PROTECT YOUR PROPERTY FROM CREDITORS!

Are you concerned about creditors going after real property that you own?  Whether you have current creditors or are potentially worried about future creditors, protecting any property you own is always a smart move.  Thinking proactively could save you and your family hundreds of thousands of dollars in equity that may exist in any real property you own.  An asset protection plan is crucial.  Call Today to find out more!

The Threat

Your real estate may be at risk to creditors if . . .

  • You own the property in your own name. 
      • If you get sued or incur debts, any judgment or commercial creditor may be able to “attach” your property to satisfy your unpaid financial obligations. It would not matter whether the financial obligation is related or unrelated to your property.
      • Owning real estate in your own name allows the property to be treated like any other asset; meaning, if a creditor is able to take your money or cars, he or she can also take an interest in your property.  
  • The property is owned by an operating company. 
    • You often hear that you should  “put property into an LLC.”  However, additional measures are required to effectively protect your property.  Simply putting property into an LLC exposes the property to corporate creditors. 
    • The company’s assets, including property, are at risk if the company gets sued in relation to the property or if the company incurs debt based on its daily business activities and operations.

Common Misconceptions

Many people believe that if they simply transfer the deed to their property over to their children or a close family member, then the property will be safe from creditors.  This is only half-true and a much better solution exists to accomplish the same goals. 

Transfering a deed into the name of someone else leaves you with no ownership rights in the property any longer.  While this may protect the property from your creditors, it will not protect the property from the creditors of the person whom you transferred the deed to. 

Simply forming an LLC is also not a quick fix.  There are other considerations to take into account to make sure that the property is sufficiently protected.  If the LLC engages in business transactions unrelated to the property or exposes itself to a lawsuit, then the property could be attacked by judgment creditors or debtees.

The Solution

  • Establish An Irrevocable Third Party Trust. 
      • Irrevocable trusts can provide strong asset protection benefits.  Individuals can set up an irrevocable trust and transfer the deed to their property into the trust’s name.  If done properly, the individual’s creditors can no longer attach the property, now held in trust. 
        • In most cases, we set up an irrevocable trust naming a close relative (ex. a child) as the “trustee” and the “settlor” is the current property owner (ex. mother).  The current property owner is given a “life estate” in the property, allowing him or her to use the property uninterrupted for his or her lifetime.  Once the beneficiary passes away, “remaindermen” are specified.  These “remaindermen” are essentially those persons whom the settlor wishes to leave the property to after he or she passes away. 
  • Establish A Holding Company.
    • Limited liability companies (LLCs) are popular choices because they offer liability protection with limited formalities.  As mentioned earlier, there are other considerations that a knowledgeable attorney can help you with.  The LLC should only hold your property; the LLC should not engage in unrelated business activities. 
    • Need Help forming an LLC or other business entity? Fill out our simple CORPORATE ORDER FORM and we will take care of the rest! 

WAIT WAIT WAIT . . . 

No matter how you chose to protect your property, you must consider purchasing blankcomprehensive insurance coverage!  There are so many coverage options available that could be tailored to your individual needs.  Whether it is an investment property, a primary residence, or a business property, insurance coverage will offer you unparalleled protections.  For more information, contact our most trusted financial advisor and insurance expert Peter Craig at [email protected].

Gulotta & Gulotta, PLLC has been helping clients protect their assets using both these methods.  If you have questions or would like to schedule an appointment, do not hesitate to contact us!  We are here to help you. 

 

 

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