How My Client's Asset Protection Strategy Saved Her From Being Sued

On my blog I've gone over countless ways to protect yourself using an asset protection strategy. But what I haven't done is shown you real-life examples of how asset protection can benefit you, until now.

Get Information From Real Asset Protection Experts

There's a lot of bad information out there about how to protect your real estate investments. You may have seen YouTube videos or read forum posts from people who claim to be experts. T

he thing about the internet is, anyone can claim to be an expert. Even if they've just read a single Wikipedia article on the subject.

You may have even received bad advice from your CPA or an attorney who's a general practitioner in the field. These people will tell you real estate insurance is enough to protect you. But the fact is they don't know. Their advice isn't just wrong, it's dangerous.

Insurance covers things like negligence or a slip and fall in a house. It doesn't cover a lifetime of fraud or breaches of contract. You may think "hey I'm an honest person, I don't need to worry about lawsuits."

But that's not why lawsuits happen.

Understand Why Lawsuits Happen

The majority of lawsuits happen because of a misunderstanding. Take for example a client of mine. She recently bought a house and renovated it. During her renovations she put in some new plumbing because she thought it would add more value to the house.

asset protection case study

Then she went ahead and told the person buying the house how she re-did the plumbing. So they sent her an email asking what plumbing she replaced. She responded, "Well, I re-did all the plumbing in the house."

So they bought the house from her. Some months after the sale there was a leak that caused tens of thousands of dollars worth of damage. The people who bought the house from her threatened a lawsuit based upon her email that said she replaced all of the plumbing in the house.

Now, this seems to be a simple misunderstanding of what she meant in her email, but that was the basis of this lawsuit. I'd like to point out that this is actually a case of intentional fraud, which isn't something an insurance policy would ever cover.

My Client's Asset Protection Strategy Saved Her Thousands

Luckily, my client had the foresight to put in place a proper asset protection strategy, including a series LLC with an Anonymous Trust. Because of the superior position she was in due to her asset protection strategy, they eventually dropped the lawsuit against her.

As real estate investors, we should all be using this type of asset protection strategy. If you have any questions about asset protection, feel free to ask me in the comments below or read more of my free educational pieces.

Is Your LLC Easy to Sue or Is it Litigation-Proof?

You've likely heard online from some keyboard warrior or a CPA or perhaps even from an attorney that an suing an LLC is easy. This is absolutely not true.

LLCs are incredibly hard to sue, if not litigation proof, if they are maintained correctly. The problem is that most LLC owners don't do the things necessary to maintain their LLC's legal status. If you don't treat your LLC like an LLC, then when a lawsuit comes around the courts won't either.

Let's go over what you need to do to keep your LLC litigation-proof during a lawsuit.

How To Keep Your LLC Litigation-Proof

The first thing you need to keep in mind is that you must maintain records and accurate accounting of your company. If you don't have a company bank account, you need to get one ASAP. Here are two things you should ask yourself when it comes to your company bank account:

You need to run everything through a bank account for your company to make sure its seen as a legitimate and separate entity from yourself. Bonus: This will also make doing your taxes easier.

You cannot treat your company bank account as if it's your personal piggy bank. This means you have to be careful in the accounting for your company. If you ever take money out of your company account you must keep a record of it as a dividend from your company.

If you fail to do the above, your LLC's legal status will no longer apply. You will be easy to sue. Keep your records on point to keep your LLC protected.

Maintain Accurate Records And Suing Your LLC Will Be Harder

I recommend keeping an eye on your company bank account at all times. Even CPAs can make mistakes.

If you have any questions about what we just went over feel free to ask me in the comments section, I'd be glad to help you. If you've got this down, check out our other posts to learn more about preserving your wealth with an LLC structure.

If you're ready to form your LLC or improve your asset protection plan, we can help you. Schedule your personal consultation today. Our experts can assist with every aspect of company formation, management, and oversight. We're also happy to address your business banking and tax questions.

What Does A Nightmare in Litigation Look Like?

What does a nightmare in litigation mean? It means having to risk thousands and thousands of dollars with the mere hope of being able to get something out of the other party. This is the nightmare which causes the attorneys looking to sue you to lose sleep at night.

Think about all the commercials you see on TV about personal injury law firms. These guys advertise to get clients for these specific type of lawsuit because they know they can win them.

Now ask yourself this. As an investor and as a business person, do you go to Las Vegas rolling dice hoping that you'll recover (money, assets, etc...) ?

