I am a little frustrated in finding a lawyer to work with. How difficult should it be to find a lawyer interested in working with real estate investors? Anyone else feel it is difficult?
I met with a lawyer on Friday and discussed the need to plan for asset protection and setting up an llc and various beginning ideas and said I wanted to get going on this quickly as I am interested in a couple of properties. The lawyer said she would get back to me and meet this week on estate planning and discuss llc’s and now it is Tuesday and I have yet to hear from her.
Her attitude seemed somewhat lackluster but I wasn’t sure if this is generally the cool mood of lawyers. Should I look elsewhere?
You don’t need a real estate lawyer. You need an estate/AP planner who specializes in real estate investments.
Is this person local? How did you find her? Does the firm specialize in estate planning? It’s best to use a referred attorney who can work with national AP planners and tax experts to draft your plan. No one person knows the legal and tax issues well enough to craft a plan alone. Your local RE group is a good place to start and the lawyer will call you back if you are referral.
It’s only Tuesday. I wouldn’t start getting worried until Thursday.
Thanks for the reply BLL.
The lawyer is local and from one of the larger firms in the state which I thought might have some clout if I needed legal representation in the future.
The lawyer represents clients in diverse matters related to general business, real estate development, land use and probate, trust and estate matters.
She has represented banks involving trust and banking practices, real estate developers, entrepreneurs in start-ups and established corporations.
Also, probate, trust and estate practice developing individualized business succession and estate plans so as to minimize conflicts with tax obligations. (taken from their website)
Thought this would be a good start. btw, what is an AP planner?
This is just my opinion, but you could be small potatoes to the firm and she doesn’t care that much about you. You will not be a repeat customer or even a big spender. Bringing you on as a client doesn’t improve her position with the firm. Large firms want big, repetitive business like the developer who is building every year or the administration of multi-million dollar trust. They want complicated jobs that generate lots of billables. Maybe she is really busy and will call you later in the week. I don’t think it’s inappropriate for you to call Thursday afternoon or Friday to set up an appointment if you don’t hear back before then. Keep in mind the squeaky wheel gets the oil.
AP planner is short for Asset Protection planner, which is a slang term for people who specialize in Asset Protection planning. AP is not taught in law school and there isn’t AP law. It is the interaction of estate planning, trusts, probate, insurance, entities, business and contract law, creditor/debtor law, taxation, bankruptcy, financial planning, and many other topics. Unfortunately, most people who do AP work are hopping on the band wagon for a quick buck and having nothing more than a basic understanding of the issues. They rely more on what true experts say than researching cases.
There is a book by Roccy DeFrancesco that discusses planning in the context of a team approach. The team approach starts with a local attorney you trust and a tax guy you trust. Both are usually small firms and they contact national planners who are the true experts. The experts know the big picture issues and your locals know your specific situation. They work to create a plan that works for you. This is not a DIY or cookie-cutter operation.
I wouldn’t worry about having entities and all kind of planning in place before you start. Good business practices and insurance will be sufficient until you amass signficant wealth. The reality is that most litigation is settled for the insurance limits. Entities can get costly. There is annual maintence and recording keeping that can take you away from growning the business. Advanced planning is only needed when there are millions of dollars at stake. The real issue is doing it wrong and then having to redo everything later on, which can have horrible tax consequences. That being said, I think everyone needs a revocable living trust, pour over will, health care proxy, durable power of attoney, and contingent power of attorney. That’s where I would start. You can talk to folks about LLCs, etc for future work, but I wouldn’t set up any entities until you are sure you know how run them, how they work, and how they are taxed.
I would suggest you educate yourself on entities and all the other AP topics. That will give you a basic understanding and general knowledge that will help you decide if someone is qualified. Here are some books.
Asset Protection by Adkinson and Riser
Wealth Preservation Planning: A “Team” Approach by Roccy DeFrancesco
Nolo has some good books on the actual operation of LLCs and entities
Thanks for the info BLL.
I couldn’t come up with what an AP planner was, but that was exactly why I went to see this lawyer in the first place. I wanted to start off in the right direction before getting myself into trouble. I do have assets needing protection and need to protect them before risking it all with this new venture.
I am familiar with the different entities and have a c-corp right now and considering changing it to an LLC or S-corp for various reasons.
Still no word from the lawyer. I don’t want to call. If she’s not interested in my stuff I’ll go somewhere else, but after finding someone else I will let her know the reason.
What do you think of Land Trusts?
Land trusts are just another planning tool and can be very effective. Limited partnerships, LLCs, c-corps, and the various types of trusts are just tools. One is not better than another or a substitute for another. They all do different things and work well in conjunction with each other. You wouldn’t chose a hammer over a screw driver or pliers for your tool box. You would get them all because they do different things.
The key is to know when and how to use them. That is the job of the professional you hire. You don’t tell your planner you want an LLC. You tell him your situation, your goals, and your concerns and he recommends the LLC if it is appropriate. It is his job to ask the right questions to find out what you need and explain it to you.
Just a word of caution. Never do any type of planning with the intent to prevent, delay, or hinder the collection of a valid debt. This includes judgements from future, unknown creditors against future, unknown actions for which you are held liable. Such transfers are fraudulent transfers and subject to undoing by the courts. Don’t give creditors a low hanging fruit. Your planning is always done for some legitimate reason like estate planning or business continuity or separation of accounts. If the planning happens to prevent, delay or hinder the collection of a debt, it’s just a side effect.
For all this talk about scummy lawyers stealing your stuff in a bogus lawsuit, how many people do you know who have lost a lawsuit and had to sell stuff to pay the judgement? How many people just settled for the insurance limits? How many people do you know file income taxes every year? How many people do you know that have been screwed in a divorce? I would be more worried about paying too much in taxes than losing a lawsuit. Taxes and divorce are the biggest destroyers of wealth, not the lawyers.