All Forum Posts by: Tyson Wade

There are certainly different flavors of asset protection depending on your risk tolerance. Some prefer to lean more heavily on insurance in the hopes that they will pay out when it matters most, others will use insurance as an additional tool in their toolbelt, along with a good business entity structure. 

LLCs can provide statutory protections, and separating assets into separate LLCs can minimize the risk of loss should an LLC get sued and insurance not cover the specific harm that was caused.

While LLCs are typically designed to protect you personally from any liabilities that arise from activities within the business, many states' LLCs do not provide any protections for your business assets in the event you get sued personally. For that reason, it can be a good idea to set up a holding company in a state that does provide strong "outside" protections by way of charging order protections, such as WY or NV. Each LLC you set up to hold property can then be owned by that holding company, providing protection from liabilities that can arise both inside the property LLC (like a slip and fall), and outside (like you causing a car accident). Adding insurance on top of this can serve as an additional layer.

Of course, the LLC setup can get complicated quickly and will of course be more expensive to set up and maintain, so to each their own!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

@Jessica Privitera I'm sorry you had to experience that first hand. I've handled a few evictions for clients who are removing family from their units under somewhat similar circumstances, and it's always an emotional roller coaster. Using a professional management company to serve as a barrier is usually best in these cases, as you can simply let them be the "bad guy." This removes emotion from the administration of the lease, and can help maintain your relationship as well.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

While not directly relevant to negotiating or acquiring out of state property, one important thing to consider when investing out of state is how you structure your investment from a legal perspective. While the limited liability company is common, some states provide additional, sometimes better means of asset protection, so it can be useful to familiarize yourself with what's available in the state(s) you plan to invest in. To familiarize yourself in this regard, I'd recommend "Next Level Real Estate Asset Protection" by Clint Coons.

If you believe the lawsuit to be unwarranted, or if you have any outstanding counterclaims, then you'll want to be sure that the current settlement is agreeable to you. If so, then you may consider first getting this settlement agreement in writing. This is where an attorney can be particularly useful, as they will likely have the resources to craft a robust agreement that provides remedies for any unforeseeable situations that may arise as this suit (hopefully) fizzles out. Once this agreement is in place between you and the tenant, then the tenant (as Plaintiff here) can file a motion to dismiss the case (I'd recommend requiring that this be dismissed with prejudice so they can't reopen the case down the road).

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Because there is no operating agreement governing this situation, you may consider entering into an agreement with your partner wherein the both of you agree to transfer the property out of the entity and into your respective names, as 50/50 tenants-in-common. This agreement should also address assumption of the debt, if your lender provides for this as an option, so you can transfer the debt to your partner, or at least add them as an additional borrower if possible. 

Holding the property as tenants-in-common will allow you to sell your individual 50% ownership of the property to a buyer, while allowing your partner to retain their 50% ownership. If you maintain 50% of the debt after the change in ownership to this tenant-in-common structure, then you may consider including your 50% of the debt in your sale (again, if your lender allows for this). Ultimately, the lender may require the note to be paid off, which would require a refinance and change of borrower from yourself to your partner and/or the new owner of your old 50% share. 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

 Correct, it would get recorded with the County Recorder. If you have a title company or attorney draft it for you, they can typically get it recorded for you as well.

 Love this recommendation. Only thing I would add is that if Subject A uses a Lady Bird Deed of TOD to transfer the property upon death there is less flexibility for planning. Subject A passes, the properties go to Subject B. In some cases, Subject B may not be ready for such a large asset, in which case the revocable living trust is the better option here. In either case, the step-up in basis remains, but the living trust allows for you to plan around Subject B's strengths and weaknesses to ensure they receive the property when they are ready for it, and in the way that Subject A would like (rather than simply being made outright upon death). 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

It can potentially create a cloud on title if you deed it directly from the old deed into the trust, which can cause issues with title insurance. Generally, to avoid a cloud, you can file a corrective deed, which is a deed that serves to provide public notice of the name change, but indicating that the two names are one-in-the same person. Then, you can record the deed into the trust. This can clean up the chain of title. While you're not legally required to hire an attorney to prepare the corrective deed, it is a bit different than your typical deed, so if not using an attorney you may need to find a local title company that can help prepare it.