Tahoe-Truckee Market Beat: A few ideas to help protect your assets
We live in a very litigious society. Lawsuits are quite common and can be devastating to your finances in the event you end up on the wrong side of one.
There are several steps you can take to protect your hard-earned wealth. There is no one-size-fits-all solution, and the best strategy depends on your individual situation. It’s worthwhile to consult with a competent legal advisor when considering what might be best for you.
A liability umbrella insurance policy can be a very good tool and typically they are reasonably priced. Having an insurance umbrella in place can provide a very good layer of protection.
Homesteading your primary residence can protect your home in the event of a lawsuit and the amount of protection varies from state to state. Qualified retirement accounts also have some protection from creditors and the amount depends on your state of residence.
Establishing an LLC, or limited liability corporation, can be another very effective tool for asset protection. LLCs can work quite well for rental properties and brokerage accounts. Some states have better laws than others regarding LLCs.
Currently, Nevada and Wyoming are two of the best states to establish an LLC in. Nevada recently instituted a gross margins tax that affects businesses with revenues over $ 4 million per year, so that is one disadvantage if your revenues exceed that amount.
If you have some rental properties in California, the laws are not quite as good, but you can set up a California LLC, then have a Nevada or Wyoming LLC own the California domiciled company, and get the advantage of superior asset protection that way.
LLCs can also be set for brokerage accounts. If the account is titled in the name of an LLC, you can get some creditor protection and there are some tax advantages as well.If your account is set up as an LLC the tax write offs for losses and business expenses are better.
If you lose a lawsuit, you may get a charging order against the account, but it is difficult to get at the assets in the accounts, so attorneys who work on a contingency are less likely to go after them.
If you’ve worked hard to build up your net worth it may be a good idea to seek some advice about the best ways to protect it.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.
Support Local Journalism
Support Local Journalism
Readers around Lake Tahoe, Truckee, and beyond make the Sierra Sun's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User
STATELINE, Nev. – A Lake Tahoe visitor plans to purchase an electric car and put a down payment on a new home after striking it rich at a Stateline casino.