Over the course of your life, you will (hopefully) amass what we call “assets” (aka stuff worth money). Some of those assets might be growth or income-producing assets, such as stocks or real estate. While others may just be stuff that continually loses value, like a car or IKEA furniture. You also may just have some money (aka cash) in the bank sitting there for a rainy day.
There are a couple of primary ways you can lose your assets…1) is by making really poor investment decisions where you lose money instead of making it…boo, and 2) by getting sued and losing. This post is mostly about being prepared for the latter.
You can get sued for anything it seems, and lawsuits are a primary way we can lose our assets. Here are two more areas in which you may be susceptible to lawsuits.
Largely this would include something “bad” happening at your residence, like your dog mauling the neighbor's kid. Or while driving your car, you hit and maim someone. Beyond that, you could perhaps get sued for slander or something weird like that.
If you make your living as a freelancer, independent contractor, or own any kind of business, you are always more open to lawsuits. This could be anything like you causing some accident while doing a freelance gig, or committing professional malpractice in some way.
How do I protect my assets in regards to real estate investment risk?
How do we avoid this risk and attain asset protection? You set up “Entities” to hold, and more specifically “silo” your assets. What kind of entity did you ask? Well, for real estate, it usually comes in the form of an LLC
Good question. While my nutshell statement is true, there are a few more things you might want to consider when deciding how to develop your asset protection plan.
What else do I need to know about real estate LLCs and asset protection?