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Asset Protection for Commercial Investment Portfolios

| Jul 13, 2021 | Firm News

Your real estate portfolio is growing, which brings with it certain risks. To shield your assets from legal and financial consequences, you must address various components. 

You have invested significant capital and time into your real estate properties, making it essential to protect your holdings from lawsuits or other legal issues. 

Real Estate Insurance

Insurance can be the first line of defense against potential issues stemming from your property ownership. It typically covers events such as storms, fire, vandalism and slips and falls. However, insurance policies generally do not cover remarkable claims, like gross negligence, tenant disputes or financial conflicts between suppliers, contractors or vendors. 

Asset Protection Trusts

Land trusts hold your real estate assets. These trusts are grantor trusts that contain detailed instructions for income distributions. They also specify who can sell, lease or encumber your properties. Land trusts do not exempt you from liability but offer an added layer of protection. 

Irrevocable trusts can offer exceptional protection, but they are complex accounts that require professional assistance to set up correctly. Property that you transfer into this kind of trust belongs to the fund, and specifications vary from state to state. 

Ownership Entities

Choosing an ownership entity right for your portfolio entails a thorough evaluation of your business factors and the resulting tax implications. It is crucial to comprehend the intricacies of each formal structure and how they affect your liability and bottom line. 

When you hold many commercial properties, asset protection is vital to prevent possible financial loss. You may find that the basic steps most people take are insufficient for your real estate investments. Making the best decision for your economic well-being requires in-depth knowledge of the available options and related laws. 

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