OK. There are seminars , Forums, Books , and CDs on asset protection , land trusts, LLCs ect. Some say they are over hyped and some say they are absolutely necessary.
MY question is does anyone have any case history of any body anywhere trying to sue and was thwarted be one of these vehicles? I have yet to hear or read of a single story but would certaintly like to do so.
Every week, all across the country, lawsuits are filed against landowners, landlords, investors, and property managers. You can go to the courthouse of any county in this country to verify this.
If you do not have a legal entity, a legal person, such as an LLC, set up to own and manage your property, you will be sued individually and you will be personally liable for any problems or litigation that arise.
LLCs, if set up and maintained properly, are an excellent, tax-advantaged way to shield yourself from personal liability.
This is important - do it for your family.
I’m sure I could find instances of where an entity saved someone’s bacon. I DO think that such instances are comparatively rare. Before an entity comes into play, several things must ALL happen:
Does this mean you don’t need an entity? NO! It DOES mean that given the last-ditch nature of the entity’s liability shield, you keep costs & complexity low (e.g. - don’t overdo it with too many entities, NV entities, etc.). It’s alot like life insurance - the liklihood of dying young is low, but the consequences stark - so you get the term life insurance (because it averts catastophe if needed) but aren’t willing to pay high premiums (because the liklihood of needing the insurance is low). If an entity isn’t providing tax savings (as they often do with flips), use them for asset protection alone (generally the case with rentals) but keep the costs in time & monsy in line, just as you would with term life insurance.
John Hyre
John… Your response is well taken. I did go to the courthouse as Steve Tiemann suggested. I will be dogonned if I could find any lawsuits . Its easy to find a murder. However Im sure somewhere ,some time , it has happened. I would just like to know where and some of the details. In the entire USA , and with all of the gurus , lawers, property owners , seminars, and forums like this there has to be someone willing to tell their story.
Go to your State District Clerk’s office, your County Clerk’s office, and your Federal District Clerk’s office. Look through the indexes of civil lawsuits.
In Dallas and Fort Worth alone, there are hundreds of lawsuits pending relating to real estate transactions. Some of these are contract cases, some are negligence cases, some are landlord-tenant cases against property managers.
The cost of protecting yourself with an LLC is so low, and the benefit is so great, why would you not do it ?
To find a case where an entity has saved someone’s bacon, simply go to a law library & find some law journal articles on “Piercing the Corporate Veil” or look in the West’s indices under the same topic. In some of those cases, the courts chose to pierce the veil, that is, ignore the corporate identity. In other cases, they chose to respect the corporate existence - in those cases, the entity withstood the creditor’s attack and saved the owners money (else the creditor would not have litigated the corporate existence to begin with). Of course for every published case, there are many more unpublished or hard to find instances of the same. It does happen, but as I said, getting to that point is comparatively rare.
John Hyre