Asset protection without LLC

[James Moore]

Hey everyone,

Does anyone know how I can go about establishing asset protection without an LLC?

I've heard land trust is an option but am unsure how this actually works and if it's a viable option.

Appreciate any details anyone is willing to share, or a professional connection.

[Stuart Udis]

@James Moore Specific to real estate- premises liability claims, landlord tenant disputes, construction defects, performance related issues, payment disputes, financial difficulty or a property title defects are the conflicts most commonly associated with real estate ownership.  Asset class, location of the real estate and investment strategy will influence which risks are most likely to arise. 

Take care of your properties by eliminating premises liability exposures, exceed the implied warranty of habitability standards;  be responsive and reasonable with tenants;  Screen and work with- licensed and appropriately insured contractors, property managers, brokers;  Use contract management to shift risks and defense; avoid your own conduct and conduct of others that arises to negligence.  Don't overextend yourself. Always get adequate title insurance and review the Schedule B closely so you know what you're walking into.  Similarly, complete thorough diligence on real estate before making a purchase so you are aware of what you are walking into, or at least can greatly reduce surprises.

The best and most affordable asset protection is operating your business on a daily basis in a manner that avoids conflict. Failure to operate your business correctly greatly diminish the effectiveness of insurance, entities. In addition, your premiums will increase if liability events follow you and you may be forced into exclusively using surplus line coverage which is more expensive as well

Perhaps if you have an LLC that serves as the beneficiary of the land trust you will have some protection, but a land trust alone doesn't really offer protection, especially if you are the beneficiary. One of the key complications with land trusts arises when financing property. Many lenders are unfamiliar with land trusts or hesitant to lend to property held in a land trust. One of many examples of impractical asset protection systems being pushed on investors that add little to know benefit. Depending on your circumstances a land trust may help with succession planning but that doesn't appear to be your primary objective.

Your goal should be to prevent and deter liability first and foremost. Also, as a general rule for all investors- if they can't articulate how their entities will actually help if the most common real estate related conflicts arise they shouldn't be paying the fear driven   asset protection "specialist" selling the services.