Asset Protection

Why LLC's Are Great Asset Protection Tools

Some of my clients need not only estate planning but business planning as well.  A lot of business planning is resolved by the use of LLC’s, or limited liability companies, whereby they are formed and then hold investment properties or rental properties as a way to protect other assets.

The idea of the LLC is to shield the individual and/or other LLCs and entities and their assets from any lawsuit arising from and against a property. For example, let’s say you own a rental property and your tenant slips and falls on the property and is severely injured.  He or she decides to sue you for the damages (medical bills, lost wages, pain and suffering).  If that property is in your individual name, the tenant would be allowed to sue you in your own name and any property that you own in your own name would be subject to his claims.  But, if the property was owned by an LLC, the tenant will have to sue the LLC and only the LLC’s property would be subject to his claims.  And, if the LLC’s only asset is the rental property, the tenant’s recovery will be limited to the property, and any lawsuit will not threaten all of your other assets.  Be mindful, though, that if the tenant was occupying the property prior to the property’s transfer to the LLC, he would likely still have claims against the owner, individually.

An LLC can be a very valuable tool when you own investment properties. LLCs allow you to protect assets and that is the primary goal of professional estate planning. If you would like to look into your needs when it comes to Dallas Estate Planning and whether business planning may also be helpful to you; call me at 214.220.2130 for more information or to set up a free consultation.

Asset Protection Secrets Revealed

Here’s yet another story on why avoiding probate is a good idea.  I represent a North Dallas, Texas man whose wife died in an auto accident.  She died “intestate” meaning without a Will.  In fact, she didn’t have any estate planning in place.  She didn’t have a Will, Trust, Power of Attorney, Medical Power of Attorney, Advance Directive / DNR (Do Not Resuscitate Order) or anything else.  It just so happens that the wife purchased their family home before she and her husband married, making it her separate property and not their community property.  The difference is really big in the eyes of the law.  The husband wants to sell the house and move out-of-state near his parents so that he can get some help raising their young children. 

Under the Texas Law of Intestacy, and the law of Descent and Distribution, since the house was separate property, the children will receive ownership of the house subject to the husband’s life estate.  But, since they are minors, the court is going to likely require that the estate be administered, that a guardian ad-litem is appointed for the children, and the court will scrutinize any sale of the house to make sure that the children’s best interests are protected.  In short, the process is going to be long, expensive and frustrating because of the court oversight.

Since she didn’t have a Will or a Trust or any other legal planning, we will never know what the wife wanted, but, like most people, we believe that she would have wanted it to be easy on her husband and children and not lengthy and expensive.  Her husband is now in a real bind because he has to continue to make house payments on the house note while he pays rent on a rent house down the street from his parents.  It will likely be six months before he’s in a position to put the house on the market and, the process is even more complicated because he’s now living out of state and has to travel back and forth to Dallas for court.

If they had been clients of ours before the wife passed away, through the use of a Trust, the husband could have sold the house immediately without the delays from court intervention or oversight and without legal expense.  They would likely have had a Will too, but as a “secondary” document, with pour-over provisions.  That means that their primary estate planning tool would have been their Trust with the Will serving as a back-up.

It’s a sad story made even sadder by the predicament that the family is left with.  The frustrating thing is that it all could have been easily avoided.  If you want your family to avoid complications like these, contact our office so that we can speak about the options available to you.

Donald R. Jones, Attorney

The Jones Law Firm

3109 Carlisle St., Suite 100

Dallas, Texas 75204

214.220.2130 office | 214.220.2131 fax

don@jonesestateplanning.com

www.JonesEstatePlanning.com

www.GetMyAffairsInOrder.com

www.NoLawyersNoJudgesNoCourtrooms.com 

Don’t Be Fooled by Remarriage and Asset Protection

I helped a Mesquite, Texas couple today with their estate planning needs.  The husband has had some recent health issues.  He had a few questions about protecting their assets if he passed away first and his wife decided to remarry.  He wants to make sure that their kids receive their estate’s assets and that they don’t go to a new husband or the new husband’s family.

Their questions reminded me an old, silly joke:  Fred and Wilma are sitting together on their front porch one day.  Fred asks Wilma out of the blue “Wilma, if I were to die, would you remarry?”  Wilma said “Fred, don’t be silly, you are in great health.”  Fred said, “I know, but would you?”  Wilma said “Maybe so.  We’re still pretty young.”  Then Fred asked, “Would you let him live in our house?”  Wilma replied, “Fred this is weird.”  Fred said, “I know, but would you?”  Wilma said, “I guess so, its paid for.”  Then Fred said, “Would you let him drive my truck?”  Wilma said, “Fred, can we stop this?”  Fred asked her again.  Wilma said, “I guess so.  It would just be sitting there I suppose.”  Then Fred said, “Ok, one more.  Would you let him play with my golf clubs?”  Wilma replied, “No.”  Fred said, “Why not?”  Wilma said “He’s left-handed”.

It’s a silly story designed to illustrate that affairs and remarriage happen.  Protecting your assets from remarriage for the benefit of your children is one of things that we do at The Jones Law Firm.  There are several ways to do so and they all involve the use of Trusts.

Contact us at The Jones Law Firm to learn more.