Suppose a real estate investor gets in a car accident and is sued because the other driver died in the accident. Suppose that a real estate investor is sued in a wrongful death case and the plaintiff obtains a million dollar judgment. How can the plaintiff collect the judgment from the real estate investor? The plaintiff can try to obtain the money that the defendant has in the bank. If there are insufficient funds in the bank account, the plaintiff in the wrongful death case can go after the defendant’s non-exempt assets, including real estate investment properties.
What kind of asset protection plan should the real estate investor obtain? Transferring investment property to an LLC may be part of an overall asset protection plan. An owner of multiple real property assets should consider transferring title into an LLC prior to a catastrophic event like a wrongful death or personal injury case.
A primary purpose of an LLC is to provide protection from personal liability for its members. This may involve using a Series LLC. A series company permits the LLC to hold multiple properties in separate “compartments”, not subsidiaries.
If possible, rental or investment property should be acquired directly in the name of an LLC. Thus, when obtaining real estate by deed, it may be best to have transferred the property directly to the LLC.
Sometimes people want to transfer assets after they have already been sued for a wrongful death accident. The problem with transferring the asset after the lawsuit or after the judgment is obtained is that the deed transfer may be considered fraudulent.
What can a person do if they have multiple real estate assets? The real property investor should consult a real estate attorney. The author has experience in both real estate transactions, real estate litigation and personal injury litigation.
– Article By Richard Weaver