I'd like to finally get my major finances in order including existing asset protection for the future.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have no issue spending the $ for a good attorney, but am wary of the fact that many supposed "asset protection" attorneys talk big, but might not really know what they are doing . What keywords should I be listening for when I speak to them for the first time, and what strategies should I be wary of? I've heard horror stories on other boards about lawyers suggesting trusts/etc that are completely worthless, and just looking for some guidelines to help me in my search for an attorney. Any help is much appreciated!
Full Version: Asset Protection
QUOTE (jen10001 @ Sep 10 2009, 06:25 PM) 
I'd like to finally get my major finances in order including existing asset protection for the future.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have no issue spending the $ for a good attorney, but am wary of the fact that many supposed "asset protection" attorneys talk big, but might not really know what they are doing . What keywords should I be listening for when I speak to them for the first time, and what strategies should I be wary of? I've heard horror stories on other boards about lawyers suggesting trusts/etc that are completely worthless, and just looking for some guidelines to help me in my search for an attorney. Any help is much appreciated!
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have no issue spending the $ for a good attorney, but am wary of the fact that many supposed "asset protection" attorneys talk big, but might not really know what they are doing . What keywords should I be listening for when I speak to them for the first time, and what strategies should I be wary of? I've heard horror stories on other boards about lawyers suggesting trusts/etc that are completely worthless, and just looking for some guidelines to help me in my search for an attorney. Any help is much appreciated!
You must be like Super Girl. How did you manage to get rid of your business debt, the debt on your land, etc all in about a year and a half? And end up with great credit? And in NV? And being that your primary income generator is Real Estate? Kudos to you!!
QUOTE (jen10001 @ Sep 10 2009, 08:25 PM)
I'd like to finally get my major finances in order including existing asset protection for the future.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have trouble believing everyone gives you this advice. Seems to me it would serve no purpose whatsoever except to transfer money from your pocket to some lawyer's wallet, while complicating your life and limiting control of the property in the process, and possibly eliminating your personal tax benefits relating to the properties.
Seriously, what purpose is that even supposed to serve? And don't say "asset protection", I don't know what that's supposed to mean.
QUOTE (Kevin20 @ Sep 11 2009, 12:11 AM)
QUOTE (jen10001 @ Sep 10 2009, 08:25 PM)
I'd like to finally get my major finances in order including existing asset protection for the future.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have trouble believing everyone gives you this advice. Seems to me it would serve no purpose whatsoever except to transfer money from your pocket to some lawyer's wallet, while complicating your life and limiting control of the property in the process, and possibly eliminating your personal tax benefits relating to the properties.
Seriously, what purpose is that even supposed to serve? And don't say "asset protection", I don't know what that's supposed to mean.
I work for the kind of lawyer that gets this type of question often. He doesn't draft legal documents, so he gives the honest answer.
The reason people transfer properties like this to an LLC or a Corporation is to shield themselves from liability in the event that anything should go wrong at the property. Say some kids are playing in the vaant lot, and one of them gets hurt, and there was something on the land that's not up to code. Well, she could get sued, and losing is a real possibility. Say the family wins a settlement for $1 Million because the kid lost a leg. That actually happens, and its more common than you'd think, and if you own the property personally, they can force you to start liquidating your assets to satisfy the civil judgement.
The advice we give at work: if you can get an LLC setup by a decent attorney without paying too much, its probably a good idea. Otherwise, get yourself an umbrella insurance policy to cover you in the event that a liability should arise. They're generally pretty cheap (couple hundred bucks a year for a couple million dollars in coverage), and provide you sound protection. The LLC route is cheaper each year (in most states) but you risk losing the property if the LLC is sued, and the LLC forced to liquidate its assets which in this case is just the property). The insurance is a more expensive alternative, but you won't risk losing the property.
Basically, "asset protection" is protecting your assets from a lawsuit. By holding them in the LLC, the company gets sued, but the liability is limited to the company, she won't lose her home.
Some people say you should do it to save on your taxes. These people are either crooked, or misinformed. Sometimes both.
nice writeup troy
ty
ty
QUOTE (TroyP @ Sep 11 2009, 02:55 AM)
QUOTE (Kevin20 @ Sep 11 2009, 12:11 AM)
QUOTE (jen10001 @ Sep 10 2009, 08:25 PM)
I'd like to finally get my major finances in order including existing asset protection for the future.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
My current situation is as follows:
1) Primary Residence (homesteaded since 2002) in NV, owe approximately what it is worth. I'm not having problems making the payments, have 9 years left on a low-rate 15yr loan, and need a place to live, so it is as good as anyplace else.
2) Vacant Land (no rental income) owned free and clear in California purchased in 2000 and paid off in 2005, value of approximately 250K.
3) I am unmarried, both properties are held personally (ie as a single woman), and have great credit.
4) I have no credit card debt, no skeletons that I'm aware of (ie upcoming or active lawsuits/ex-husbands), no auto loan, plenty of insurance coverage, etc.
I am constantly told by practically anyone with a heartbeat that I should put my properties in a trust/LLC/etc., but am concerned about doing the wrong thing and messing up my situation down the road. Am less worried about protecting my primary residence as it is already well-encumbered, but would obviously like to protect it down the road as the principal is paid down.
I have trouble believing everyone gives you this advice. Seems to me it would serve no purpose whatsoever except to transfer money from your pocket to some lawyer's wallet, while complicating your life and limiting control of the property in the process, and possibly eliminating your personal tax benefits relating to the properties.
Seriously, what purpose is that even supposed to serve? And don't say "asset protection", I don't know what that's supposed to mean.
I work for the kind of lawyer that gets this type of question often. He doesn't draft legal documents, so he gives the honest answer.
The reason people transfer properties like this to an LLC or a Corporation is to shield themselves from liability in the event that anything should go wrong at the property. Say some kids are playing in the vaant lot, and one of them gets hurt, and there was something on the land that's not up to code. Well, she could get sued, and losing is a real possibility. Say the family wins a settlement for $1 Million because the kid lost a leg. That actually happens, and its more common than you'd think, and if you own the property personally, they can force you to start liquidating your assets to satisfy the civil judgement.
The advice we give at work: if you can get an LLC setup by a decent attorney without paying too much, its probably a good idea. Otherwise, get yourself an umbrella insurance policy to cover you in the event that a liability should arise. They're generally pretty cheap (couple hundred bucks a year for a couple million dollars in coverage), and provide you sound protection. The LLC route is cheaper each year (in most states) but you risk losing the property if the LLC is sued, and the LLC forced to liquidate its assets which in this case is just the property). The insurance is a more expensive alternative, but you won't risk losing the property.
Basically, "asset protection" is protecting your assets from a lawsuit. By holding them in the LLC, the company gets sued, but the liability is limited to the company, she won't lose her home.
Some people say you should do it to save on your taxes. These people are either crooked, or misinformed. Sometimes both.
thanks for an excellent explanation, yes I've seen asset protection used in the context of protection from liability/suit and umbrella insurance policy advice;
another context is shielding of assets of seniors prior to qualifying for Medicaid payments of nursing home expenses (very gray area IMHO)
Very good advice. Gonna make note of it 
you also might want to consider an umbrella policy if you are concerned about liabilities. 1 million in coverage costs us $145 a year.
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