Asset Protection Strategies
Asset Protection planning is an ethical and acceptable form of wealth planning. It is the skillful application of legal techniques and strategies to protect the assets of an individual, family or business from future civil money judgments. Its goals are to provide an incentive for a plaintiff to settle a claim; to improve the client’s bargaining position; to offer options when a claim is asserted, and ultimately, to deter litigation in a judicial system that is unpredictable.
Asset protection planning is a complex area of the law involving the knowledge of debtor/creditor laws, fraudulent transfers, civil litigation, property laws, bankruptcy, and other tax planning, related areas.
Take action now to have an asset protection plan created for you that will provide you and your family with optimal financial security. You’re a phone call away from beginning to enjoy the comfort of having your assets protected.
Series LLC's: IF YOU OWN MULTIPLE PROPERTIES
If you own two or more rental properties held in your and/or your spouse’s name, you need a Series LLC as part of your Asset Protection plan.
Texas law allows the creation of an unlimited number of subsidiary LLCs ("series") under the registration of a master LLC. Each series holds one rental property and provides separate liability protection for each of properties within the respective series.
The Series LLC provides a wide range of benefits for its owners: (1) Protection from personal liability; (2) only the Master LLC requires a certificate of formation filed with the Secretary of State, which results in reduced start-up costs when an additional Series LLC is created; (3) unlimited Series LLCs can be created under the Master LLC; (4) each Series LLC enjoys separate liability protection from every Series LLC; (5) saving of administrative expenses; (6) less complex than corporations with subsidiaries; (7) versatility of business activities.
Traditional Use. The land trust is traditionally used to provide both privacy for the true owners of the property (the trust beneficiaries) and asset protection by discouraging lawsuits. However, it has multiple other benefits such as the ease of transfer of the beneficiary's interest in the trust without changing title to the real property; it allows for the multiple ownership of the beneficial interest; it bypasses probate; it is easily created and dissolved; and it has no tax reporting requirements.
Used as Security Instrument. The land trust can also be used as a short-term contractual security instrument in real estate loans in place of a deed of trust. In this application, the lender, typically a hard money lender, advances the money at closing to purchase the property and title to the property is conveyed to the trustee; the borrower does not take title, but is given a beneficial interest in the trust that entitles him to improve the property and receive the net proceeds of the sale, after paying off the loan. Should the borrower default in the performance of the any of the contractual obligations required by the terms of the trust, i.e., payment of property taxes, failure to pay subcontractors or suppliers, his rights as a beneficiary are terminated by written notice from the trustee. Upon termination of the borrower's interest, the lender has the exclusive right to control the disposition of the property.