Posted by Bill Gatten on May 30, 1999 at 13:10:40:
Hi Dave,
Actually, you’d want someone as co-beneficiary who wouldn’t likely be sued along with you. If I was going to sue you ('though you’d have to have called me “Fat-Fat” or “Dumbo Ears” or something worse, to rile me to that extent), I’d name your wife too. The idea is to have an unrelated party as co-beneficiary; but if that’s not feasible, at least make sure it’s someone who would “appear” to be unrelated, if a would-be plaintiff ever got the low-down on the trust and who its beneficiaries were.
What is the best way to title rental properties to protect your equity from lawsuits? I have liability insurance but there are exclusions and limits. Is there a way I can be sure may assets are protected? Is a limited partnership the answer?
Re: protect equity from lawsuits - Posted by Bill Gatten
Posted by Bill Gatten on May 29, 1999 at 22:40:05:
Co-Beneficiary Land Trust.
Co-Beneficiary Land Trust.
Co-Beneficiary Land Trust!
Land trusts convert Realty ownership to Personalty (as legal and equitagble title is vested with the trustee, leaving the beneficiaries with only air… which air is characterized by the IRS and the courts as Personalty: and Personalty is non-partitionable by judgement creditors…including the IRS. Therefore, the property is shielded as you wish it to be.
Just put the property into a land trust and name someone else (preferably someone with a different last name) as a co-beneficiary in it.
Bill Bronchick has an article on his website (it might be on creonline also) about “how to lawyer-proof your assets”. Excellent material. www.legalwiz.com
How about make a few payments on the loan and then stop making payments. Then have your mortgage company send notices of default to your title holder demanding payments plus late fees and 18% interest. After a few months, this property will legally be so much in the red that no creditor could ever touch it.
Rich, would advise you reading the Legal Corner articles on the subject, and checking out Mr. Bronchick’s website - In addition there are articles in the How To section, and - once the search is functional again - a million threads on the subject. There is no one right answer… but at least you’re asking the questions.
When our (former) atty suggestion that the solution to the problem was MORE liability insurance, my husband riposted that we don’t want deeper pockets, we want invisible pockets!