What is Asset Protection Planning (and How Do You Achieve It)?

One of almost everyone's life goals is to accumulate enough wealth (in the form of these assets) in order to eventually retire (or do whatever makes us happy…which could also be to continue working, if you like working).

When you are young and don’t have much to your name, you don’t spend a lot of time worrying about “asset protection.” But as you get older and start to accumulate some assets, you have to start protecting those assets from being taken away from you!

How can my assets be taken away from me?

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.

You own all your rental property in your personal name, along with your other assets like your house, your stocks, your cash, etc. Well, if one of your tenants sues you (and wins), they would potentially have access to ALL of the assets you have in your name…that’s no bueno!

As related to real estate

Other ways to lose your assets 1. In your personal life…

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.

2. In your business life…

What else do I need to know about real estate LLCs and asset protection?

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 (Limited Liability Company).

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