Funding Guide - Basics

Remember, your plan is only useful to protect if your assets are titled in the name of the plan. The funding of the entities in your planning is critically important and, while we can help, most of the actual changes must be done by you.  These include bank accounts and deeds to property, which an only be signed by you. 

For your convenience, we have created this resource page to provide you with general information on funding and links to maintenance and tax reporting documents for each of the specific entities which may be in your asset protection plan.

Lodmell & Lodmell cannot complete the funding process for you. We can, however, assist you in this important process. We urge you to take the time to complete the funding process and please reach out to us at any point if you need help or feel stuck.

Should you have questions about how you can fund your existing plan, or if you’re interested to develop an asset protection strategy, call Lodmell & Lodmell today.  We’ll be happy to answer your questions.

 

Funding Basics

• Primary and Second Homes (non-rentals)

The first asset you need to consider is your primary residence.  If you live in a state with fantastic homestead protection like Florida or Texas, then you don’t need to do anything.  Your home is already protected.  Otherwise, you need to provide some protection for your home.  The typical way to do that is to transfer or “deed” your primary residence into your asset protection trust.  The same is true of any second homes that you own but don’t use to generate rental income.  This can be done locally with a real estate attorney or title company.  We also have had good success using U.S. Deeds, which is a national deed preparation company. They can both prepare and file your deed for you in most cases.  They can be reached directly at [phone] or Click Here for full details.

• Risk Assets (Rental or Investment Properties)

Rental or investment properties are slightly riskier than non-rental (personal use) properties.  As a result, there needs to be additional insulation around them in order to protect your other assets.  That additional insulation comes in the form of a limited liability company (a “LLC”).  If you have already created LLCs for your properties, then the funding works as follows:

1. The LLC is created, and should be owned in the exact same proportions as the property to be transferred.  This means that if the owners of the property are husband and wife, then the new LLC should be owned by husband and wife as well. 
2. The rental property is deeded into the LLC.
3. The LLC is transferred into your asset protection limited partnership.

It’s very important that you follow the exact sequence described above, because in some instances it can save you money by avoiding transfer taxes and/or a reassessment for tax purposes (check with your local taxing authority and clerk of court to make sure).  If you have rental properties, but have not yet created an LLC for them, please contact us to discuss.

• Safe Assets (Stocks, Bonds, Syndications, other securitized financial assets)

Cash, stocks, bonds, precious metals, and jewelry are all considered “safe assets.”  That’s because they can’t generate direct liabilities for you.  Think about it like this: Someone can get injured on your rental property, which makes it risky, but holding a cash or stock account does not create the same direct level of risk.  Because of this unique feature, your safe assets can be owned directly by your Asset Management Limited Partnership, without the need to insulate those assets with a separate LLC.  Remember, we strive to keep your structure as simple as reasonable, while still giving you all the protection you need.

• Vehicles (Personal Use)

Vehicles are very risky assets.  As a result, unless they are particularly valuable, they should be left outside your plan completely.  We recommend that you own vehicles in your personal name.  We do this because it is very difficult to separate the driver from the vehicle and if the vehicle were actually placed into you asset protection plan, you actually increase your exposure vs. decrease it. Therefore, it's okay to keep daily driver vehicles in your own personal name and trust that your other assets are safely protected in your plan.  We do; however, strongly suggest that you have very high insurance limits on all vehicles.  This includes an umbrella insurance policy which effectively increases your policy limits.  For most of my clients $3-5M is minimum for an umbrella policy. 

For a complete checklist of assets and where they should be placed in your plan please see the attached file.

Lodmell & Lodmell, PC is one of the nations leading Asset Protection Law Firms and the creators of The Bridge Trust®.  L&L serves clients nationwide and may be reached at [e-mail] or 602-230-2014.