Real Estate Preservation
Protect Your Wealth
You are on the road to building your wealth through real estate and other investments. CONGRATULATIONS!! It is NOT enough to just build your wealth; you must PROTECT your wealth! From what? From things that either happen on your property, or from things that happen to you–in both cases you can get sued and all your assets in your name are at risk.
What should you do? Most advisers will tell you to simply transfer title to all your property to an entity, such as an LLC (Limited Liability Company), and some courses even go so far as to provide you with the forms and no other practical advice or ramifications or practical tips. PLEASE DON’T DO THIS WITHOUT A REAL ESTATE STRATEGY SESSION; Why? for one thing, because of the ramifications to all your insurance coverages–the only asset protection elements you have–are jeopardized or eliminated!
Read the following DID YOU KNOW’S to determine if you need a Real Estate Strategy Session.
DID YOU KNOW that if you simple transfer title to your property to an LLC, you have just VOIDED your title insurance policy?
DID YOU KNOW that your hazard/liability policy will also not cover you for perils if you transfer title?
DID YOU KNOW that your hazard/liability insurance policy routinely does not provide LIABILITY coverage EVEN IF you asked for the LLC to be added as an additional insured? (check you policy and see if the liability box is checked or just the property damage box; or if it says “additional interest” that does not cover liability).
DID YOU KNOW that if the entity you transfer title to is anything other than your single member LLC, the hazard/liability insurance company won’t add the LLC? (because they consider it a business and want to instead issue a commercial policy) –same problem with transferring title to vehicles.
DID YOU KNOW that you will not be able to refinance your property after you transfer title to an entity? (you’ll have to transfer it back).
DID YOU KNOW that unless you file an exemption, the county assessor can re-assess your property taxes after you transfer title?
DID YOU KNOW that your umbrella policy won’t provide coverage above your existing hazard/liability policies if you transfer title to an entity? (unless all underlying policies include the LLC as an additional insured AND you request the umbrella carrier to also add the LLC as an additional insured).
DID YOU KNOW that transferring all your properties to the same entity will NOT protect those assets? (if there is a problem with one all the assets in that name are at risk).
DID YOU KNOW that even if you transfer assets to an LLC, if you do not maintain a separateness for that LLC i.e. you commingle the rents into your personal account, you have likely defeated the separate status needed to afford the asset protection?
DID YOU KNOW that transferring title to your personal residence to an entity can have serious negative tax consequences? (you could lose your personal interest deduction; you can lose your state/county homestead exemption; you can lose your ability to take advantage of the $250,000 tax free gain on the sale of your residence ($500,000 for married couples), among other ramifications).
These are just a couple of the basic Practical Tips you need to know and how to manage the process. If you have already made title transfers, there is hope; we just need to work through it.
This is what an initial REAL ESTATE STRATEGY SESSION can provide you. Questions like how much equity should I have in a property to make sense to transfer title to an entity; or how many entities should I use for my properties, are all important strategy issues we will address.
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