Is Your Financial Life Really Protected?
Last week I had the opportunity to attend an investment financial class dealing with how to invest in the stock market, however I came out learning a lot more than just how to invest your money. I learned asset protection and taxes along with how to invest with a purpose.
I’ve always known that here in The United States we live a very litigious society, even though we only represent about 5% of the world’s population the US represents 93% of all the lawsuits ever filed. Some of these lawsuits have merit and deserve to have their day in count. However most of these lawsuits are completely frivolous and with little merit.
They are being filed by attorneys and plaintiffs that see an easy opportunity for a payday and judges that use these suits to send a message to the wealthy that any perceived misbehavior will not be tolerated.
Most of these lawsuits don’t ever see the inside of a courtroom since they are settled out of court by insurance companies.
And that is the point. No one wants these cases to go to court, not even the plaintiff’s attorney. All they want is a quick and easy settlement from an easy target.
So the question then becomes: How do we keep from becoming a target of a lawsuit? The short answer is we need to take ourselves off the target. If your family is anything like ours, you probably have a home, couple of cars, investments, bank accounts, etc. Totaling several thousands of dollars and all of it listed under your name and/or social security.
The problem with this scenario is if you happened to harm someone due to an accident all these assets are now for the taking and will be used to determine (fairly or not) the maximum amount of a potential civil award jeopardizing you family’s livelihood and future.
So again the question is: How do we protect these assets? The answer lies in having nothing under your name by creating a Limited Liabilities Corporations (LLC) that shelter these assets from potential lawsuits while providing all the control.
Now, you may think that an LLC is for someone who owns a business and not some someone like you, but how many of us operate a home based business? And yet, not incorporating your business as an LLC is effectively ignoring some of the most significant benefits of owning and operating a business such as asset protection and tax benefits.
Coming out of this class I learned that the most effective way of operating your home-based business is as an LLC or C-corporation and under this entity have additional entities sheltering your primary home, any vacation homes, investments, each under separate LLCs.
This allows you to take off these assets from being under your name and placing them under the LLC entities limiting your legal liability and providing you with maximum control of the assets. This is an idea that has been used by the wealthy for decades, but now it has become very popular among folks building substantial assets and operating business they seek to protect.
This may sound complicated, but CPA’s are very familiar with this type of asset protection. Many of us just don’t take the protection that the law allows.
If you have any further questions, I would be available to meet face to face in the East Valley or thru a Zoom call if you are out of state. Let me help you protect your family and remove the target off your back.