Protect Your Assets and Your Business
Shield Your Wealth - use Trusts, Corporations, and Other Entities

If there is any potential downside to becoming rich, it is asset protection. The more money you have, the bigger a potential target you become. Therefore, asset Protection may not sound so scary, or does it?

Scary, sure considering  nearly one out of every six jury awards in the U.S. exceeds $1 million. In some states, one out of every four jury awards exceeds $1 million. During the last five years, more than seven percent of all U.S. companies, both large and small, suffered a lawsuit costing them in excess of $5 million.

The good news is that although you may not be able to avoid being a target, you can avoid getting hit. Protect your assets by shielding your wealth through entities and other protections.

Asset Protection Basics

Successful people are not only interested in making money, but also in protecting it. You can have many streams of income, but if you aren't careful about how you develop and protect them, you could lose them, all. It's important to understand how to protect what you've worked so hard to get.

Realize that asset protection for someone who owns 20 hotels and 15 apartment buildings will be more significant than for someone who just has a beat-up car and an overdue credit card bill. So start thinking about asset protection today, even though you may not have any worries now. Here are two suggestions:

   1. Stop officially "owning" things. The more you own, the more likely it is that you will get sued. Research indicates that if you earn more than $100,000 a year, you have a one-in-four chance of being named in a lawsuit. If you earn at least $250,000 a year, you have a one-in-two chance of being named in a lawsuit. Learn how to take things out of your name so that you don't "own" them--one of your entities does.
   2. Get assets out of your name. The fact is, most wealthy people don't put possessions in their own names. If your business is real estate, you can buy property in a corporate name or in a trust name. You can set up a land trust or a true irrevocable trust. Buy and sell properties, own properties, and partner with people through trusts and corporations so your name won't be on the deed or title.

Entities that Offer Asset Protection

Several types of business entities exist that can serve your individual needs. Insurance is your first line of defense.  Most businesses in the United States operate through a corporation or partnership of some kind. These entities make you look more professional, allow you to run your business(es) with a level of asset protection, and can continue past your life if you choose.

There are two types of trusts for you to become familiar with are land trusts and irrevocable trusts.

Land Trust
Do you know that the worth of your home and the original amount of debt owed is on public record when your home is owned in your name? Anyone, including a plaintiff's attorney, can find out what it is, where it is, what it is worth, and what the approximate debt on it is. To be anonymous, many people take their properties out of their names and put them into a land trust. Then you don't own it; the land trust does.

This is an excellent way to hold real estate or "take title" to property. Investors, real estate companies, and corporations often form a land trust--a legal entity designed specifically to hold real estate. A trustee is named, and you are the beneficiary. But only the trustee's name appears in public records, not yours. You have liability protection because it is a separate entity--and best of all, you have anonymity.

The thing to remember about land trusts is that you control it and still get the tax advantages, even though it's not in your name. Trusts are also advised if you are wholesaling or lease-optioning houses. Put them in a land trust that you control.

Come back tomorrow for your lesson on irrevocable trusts.

As always, your questions and comments are encouraged. Contact us at www.minocquamortgage.com or marcia@minocquamortgage.com