Sunday, August 10, 2014
Estate planning and asset protection go hand in hand. Planning for the distribution of wealth would be impractical if you did not have any wealth to distribute. Yet, asset protection for real estate can be somewhat challenging, mainly because it is the only asset that is immobile. Below are several strategies for protecting real estate assets:
- Giving gifts. One of the most effectual ways to shield real estate from creditors is to give it to your children or other family members—either outright or by trust. However, you will lose all economic interest in and control over the real estate.
- Protect your home. You can protect your home against creditors in three ways: tenancy by the entirety, homestead exemptions, and a qualified personal residence trust.
- Protect other real estate. For business and investment real estate, an effective asset protection strategy is to transfer title to a limited liability company (LLC) or limited partnership (LP). This will safeguard the real estate from creditor’s claims.
- Plan early. It is always a good idea to have an asset protection plan. The earlier you apply your plan, the more likely it is to succeed.
See E. Hans Lundsten and Joseph Marion, III, Protecting Your Real Estate Assets, JD Supra Business Advisor, Aug. 8, 2014.