As the real estate market in Chicago has been growing, the appeal of investing in property has increased. However, there are numerous risks involved in owning real estate, which may turn some people away from buying.
However, there are many ways to mitigate the risks associated with real estate ownership. For owners, investors, and landlords in Chicago and surrounding areas, Hart & David provides the legal advising and services necessary to create an effective asset protection plan.
The risks of owning and maintaining real estate property are numerous, and may come from tenants, passersby, guests, and anyone else who might view a real estate investor as a lucrative target. To head off this risk, you not only need a good lawyer to represent you, but you also need legal assistance in creating a functional asset protection plan. If structured correctly, your plan will mitigate a wide variety of risks, including:
- Liabilities from negligence, such as mold, asbestos, lead-based paint, and so forth
- Injuries to tenants or guests that occur on your property
- Fire or other disasters that may result in injury or destruction of personal property
- Defects on the property
In addition, the high number of lawsuits that landlords and real estate owners face result in higher insurance premiums. While insurance is important, it is no longer viable on its own, and its high cost makes it very burdensome for the amount of benefit it provides.
Asset Protection Strategies
Mitigating the risks posed to you and your assets is the purpose of effective asset protection planning. There are a variety of strategies that will go into your plan, each of which is designed to discourage lawsuits. These strategies may include:
Partnerships: FLPs or LLCs will effectively remove an asset from your ownership. Anyone who sues you, therefore, won’t be able to seize your assets since they are technically owned by the partnership, not you.
Trusts: Assets held in an irrevocable trust will also be protected from seizure in a lawsuit. Again, since assets in an irrevocable trust aren’t technically considered to be yours, they can’t be taken away from you.
Foreign investing: Money can be stored offshore to protect it from creditors.
Mortgaging and equity stripping: Mortgaging your property will remove any equity built up on it, effectively reducing its value as far as creditors are concerned.
A working plan will discourage lawsuits by removing attachable assets from your person. This makes it much less profitable to press charges against you, and allows for a favorable resolution with your insurance outside the courtroom. In this sense, asset protection allows your insurance to do what it’s supposed to.
Of course, in order for the various aspects of your plan to work, they need to mesh well. In addition, they each need to comply completely with federal and state regulations. Hart & David, with our experience in real estate, asset protection, tax law, and federal/state regulations, can help you construct your plan for optimum asset protection.
Creating your plan must be done promptly, long before any lawsuits can be made against you. Otherwise, it can easily backfire. Consult with our lawyers today to ensure that your personal and real estate investment assets are fully protected.