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.
Make Sure You’re Informed
There’s a lot of bad information out there when it comes to advice 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.
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 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.
Bad Plumbing Isn’t 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.
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 in the plumbing which 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
Luckily, my client had the foresight to put in place a proper asset protection strategy, including a series LLC. Because of the superior position she was in due to her asset protection strategy, they eventually dropped the lawsuit against her.
This is the type of asset protection strategy we should all be using as real estate investors. If you have any questions about asset protection, feel free to ask me in the comments below or read more of my blog posts.