There are about a million posts about asset protection, usually having to do with asking how to go about doing it, or what the 'best' strategy is. There may be posts about the topic I'm going to ask, but it's drowned out by the million general asset protection posts.
Here's the question:
Does anyone have an Asset Protection Success Story?
This could be any situation where because you had some form of asset protection, whether a legal entity, adequate insurance, or something else, the outcome for you was better than it could have been.
I am NOT interested in how your asset protection is configured unless you can demonstrably say you have used it. For example, if your asset protection strategy is to have a huge, confusing labyrinth of entities obscuring the ownership of your properties, you can't say it's a success story because you have never been sued or had a claim. You CAN say it's a success story if someone tried to do so, and couldn't, though. Affirmative evidence of efficacy only, please.
My guess is there will not be many replies to this thread with actual success stories, and if there are any, most of them will be in the "my liability insurance paid the claim" category. However, I'm very curious to find out if that guess is valid or not.
Do you pay your home insurance to brag about the lightning hit and consequent fire and call that a success? Or care to explain how your car insurance saved you from totaling your car? I would say the absence of these incidents is a success. Asset protection is a form of insurance against litigation.
Here is another thread you might find it related to your question: https://www.biggerpockets.com/forums/51/topics/551672-asset-protectiondoes-it-even-matter
Not my own but happened to my CPA who runs a successful private firm:
Her daughter (teen) allowed her boyfriend (teen) to drive her car which was in CPA's name/insurance. Boyfriend hits 3rd party while texting and driving. No major injuries but both cars totaled. 3rd party learns who actually owns car, threatens to sue. Drops suit after the lawyer looks into CPA and realizes they won't be able to go after private assets or the business.
2nd story also not mine but does not have happy ending. Husband has good job with good benefits but gets laid off. The only life insurance he had was through the company and 6 months after the layoff gets cancer and dies. His wife and kids lost pretty much everything. That one hit home for me since I just had a daughter and finally caused me to buy my own policy.
I agree with Costin that it is all insurance; and insurance and lawyers fall into the category of necessary evil. Asset protection can be expensive but when something happens that is totally out of your control you'll be happy its there.
Here, another "fresh" thread on a scenario one would be better to have the asset protection in place before this happens: https://www.biggerpockets.com/forums/52/topics/561300-urgent-help-potential-tenant-with-pitball?page=1
from my point of view if your an individual and not partnering with folks who ever is going to sue you is going to name you personally.. this is where you need good insurance to take up your defense as your first line of defense.
whether they have the right to sue you is immaterial.. or whether they will prevail is immaterial..
if your operating as a group or partnership and have clean records this can limit your exposure to your ownership.
other than that retirement accounts should be maxed out they basically cant be touched... certain trusts.
but just LLC labyrinths like you mention.. those are not going to do it for most or.. you will spend a ton of dough fighting to make the position they can't sue you. when suits happen everyone is named .. that's when you need good insurance to handle your defense.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing