Real estate assets are subject to lawsuits and probate. Many people purchase insurance to protect their real estate assets against damage or loss. Yet do not realize the importance of putting an asset protection plan in place to protect their real estate assets from lawsuits and probate.
If you own a rental property, there is always a chance that one of your tenants may sue you if a breach of the tenancy agreement occurs due to your actions. If you do not plan your estate, your death might trigger internal issues and your intended beneficiaries might not get what’s rightfully theirs.
Here are some common estate planning tools you can use to protect your real estate assets in Sonoma County.
You can use a trust to protect a vacation home property that you do not rent out on a regular basis from creditors or potential lawsuits. If you want to reduce the size of your estate to minimize your estate taxes, create a Qualified Personal Residence Trust (QRTP).
A QRTP allows the creator to use their property for a limited time and then pass it onto their intended beneficiaries. A QRTP is an irrevocable trust, meaning it cannot be amended without the consent of the beneficiaries.
On the other hand, a revocable trust can be changed without obtaining the consent of the beneficiaries. Revocable trusts are more flexible than their irrevocable counterparts. A revocable trust is often used to ensure that the property stays within the control of the creator’s family.
LLCs are often used to protect income-generating properties (such as rental properties) from lawsuits and claims brought by other parties. An LLC may offer the property owner some privacy as the property can be listed in a company’s name. If you have an LLC, revisit your strategy regularly and introduce the necessary changes to ensure it remains relevant.
An offshore asset protection trust operates just like a US trust, except that its trustee is not a US citizen. There are several benefits of offshore trusts. The trustee of a US trust has to surrender control of the trust if a court orders them to do so.
The trustee of an offshore trust, on the other hand, is not subject to the laws of the country and can challenge a court’s judgment against them.
The Johnston Thomas Law team consists of some of the most sought-after legal professionals in Sonoma County. We will help you navigate the complex field of real estate law. To make an appointment with one of our attorneys, call (707) 545-6542.