Asset Protection for Real Estate Investors

Yesterday, I received an email from a real estate developer that desires asset protection legal services. Unfortunately, in this legal market, many business owners and real estate investors have learned asset protection the hard way--experience. Many real estate investors and owners were ill-prepared for the litigation risks facing their industry. Many families of real estate owners and developers have experienced severe hardship in answering lawsuit.

LLCs are the Favored Choice of Real Estate Investors

Limited Liability Corporations (LLC) are the favored business entity for real estate owners and developers. An LLC has the flexibility of a partnership, but the limited liability protection of a corporation. Unlike a corporation, an LLC may have different types of stock or membership interests. In litigation, an S corporation may be foreclosed, which means that the real estate investor or owner has little bargaining power. This is important because many real estate investors and owners own significant real estate holdings that are unable or unwise to be sold right now. Thus, a foreclosure proceeding will result in a loss of equity and real estate holdings. In contrasts, a properly structured LLC may have different levels of investors such as husband, wife, and a family friend. This structure can prevent a foreclosure proceeding and likely assist you in maintaining ownership of your real estate holdings.

Another popular entity for real estate investors and owners are irrevocable trust. An irrevocable trust is a type of trust that is unamendable. This means that once you set it up, it cannot be changed. The purpose of establishing an irrevocable trust is asset protection and estate planning. In many instances, your wife may be the trustee and your real estate property is untouchable because you will not be the owner of the real estate property. Thus, you have properly tranferred the property into somebody's else's name without the downside.

Sean Robertson is an estate, corporate, and asset protection attorney. Sean Robertson may be reached at 312-498-6080 or 630-364-2318. We have offices in Chicago and Naperville, Illinois.