Probably not and neither will an attorney. Suing people is usually a gamble for attorneys because they tend to get paid from the settlement. However, in order to get a settlement they have to win.

No attorney is going to try and sue you if they think there's not a good chance of winning. They can't make money if they don't win. Attorneys are in the business of only taking cases that are guaranteed wins. They won't take a case they can't win and they won't dare try to sue you...

At least not when I've got your back. You wouldn't believe how powerful asset protection is.

At Royal Legal Solutions we Take Legal Asset Protection to The Next Level

Attorneys don't like to lose, and when you gamble there's always a chance you might lose. What we do is make it a gamble for attorneys to come after your assets. Most attorneys aren't willing to put in the time and effort to sue you when they know there's plenty of other people they could easily win lawsuits against.

We specialize in making your assets untouchable and intimidating to pursue in court/litigation. You could own a company generating over six figures in revenue yearly, or even millions, and nobody would know except you.

But let's say someone were to win a lawsuit against you. Because of the asset protection plan you have in place (thanks to us) their ability to come after your assets would be next to nothing.

Asset protection involves the use of LLC's, Series LLC's, Anonymous Trusts, and several other legal structures. These legal structures are proven to work, legal and cost effective.

The Two Biggest Reasons Why New Real Estate Investors Lose Money

Welcome to the real estate industry! You'll quickly find out how easy it is to lose money when you don't know what you're doing. And even if you do know what you're doing, you can still lose money if you're not careful. But let's assume you're new.

I'm not trying to be a "party pooper" or anything like that. As a real estate investor myself, I just want you to know what you're getting into. So what exactly are the two biggest reasons why new real estate investors lose money?

You Will (Probably) Make Bad Investments

While it's not necessarily a guarantee that you'll make bad investments, the probability is high. However, it's only natural to be "bad" at something when you first start doing it. *wink wink*

But is there really any other way to learn other than from your mistakes? Yes and no. I recommend new investors do joint ventures with more experienced real estate investors before they go out on their own. Just make sure you find someone who knows what their doing if you choose to do that.

So what's the other big reason why new real estate investors lose money?

You Will (Probably) Get Sued

This one might surprise you. The truth is anyone can and will sue you if you're worth enough. It could be a random person off the street or even a business partner. You never know when it'll happen, but you have to be prepared. Otherwise you could lose everything.

Luckily for you, preventing lawsuits is easier than learning how to not make bad investments. The most proven way to prevent lawsuits is through asset protection. Asset protection involves the use of LLCs and other legal structures when doing real estate transactions and signing contracts.

Like I said earlier, anyone can sue you. But that's only if you're worth enough. Asset protection can make it appear as if you're worth nothing. Or, you can use asset protection as leverage to convince someone not to waste their time suing you.

Well that's everything. As always, if you have any questions feel free to ask me in the comments below. For questions about your individual situation, contact us directly.

The Dangers Of Fraudulent Transfers & Lawsuits

The Law Favors The Proactive When It Comes to Lawsuits

Being proactive means instead of reacting, you're directing. Why react to a lawsuit when you can direct your assets and avoid a lawsuit all together?

In the real estate industry lawsuits are filed everyday in the United States. If you're not protected, you can easily be caught up in one of them and lose everything. We're talking home equity, other assets and even your car. So if you're thinking about waiting to set up your LLC structure, don't. The fact of the matter is, once you're sued, it's already too late.

So once someone threatens you with a lawsuit, you might want to transfer your assets to someone else to protect them. The problem there is asset transfers after the fact of when a lawsuit is threatened or before it's even filed, can be considered a fraudulent transfer.

A fraudulent transfer doesn't necessarily mean that you did anything that was shady. All it really means is that you transferred the asset outside of the normal course of business.

Fraudulent Transfers

For example, you can't sell it to your niece for a dollar and think nobody will say anything. But if you sold it for what it was worth, then you'd be okay. Still, the best thing you can do is be ready for a lawsuit.

The best way to avoid a lawsuit is to be ready for one. I've written about a number of ways to do this. One such way is to hide the equity in your real estate from creditors, which you can read about here.

Don't Wait, Be Proactive

A solution won't just fall out of the sky and into your lap. Remember, the law favors the proactive. And one of the best things you can do to that end is to contact a specialist.

How To Make Your Assets Judgment Proof In A Lawsuit

If you’re a real estate investor, you are at risk from lawsuits whether you know it or not. You may already know the real estate industry is a breeding ground for lawsuits. Now add in the fact that you live in a country where people can sue you for nearly anything.

