way that allows you to keep control and profit from them while at the same time keeping them untouchable by others.

Liability insurance is an important element in protecting your assets. Insurance is not asset protection in itself but it provides risk management. A competent insurance broker can help you to decide how much and what type of insurance is appropriate for you.

Owning real estate with the correct entity is important for both protection and tax implications. I have used both corporations and LLC asset protection entities as well as land trusts. The specific circumstances and goals for ownership of each property will dictate how to set up ownership. In some cases you may want to separate ownership from management thus limiting liability to the owner by having the management company interact with the public.

Over the years I have gathered the information that allows me to make decisions about what entity to use for my businesses. Armed with that knowledge I often times use the LegalZoom to set up my corporations and LLC's quickly and inexpensively.

Taxes are also a factor when deciding on how to hold properties. You should spend the money for guidance from an attorney and CPA to ensure you meet your real estate investment protection goals.

The effort you put into your real estate asset protection plan will give you peace of mind that in the event of a lawsuit you have minimized your exposure