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Follow on Google News | Protecting your assets when Investing in Real EstateBy: Jan Werner For many years, insurance constituted enough of a defense, or at least a stop-loss, for property investors. Today, that’s changed significantly and more preventative measures must be taken. With the advent of new corporate classifications and existing legal structures, various protections are available. Property Investor Asset Protection Some investors have formed corporations to protect their real property assets. This makes sense, as “C” corporations and “Subchapter S” corporations do establish legal protections of personal assets. However, these structures have tax consequences which do put a financial burden on the owner. Here are some proactive solutions to protecting assets: LLC’s. A Limited Liability Corporation, or LLC, is now a favorite for real estate investors because it offers the same legal protections, but does not burden the owner with tax obligations. These structures are easy to setup and have all the advantages of traditional corporate entities. Liability insurance. You likely have insurance for your investment properties, but have not reviewed the policies in some time. Umbrella insurance is only as good as the amounts covered. Take some time to revisit your policy and make increases where necessary. Formalize any partnerships. If you are a partner in one or more real estate investments, it’s sage advice to formalize said partnership. Just as in a marriage with a joint account, you’ll be held liable for the actions of your co-investor. This will also clearly define responsibilities and percentages. Trusts. Yet another way to protect your real estate assets is by creating a trust. There are two types of legal structures that work best, living trusts and land trusts. There are many benefits to forming a trust, and most investors place their trusts inside an LLC, which is then put under a living trust. This is ideal for asset protection and estate planning purposes. The point of establishing any protection is to limit exposure. When an investor is named as a defendant in a lawsuit, it’s usually because the plaintiff’s attorney conducted due diligence which reveals significant assets. Those assets are what’s most appealing and vulnerable; therefore, these holdings need to be shielded accordingly. For help investing in Lake Gaston Real Estate please contact www.lakegastonteam.com. End
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