For a good reason real estate is a popular investment. Real estate is a profitable venture although there are several bumps which you may encounter. However, if you own any form of real estate’s such as rental apartments, cars or vacation homes you are much likely to be issued with a lawsuit.
You should take precautions and think ahead to make sure that all your properties are well secured. When a lawsuit is filed against you, all your important assets are likely to be taken away. Below are ways in which you can ensure that all your assets and personal possession are not taken away in case of a lawsuit.
- Hiring a property manager
Looking after all your tenants and ensuring that they are comfortable in the apartments is not an easy thing to do. To save your time and all the hassle you should look for a dedicated property manager to look after all your real estate assets. Getting an apartment management NYC requires upfront money, but it’s an investment which will pay off in the future.
- Use of homestead laws
Some states have put up laws in place which protect your primary residence that is your home from creditors. For example, states such as Texas and Florida have laws called homestead exemptions which protect your home from any form of a lawsuit. In other states, you may find that you are not offered any protection for your property.
- Family trust
Use a family trust to protect all your assets. This can be done by gifting the assets to all your children or family members. A family trust can also reduce your tax liability. Although family trust will secure all your assets from being taken away, you will lose all the financial freedom of owning the real estate.
Also, remember that you can’t transfer your assets to a family member when a lawsuit has been filed against you. If you do, it will be termed as a fraudulent conveyance. If you want to use family trust, you should transfer ownership of the real estate way before the lawsuit has been filed.
- LP or LLC
If you have a business or rental properties, you might consider getting a Limited liability company also known as LLC or limited partnership(LP). The LLC and LP should be placed effectively before a lawsuit is filed.
These measures will help and protect your real estate properties from creditors’ claims. However, these measures should be carefully structured and operate for them to be effective.
- Use protective insurance
Nobody wants disasters to happen, but that does not mean that they will never occur. To protect all your assets from litigious individuals, tenant’s accidents and natural calamities ensure that you have the right insurance policies in place.
If you want to protect your real estate properties, you should do it as early as now. Don’t wait for creditors to come knocking on your door, or wait to be slammed with a lawsuit for you to act. Take the necessary precautions to secure all your assets when you still have time.