An irrevocable trust is a part of most serious, asset protection strategies. In the business of estate planning and asset protection, there are countless categories of trusts. And they all sound very serious. When Lawyers create new categories of trusts, they often create names that are very similar, often using many of the same words, as trusts by a different name. There are a number of main features or characteristics that differentiate every trust or every category of trust, and one such characteristic is whether a trust is revocable or irrevocable. [Read more…] about Asset Protection Attorney Definitions: Irrevocable Trust
Many solo-preneurs or spouse-owned businesses (“Single Member” Limited Liability Companies or business entities) think that simply registering their business as a Limited Liability Company (LLC) protects them and their families from lawsuits. You may be surprised, however, to learn that you might not be as safe as you think unless you take some additional steps. [Read more…] about Is Your Single Member LLC Safe From Outside Creditors?
In a previous post, I wrote about how to protect your investment property (and some reasons why you might want to). Let’s say that you have decided that you DO want to protect your investment or rental property by getting it out of your own name and into an LLC for liability protection. Great! Well, here are some issues that you may encounter along the way AND some ideas for how you might deal with those issues.
And if you’re not sure if this is right for you, you can always ask a trusted professional for their advice.
If you own the property outright, you could simply transfer the property into your newly minted LLC.
BUT if your property is mortgaged then by transferring the property into your business entity, you could risk triggering a “due-on-sale” clause from your lender. What that means: it’s a clause commonly found in mortgages to restrict transferring ownership of the property. If your lender finds out you have transferred ownership out of your name and into an LLC, your lender could call in payment for the entire remaining balance on the note. At this point, you could pay off your mortgage or you could refinance the mortgage (which incurs fees, hassle, and you probably won’t get the same terms as before). Many people find dealing with that to be a pain.
If you are ok with refinancing, then the prospect of triggering the due-on-sale clause might not bother you too much. On the other hand, if you have a great loan that you want to keep, or don’t want to go through the hassle of refinancing, then there is a neat way to avoid triggering the due-on-sale clause.
There are exceptions to the due-on-sale clause, including the transfer of the mortgaged property into an asset protection trust. This means if you transfer ownership from your name and into a trust, your lender will not be able to demand payment of the entire note.
Having your property in trust provides asset protection and additional privacy. When real estate is not owned directly in your name, attorneys looking to sue you won’t see the property in an asset search. If attorneys don’t think you have assets to take, you can avoid a lawsuit from even happening.
Colin Ley is a Seattle asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
Being successful in America makes you a target for bogus lawsuits from shameless lawyers. We created an effective, asset protection solution, so you don’t have to worry anymore, happily knowing your family’s future is protected. Get started now by scheduling a free, 30-minute call at livemorecarefree.com.
When developing an asset protection plan, you’ll often hear about inside liability and outside liability. They are different and it’s important to plan for both scenarios.
Inside Liability vs. Outside Liability
Inside liability refers to claims that emerge from within an asset or business entity. For example, if you have a rental property held in an LLC and somebody is hurt on the property, that liability occurs inside of the LLC. Or in other words, the creditor claim is limited to what is inside of the LLC. The creditor could not go after the business owner’s personal assets. (Another example would be if a client or customer were somehow “injured” and sues you.) [Read more…] about Asset Protection Definitions: Inside & Outside Liability
As a Seattle estate planning attorney, I come across a number of people and clients who own rental property. Some of them might be investors, but some of them are just regular folks – for instance, friends and family of ours, who are homeowners, have then gotten married and opted to rent out their home and move into a different place with their loved one. Or, another common scenario is parents who buy a home or condo for their kids to live in while in college (to help save rent and instead create an investment). After their children graduate, they start renting the property out. [Read more…] about How to protect your investment property