Please check out our asset protection articles for real estate investing below.

Asset protection can be defined as a set of legal techniques and laws that deal with the protection of assets belonging to individuals and business organizations. This is to prevent the property from being reposed in the event that they are involved in civil lawsuits. Asset protection is also known as debtor-creditor law. The main aim of asset protection is to protect these individual or business assets from being claimed by creditors. However, asset protection does not include the concealment of the assets or tax evasion by the owners of the assets.

The idea of asset protection started in the United States of America in the 1970s. This was during the rise of offshore property and trust ownership. In the present day all the fifty states of the United States have made laws that protect the assets of individuals, corporations and limited companies form the losses of their organizations by limiting the assets which creditors can claim when the organizations go under.

Asset protection involves making the assessment of the following. The organization’s goals and objectives, and then designing a structure that is likely to achieve the organization’s assets. Asset protection also involves preparing legal documents to guide the asset protection plan. These legal documents should ensure that the organizations operate within the limits of the law and not in hiding their assets or tax evasion.

Asset protection has advantages to real estate investors. This is because the real estate industry is a very unstable business in which the values of investments fluctuate according to the present state of economy. The loss of the market value of homes and buildings a real estate investor has put up will make creditors want to repossess them. Sometimes the creditors may even come for extra property to recover their debt. Real estate investors can also face lawsuits that can make them lose their assets from tax collectors, accidents victims in their property. These investors may also lose their assets to other creditors like health care providers, credit card companies and banks.

For real estate investors to protect their assets from being repossessed during lawsuits, it is wise for them to have an asset protection plan. They should make personalized assessment of their situations. This is because there is no uniform asset protection plan for all of them. After this assessment, the real estate investor can decide to go for one of the various forms of asset protection. These plans include insurance based asset protection, setting up limited liability companies and spreading of wealth.