Asset Protection for Real Estate Investors

Asset Protection for Real Estate Investors

As many Colorado residents have seen over the past few years, investing in Real Estate can produce great returns when done properly. Part of properly investing in Real Estate is having the proper tools in place to protect you from lawsuits.

As an owner of real estate, you are at risk of being sued for any of the following reasons…

1. Injuries of a tenant,
2. Injuries of a guest of a tenant,
3. Injuries of a trespasser on your property,
4. Defects in transferring your property to another person, and
5. Environmental hazards.

By creating an Asset Protection Plan, you can enjoy the benefits of owning real estate without subjecting your property to being lost in a lawsuit.

The first step in creating an Asset Protection Plan is to form a single member Limited Liability Company to own your various real estate investments. A single member Limited Liability Company does exactly as its name indicates and nothing more, it limits your liability. While standing alone, a single member Limited Liability Company does not provide asset protection. Once integrated into a properly designed Asset Protection Plan, however, it will protect your property from lawsuits.

The second step is to have your various Limited Liability Companies owned by an Multimember Limited Liability Company. A multimember Limited Liability Company will limit a creditor of yours to receiving only a Charging Order.

A Charging Order does not allow a creditor to take your property. It simply gives them the right to receive distributions when you choose to make distributions. During the time that you withhold distributions, you may pay yourself a salary for managing the multimember Limited Liability Company and a creditor is still required to pay the taxes on any income the Multimember Limited Liability Company.

While the displeasure of receiving a Charging Order is usually enough to cause a lawsuit to be dismissed or to have the case settled on favorable terms, it is also important to have a back up plan in case a result oriented judge is inclined to disregard your Multimember Limited Liability Company.

The backbone of your Asset Protection Plan is The Bridge Trust™, which allows you to keep full control of your property when a lawsuit is not being threatened. Then if your property ever comes under attack, The Bridge Trust™ transfers the value of your property beyond the reach of the U.S. court system. At all times, you remain the beneficial owner and are able to use and enjoy your property.

To learn more about Asset Protection for real estate investors, give us a call today at 720-924-6171.