As a real estate investor, you’re at risk of losing everything: equity, assets, and even your reputation. This is especially true if you hold assets in your personal name.

Did you know that a lawsuit is ranked one of the top three things that people find the most distressing events in their life? Lawsuits rival only with divorce and bankruptcy. The good news is, I can make your risk disappear. This means you’ll be untouchable when it comes to lawsuits.

How, you ask? First there’s something I’d like you to know: the truth about how the wealthy protect their assets.

The Truth About Protecting Your Assets From Lawsuits

The truth is the super rich don’t own assets. They only control them. They do this through a network of LLCs and trusts. These networks protect their assets and allow them to hide them from anybody looking to come after them. You can learn more about how LLCs and trusts protect you from my previous article on the subject.

Imagine the disappointment of anybody looking to sue you when they find out you don’t own anything. Well, at least it will look that way on paper. In reality, you could be worth millions and only look like you’re lower middle class. But the person suing you won't know that.

Who would sue somebody who appears to own nothing? That’d be a waste of time. Remember, the average person doesn’t have the money to pay legal fees upfront. What most people do is split the settlement, assuming they win.

Make Your Assets Judgment-Proof Now Before It’s Too Late

No attorney is going to come after you in a lawsuit if they think they have nothing to gain, pure and simple. But you better believe they’ll see dollar signs when your name starts showing up in  paperwork.

My name is Scott Smith. I’m a real estate investor & an asset protection attorney. I know both sides of the game because I’ve played on both. Give me a call today, and together, we’ll make your assets judgment-proof!

How A Lawsuit Can Ruin Your Life: Asset Protection, Foreclosure & More

Do you realize that a lawsuit can ruin your life? Lawsuits and judgments where even small amounts of money are involved can force you to sell one or more properties, essentially making all the work you've done worthless.

By the time you're done paying the judgement, legal fees and your new therapist you'll be back at square one. That last one is only half-joking. Lawsuits take a toll on your finances and your emotional well-being.

This type of doomsday scenario happens more often than you might believe. The reason is because once a ruling has been made, it must be satisfied. If you don’t have the cash on hand, you may be forced to "liquidate" assets or go through foreclosure in order to complete the terms of the judgement, depending on the state you live in.

Your Doomsday Lawsuit Scenario

Imagine a scenario in which a modest judgement has just been rendered against you. You owe the plaintiff $50,000. It’s important to realize that this is not a large amount when it comes to real estate litigation, nor is it uncommon for a landlord/tenant judgement. Nevertheless, it’s a significant amount of money and needs to be paid. Now, unless you like foreclosure auctions. And unlike usual, it's your properties being bid on!

Once the ruling has been made, the plaintiff has the legal right to take a variety of actions to satisfy the judgement. This includes forcing you to foreclose and hand over the proceeds of the sale.

A Real World Lawsuit Example: Fees & Loss of Your Real Estate Assets

While we never discuss individual asset protection clients, we can provide approximate details to illustrate how even a small judgement can destroy years of work and sacrifice.

Consider the following:

  1. You recently took advantage of the FHA ($11,500 in equity) to purchase a $300,000 apartment with only 3.5% down.
  2. Next, you put 25% down ($25,000 equity) on a second condo worth $100,000.
  3. You finished paying off your car loan this month, which is now worth $25,000 (equity).

The only problem is you had a lawsuit gone wrong. The judge ruled against you and you’re now required to satisfy a $50,000 judgement.
However, it’s more than that because the judge also decided you were responsible for paying the attorney fees regarding the seizure and sale of your assets. You have 3 assets at your disposal, which means potentially $9,000 ($3,000 per asset) in additional fees.

Let’s take a look at how that payment might work:

  1. You are forced to foreclose on your apartment. This covers $11,500 of the $50,000 (plus an additional $3,000 in fees).
  2. You’re down to $41,500 remaining, which means you have to sell your condo for $25,000.
  3. This gets you down to $19,500 (once you remember to add the next $3,000 in fees). So you can sell your car as well, which covers the final judgement and fees.

The result? You’re left with a measly $2,500. Oh, and you’ve lost your home, vehicle, and all of your assets. Your life has effectively been ruined from a single lawsuit and it will take you years to rebuild what you lost over just one lawsuit.

You can learn how to protect yourself form lawsuits using the legal techniques we use to defend our asset protection clients.