By Janathan L. Allen, APC of Janathan L. Allen, APC posted in Legal Services on Wednesday, August 20, 2014.
Ask yourself the following questions:
- Do you own a dog?
- Does your home have a swimming pool?
- Do you have rental property?
- Do you have your own business that is unincorporated, i.e., a sole proprietorship?
- Are you in a partnership with another party that is not an LLC or corporation?
- Do you have joint bank accounts with others?
- Does your employee use their automobile for your business purposes?
Whether you know it or not, your personal assets may be at risk if you answered “yes” to any of the questions above. Did you know you could be sued for another’s bodily harm in the event that your pet Fido bites someone or is hurt in your swimming pool, or even injured in your home? Did you know that you could be held accountable for what tenants do on your rental property? My own Godmother was sued for damages by her neighbors because she rented to tenants who were cooking meth on her rental property that resulted in an explosion that severely damaged their home. How many clients have come into the office bemoaning the fact that their partner just took off with all of the cash in the partnership account? With jointly held accounts you could be at risk in the event that the joint account holder files for divorce, has a tax levy or lien or even has a lawsuit suit judgment. Did you know that you could be liable for the actions of your partner, whether you knew what they were doing or not? Did you know that if your partner is sued, all your personal assets could be at risk in a lawsuit? Did you know you could be liable for the driving accident of an employee if they were using their auto for your business purposes?
Asset protection consists of several elements. Liability insurance is one. Utilizing an insurance umbrella can ensure that you have the money with which to defend a lawsuit in the unfortunate event that you become a defendant. Check with your local insurance agents for coverage amounts that are appropriate for your assets. LLCs are another. Utilize an LLC for your rental properties to protect yourself from renters/tenants. In the event of an unwelcomed lawsuit, only the entity that holds the real estate is at risk, your personal assets remain protected. For multiple rental properties, consider a Series LLC to protect each individual property within a single LLC. If you have jointly held accounts, keep account balances to a minimum. Utilize and create LLCs or Corporations to formalize any partnership agreements or sole proprietorship you may have and to protect your assets. And finally, consider a Living Trust to hold the interests in any LLCs or Corporations you may form as well as your other personal assets for an added layer of protection. Remember, an unprotected asset is an unnecessary risk you run in today’s litigious society. Protect you and your loved ones from unnecessary financial disaster. Create your personal plan for asset protection today.
Source: Forbes, Personal Finance, 6 Asset Protection Strategies to Shield Your Wealth, Robert Pagliarini, Contributor 10/09/2013; Forbes, Personal Finance, 23 Questions To Determine If Your Financial Assets Are At Risk, Robert Pagliarini, Contributor, 7/29/2014