Cover Your Assets Part 1 – Protecting Your Wealth Today and Tomorrow

An essential element of real estate investing is protecting the assets you’ve worked so hard to acquire.

When you’re just starting out, your investment business is pretty low liability. But as you acquire properties, the liabilities build up … and a legal problem with one property could cascade and affect your other assets if you don’t have the proper protections in place.

In this show, we’ll talk with a Rich Dad advisor on how to sort your assets into buckets so you NEVER lose everything at once.

Part one of this two-part series is for beginners and experienced investors alike. As John F. Kennedy said, “The time to repair a roof is when the sun is shining.” NOW is the time to put in place protections to keep you safe if troubles arise.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your host, asset Robert Helms
  • His liability of a co-host, Russell Gray
  • Garrett Sutton, best-selling author and legal advisor to Robert Kiyosaki

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Firewall your assets

The society we live in is very litigious … and that’s not going to change any time soon. So what can investors do?

We talked to Garrett Sutton about precautions YOU can take to protect your assets as they grow.

Your best option, Garrett says, is probably an LLC, simply because they provide the best asset protection. An LLC allows you to firewall your assets so one lawsuit doesn’t set off a chain reaction that leaves you asset-less.

Why is an LLC better than a corporation? Besides better asset protection, LLCs offer more tax flexibility and charging order protection.

Charging orders are legal judgments that allow creditors to access the money you make through your business. But some states offer charging order protection to LLCs.

And, Garrett says, most lawyers prefer to go through insurance so they can collect right away. So ideally investors have two firewall protections … an LLC or corporation AND insurance to back them up.

Some states, like Utah, California, and New York, don’t provide great asset protection for LLCs. Creditors can blow through the LLC and force the sale of assets … not ideal.

What can you do if you live in a state that doesn’t have the best rules for entities? Garrett reminds us you DON’T have to form an entity in the same state as your property or your residence.

How to set up your own LLC

While setting up an LLC may sound onerous and difficult, Garret says it’s really not that hard. There are two main steps:

  1. Set up an LLC in the state you want.
    1. Pick a name and make sure the name is available
    2. File your articles of organization, operating agreement, and certificates.
  2. Transfer the title of your property into the name of your LLC. This is NOT a sale … simply a transfer.

While there are plenty of websites advertising do-it-yourself LLC help, it’s much better to talk to an attorney, says Garrett.

A certified legal professional can walk you through all the steps and help you understand which business decisions are right for you.

And, an attorney will help you stay aware of formalities … the easy-to-follow rules that will keep your LLC safe from legal troubles.

Fine-tune your asset protection strategy

Garrett is a best-selling author. His books on starting your own corporation or LLC cover the strategies and techniques YOU can use to increase wealth and reduce risk.

A technique SOME people use is changing their LLC from partnership taxation to C or S corporation taxation.

That’s fine, says Garrett … as long as you don’t forget to amend your operating agreement.

Business decisions as simple as tax changes have many permutations we don’t even think about … another reason an asset protection attorney is essential.

Other investors are looking into offshore asset protection trusts. Something some investors don’t realize is that more than 10 states have created onshore trusts. But while these trusts make your money bulletproof, recent cases have demonstrated that it’s only bulletproof in the state where you’ve set up the trust.

Although there are many tricks for upping your protection level … and your wealth … investors don’t need 17 layers of LLCs.

They also don’t need to spend a ridiculous amount of money to form an LLC. For example, a Wyoming LLC provides great protection levels, for only $50 a year (plus any legal fees).

And LLCs don’t mean you’re locked into operating decisions. You have the latitude to make changes. LLCs are flexible!

Interested in delving deeper into the legal realm of asset protection? Delve into what Garrett has to offer on his website.

And while Garrett provides affordable asset protection and legal services, that doesn’t mean you shouldn’t seek out your own legal help … just make sure the people you work with are serious about helping small investors stay on top of corporate formalities.

In part two of our asset protection series, we’ll delve deeper into the legal world with a discussion of offshore asset protection strategies. Listen in for info on taking your profits outside of the States!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

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