While a basic estate plan, utilizing a Revocable Living Trust, will avoid Probate and minimize or eliminate Federal Estate Taxes, it will not protect you and your loved ones from your creditors or a lawsuit.  For this reason, we recommend that "at risk" assets, such as rental properties and business interests, be held in legal entities, such as a Limited Liability Company (LLC), a Limited Partnership, or Corporation.  Structuring your estate in such a manner will both minimize a creditor's ability to attach the assets, as well as protect the balance of your estate (personal home, investments, etc.) from lawsuits originating within the entity.

The classic example is that of a piece of rental property, owned individually by a person or persons, in which a tenant is exposed to lead paint and becomes violently ill.  Most, if not all, insurance carriers do not cover losses or liability associated with "exceptions" such as lead paint, mold, or asbestos.  Alternatively, the coverage you carry may not be sufficient to cover the loses realized by an injured party.  If one of these "exceptions" applies or your coverage is not sufficient, then following a successful lawsuit, the injured party becomes your creditor, and may attach your personal assets. However, if the rental property is held within an alternative legal entity, such as those mentioned above, your risk of loss of personal assets will be greatly reduced, if not eliminated entirely.

There are additional advantages to holding "at risk" assets in such entities as a Limited Partnership or Limited Liability Company.  Please Contact Us if you would like learn more about these concepts.