Asset protection is a critical part of real estate ownership, but such strategies require sensibility and balance. The complexity of any smart asset protection strategy should be in proportion to the risk involved, the value of your holdings, and the cost of creating and maintaining the asset protection strategy itself. Complex legal structures come with a high cost of maintenance and are usually unnecessarily confusing to manage and administer for most investors. It is also important to consider that these strategies are meant to reduce, but cannot eliminate, all exposure.
Basic protection scan be created through the creation and structure of legal entities, such as limited liability companies, maintenance of those entities, titling assets properly, and appropriate amounts of insurance, as needed. Together, these approaches work hand in hand with proactive tax planning from a qualified professional.
An asset protection strategy can be very helpful if it considers your specific circumstances, and you understand its benefits and limitations.