In this next portion of our series on Asset Protection fundamentals, we’ll take a look at some of the major rules you will need to know. The good news about eligibility is that you are certainly eligible for some form of asset protection. The question becomes, which strategies are best for you? Although you need not meet any particularly stringent eligibility issues with the tools discussed here, there are some rules and regulations that govern these tools. Below, you will find some information about state and federal law regarding your structures and some rules-of-thumb for optimal asset protection. These guidelines should help you make informed choices..Rule #1: Location Matters for Your EntityWe all know the real estate maxim, and feel free to chant along: location, location, location. Well, it’s not just your property’s locations that matter. Your entity’s location can make or break your asset protection plan.If you read the first article in this series, Asset Protection: The How, The Why, and The Basics, you already know that we think very highly of the Series LLC for real estate investors. If you didn’t catch it, you may want to for some reminders. We’ll wait. While any entity is certainly better than no entity or leaving property in your own name, the Series LLC offers a high level of protection while also being versatile. When Out-of-State Makes Sense: The Series LLCWe bring up the Series LLC because it is one of the most obvious examples of an entity that is effective but not yet universal. Your state may not offer an in-state Series LLC option. Only a handful of states in the country do. Keep in mind also that there is not necessarily a meaningful benefit to having your business in-state. The only “advantages” are usually that an in-state entity may be spared certain fees that a competent attorney can get around anyway. For instance, at Royal Legal Solutions, we use an Agent Trust so that our clients don’t need to worry about “foreign registration” fees on our Series LLCs. Keep in mind this is just one example of a “rule” that varies from state to state. There are many in this line of work. So choose wisely. You have your pick of where you form. We recommend getting hip to the Texas Series LLC and Delaware Series LLC as options–unless you’re in California or Canada. You two are special, and a Delaware Statutory Trust or Limited Partnership would be more helpful, respectively. Anonymous Land TrustsWhile you’re setting up your entity, look at that state’s laws about land trusts or have your attorney do so. If you plan to use these trusts, you may wish to form in a state that is friendlier. Land trusts also provide you superior asset protection than an LLC or Series LLC alone.Rule #2 Keep the Books in Order and the Tax Man HappyAsset protection tools will work best if you’re keeping our friends at the IRS as happy and can often double as tax savings measures. Know what you owe and when to pay it. Pay on time. If you’re at all unclear about how money should be flowing through your legal structures and entities, get clarity from your attorney. When in doubt, call in the cavalry. A tax-savvy attorney and CPA can work wonders on making taxes relatively painless, and even finding you points where you can save. Rule #3: Know and Do Your Part to Protect Your Asset Protection PlanNo matter where you or your properties are located, you do have to do some work to ensure your asset protection plan will work for you in the long-term. Here the major things you want to stay on top of to do your part:Operate with integrity. There is no substitute for good business.Keep clean, tidy records of everything. This need not be complex, and a simple spreadsheet will do.Know how to use your entity, its corresponding bank accounts, and who to ask for help.Rule #4: Always Work With a Qualified Asset Protection AttorneyThere are many temptations to save a buck on asset protection, whether that’s using an LLC template with the Dollar Store price, avoiding professionals or attempting to do your own legal work, or delaying getting asset protection. Ignore these ideas. They’re terrible. What you “save” today could land your backside in court on the losing end of any lawsuit. How? Asset protection is an especially complex subject, even for real estate attorneys. There are simply many places along the way where errors can be made if you’re on your own.Do you have the training, time, and desire to select the entity that is best for you, draft the appropriate documents correctly, file the correct paperwork, use your entity correctly, and maintain perfect compliance with ever-changing state and federal laws? If so, congratulations on your many talents! For the rest of us it makes more sense to hire an expert than to waste our time on teaching ourselves all about asset protection only to miss a crucial step or make a fatal mistake. That’s not to say lawyers are special. With the time, inclination, and education any of us could become anything. But if my heart gives out tomorrow, I’m calling a surgeon rather than cracking a medical book and attempting to be my own doctor. Why? Because I’m not a doctor. It makes more sense to hire a good one to worry about my heart while I do what I happen to be good at, which like most of you, is running my business. My business, of course, is protecting you. Please contact us if you have questions about the Series LLC, asset protection, or other legal concerns.. As investors ourselves, we are sensitive to your needs and keep current on all of the trends that affect our practice. When you hire our pros, you will get high quality advice and a simple streamlined judgment-proof strategy.. Set up your consultation with one of our experts to find out more details about your best options for your personal situation.