Asset Protection Strategies

One of the first steps we do for clients, and I would certainly recommend for anyone investing in Real Estate anywhere, is to discuss with your legal team or accountant about asset protection. Real Estate, albeit one of the more stable and less-risky investments, still comes with its fair share of risk, and as an educated investor, we need to ensure to mitigate as much of these risk as we can.

One way we can do that is to ensure to protect our assets as much as possible, and structures or entities are one way we can do this.

By broad definition – an “asset” is anything useful, desirable or having exchange value. Taking an equally broad view of the definition of “asset protection” then, would be – “steps taking to help protect the asset”.

Two of the more common methods or structures used to protect assets are Limited Liability Companies (LLC’s) or Corporations. Both have their pros and cons, particularly in the area of taxation and I would ensure to talk to your accountant or US Tax agent re these.

A corporation is a legal entity that exists within the contemplation of law, which is separate from its owners, or also known as shareholders. A US corporation is similar to an Australia Pty Ltd Company in this respect. A Corporation can be a good asset protection vehicle in that it shields the shareholders’ personal assets from that of the business or corporations’ assets. This corporate shield can also be referred to as the “Corporate Veil” and is in place provided a number of formalities are followed.

Limited Liability Companies or LLC’s as you will often hear them referred to are another popular method of entities used in investing particularly, within the US. These are non-corporate business entities which by design are substitution for the corporate entity. LLC’s are bound by a number of state based acts and statutes which generally set forth a number of rules that directs LLC operation and governance unless the members (or owners) of the LLC agree otherwise. Since they emerged in the 1990’s they have become one of the most popular form of business entities within the US

We have a great legal team based in the US who handles all of our work and would be happy to refer their details if you need, or if you would like to discuss getting started in US Investing, book a call with us TODAY!