Friday, October 28, 2011 Houston Asset Protection Lawyer Explains How to Shield Your Investment Properties Using Multiple LLC’s
As an asset protection lawyer in Houston, I find that it often makes sense to advise clients to create multiple LLCs when they own more than one investment property. While it might seem more convenient to simply set up one LLC for all of your properties, you can maximize your asset protection by putting each into its own limited liability company. This LLC should not include any business activity that is not directly related to that particular investment property.
The point of creating an LLC in the first place is to protect your personal assets in the event that your insurance cannot cover damages relating to the investment property. Business and corporate lawyers have long advised this approach. It keeps the landlord or property owner from being personally liable when a tenant sues for damages or creditors are looking for payment for various other reasons. The LLC is attached to the property, but not to the landlord’s personal home, vehicles, and life savings.
By creating separate LLCs for each property, you limit liability to that one company. If something goes wrong with one property, a lawsuit will not be able to draw from the others. On the other hand, if four properties are held in one LLC and something happens with one, a lawsuit can go after the equity and assets of the other three. Creditors are only able to seek compensation for the individual LLC and will not have access to funds from the others.
For example, if you have $100,000 equity and assets in each of four properties and are sued over one, there is $400,000 available to settle that suit. If each property had its own LLC, then only $100,000 would be available, saving you considerably.
While there is a cost associated with forming additional LLCs, it is minimal compared to what most property owners stand to lose by overlooking this option. We can help you with this process here in Texas so that you’re fully in compliance with all applicable laws. Many property owners look at it in the same way as they do insurance, knowing that it provides considerable asset protection.
By taking the extra step to have your Houston asset protection and business lawyer create an LLC each time you invest in a property, you are protecting your future earnings and personal assets.
Wednesday, February 23, 2011 Houston Wills Lawyer: If You Care About Your Inheritance, Name Beneficiaries!
By Kimberly Hegwood, Houston wills lawyer
As a Houston wills lawyer, I know that many people think about…and even openly discuss who they want to receive their possessions if something unexpectedly happens to them. They truly believe their expressed wishes hold legal weight and their family can use these directions to distribute their estate accordingly following their passing.
Yet merely expressing to loved ones who you want to inherit your estate and actually documenting your choice of beneficiaries in a will are two very different things in the eyes of the law!
That’s because your undocumented “wishes” will not keep your estate out of probate court. The law is very clear that if you die without a will in place, the decision as to who gets what following your passing is no longer yours to make.
Instead, when an estate goes through probate court, a judge (who doesn’t know you or your wishes!) will have the responsibility of distributing your property directly to your surviving heirs (as defined by the Probate Code) as he or she sees fit. This can be a problem for a number of reasons.
First of all, your “heirs” may not be your desired beneficiaries. You may have wanted to leave your property or other affects to a friend, partner or even a distant relative much further down the bloodline. Or perhaps you thought about leaving some money to your heirs upon your passing, but you also wanted to leave a few specific assets to your favorite charitable organization. Either way, without having such specific wishes in writing, a judge would have no choice but to leave your assets to immediate heirs if there were no beneficiaries named in their place.
And even if you did want your biological heirs to inherit your entire estate upon your passing, allowing the probate judge to make such determinations is still problematic in that you have no say as to who specifically gets what if something happens to you (e.g., Mary gets the car, Billy gets the house, Sally gets the family heirloom collection).
Finally, it may be the case that you don’t want a certain heir to inherit any of your estate upon your passing. The decision to disinherit an heir can be made for a variety of reasons, but unless you also spell this out in writing, he or she may still have legal claim to the assets you wanted to prevent them from getting their hands on.
Therefore, it’s extremely important that you take the time to make your wishes about beneficiaries known in your will or other estate planning documents while you are still alive and well to handle such matters. Remember, you’ve worked hard to acquire everything you own and it only makes sense that you are the one who designates who gets what if the unexpected happens.
If you’re not sure how to get started documenting your end-life-wishes so they hold up in a court of law, give our Houston estate planning and probate office a call at (281) 218-0880 and schedule one of our Lifetime Legacy Planning Sessions. These sessions are normally $750, but you can come in free of charge with the mention of this article. However, this offer is limited to the first 10 callers so make your appointment today! Thursday, January 20, 2011 Houtson Trust Lawyer Discusses Having the Right Tools for the Right Job
By: Kimberly Hegwood, Houston Trust Lawyer
A will is a simple legal document which describes what should happen to your assets upon death...and it is, frankly, not enough for most families. That is because the actual distribution is controlled by probate, without a plan in place. Upon your death, the will becomes a public document available for inspection by all comers. And, once your will enters the probate process, it is no longer controlled by your family, but by the court and probate attorneys.
Oh, this can be cumbersome, time-consuming, expensive, and an emotional trauma--all added on to a family's time of grief and vulnerability. Con artists and others have been known to use their knowledge about the contents of a will to prey on survivors. This, as you can imagine, must be avoided at all costs.
What is great about a Living Trust, is that it actually avoids probate and keeps everything totally private--because your property is owned by the trust. That way, technically there is nothing for the probate courts to administer! Whomever you name as your "successor trustee" gains control of your assets and distributes them exactly according to your instructions.
And one more big thing: a will does not take effect until you die, and is therefore no help to you with lifetime planning. As we all start to live longer, this is an increasingly important aspect of these considerations. A Living Trust can help you preserve and increase your estate while you are alive, and offers protection should you become disabled.
A few questions I often receive as a trusts lawyer in Houston:
"Who are the trustees for my Living Trust? Can I be one?"
YES. In fact, most Living Trusts have the people who created them acting as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your trust. In the event of a mentally disabling condition, your hand-picked successor trustee assumes control over your affairs, not the court's appointee. That's nice peace-of-mind!
"Does a Living Trust help me to avoid income taxes?"
NO. You see, the purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate federal estate taxes. It is not a vehicle for reducing income taxes (see an accountant for that!).
In fact, if you are the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.
We manage these trusts for our clients -- and we update them too! ( More on that in a future Note, perhaps.) So, if you want to set one up (and I don't blame you), send me an email, or give us a call: 281-218-0880 -- and we will get this process started for you. Tuesday, December 28, 2010 Houston Asset Protection Lawyer Discusses Generation-Skipping Gifts Opportunity
By: Kimberly Hegwood, Houston Asset Protection Lawyer
The practice of giving (tax-free) gifts to your children, in advance of estate transfers, has been around for a while. But any gift of over $13,000 has always been subject to the "Generation-Skipping Transfer Tax". This tax was set up in the eighties to prevent asset transfer for the purpose of avoiding said estate tax. It is typically the same rate as the estate tax. So, any gift over $13K would be taxed at those rates.
But not right now, it's not.
You heard me right.
With the (recently-signed) tax agreement, the tax rate is ZERO for any "generation-skipping" transfer made by 12/31/10.
Now, this won't apply to everyone, of course, but this is a welcome opportunity for the right situation. And you will need to act quickly, because beginning January 1, 2011, the tax rate for these transfers will be 35% (the same as the new estate tax rate). Further, that rate is set to go back to 55% in two years, unless Congress changes it again.
The best part? Even if you don't yet have grandkids, you can take advantage of this "loophole" by setting up the right vehicles now.
But you will have to act quickly. These sort of moves are what we routinely "pull off" on behalf of our Houston Asset Protection clients, and if you contact us quickly (281-218-0880 or by sending me an email), we can put the papers together to make it happen for you.
Again, this won't apply to everyone ... but if you think a friend might be interested, feel free to send them this article and have them contact us.
And, on the early note -- let me wish you a premature Happy New Year, 2011!
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