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The worst mistake when creating an asset protection plan is to mix safe and risky assets. For example, if we were to create an LLC we wouldn’t put your rental real estate property in there with a bunch of cash. If something happens to the real estate and the LLC gets sued, then you have just  exposed the cash to that lawsuit. By making a distinction between safe and risky assets, we are able to separate and then ultimately combine the assets once they are protected.

Risky assets and where they belong in your asset protection plan

Risky assets are anything that can hurt you and should be held in compartments. Some good examples of risky assets are cars, motorcycles, boats, planes. The most common risky asset for our clients is a piece of real estate. Your real estate properties are treated as separate entities; as limited liability companies. If you already have this plan in place, it is important to manage your assets and make sure they are properly funded.

You can’t hurt someone with a $100 bill or a stack of bills. They don’t have the same risk components as things with a door, motor, key, something you can start, walk on or fall on. Businesses are also seen as risky assets. You can hurt someone with the services you provide, or products you sell.

Taking a closer look at safe assets

What do you do with bank and brokerage accounts? Brokerage and bank accounts are safe assets, therefore they are placed in your limited partnership. You can put them directly in your limited partnership because they are not going to create any risk. Your statement should say the ABC Limited Partnership on your savings brokerage account. Ultimately in the end, your asset protection trust will provide the ultimate protection by owning the majority interest in your limited partnership.

What should you do with personal income from your job, business or practice?

It’s not a very good plan to allow your job, practice or business to fill up the coffers with retained earnings. By not making good distributions of these assets and allowing the cash to build up in your practice, you are creating an unsafe environment for the rest of your assets.  Cash inside your practice is subject to the liabilities of your practice. So if someone ever decides to sue the practice they are also going to go after any cash or any other assets tied to the practice.

If you would like to learn more about safe and risky assets or about how we can help you separate and distribute these assets call Lodmell & Lodmell today. We’ll be happy to answer any questions you may have or discuss any topics regarding asset protection in further detail.

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This Post Has One Comment

  1. if you already have a judgement in fla, and have property in other states that are in llc, then llc own by the trust, will your trust hold the creiteder off. and can the court in fla, hold a hearing in fla of breaking the trust in fla when it is a ky trust.

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Pashmina Lalchandani

CEO & Co-Founder, Bar & Cocoa / Owner, Flow Simple
December 9, 2010, Douglass was a client of Pashmina’s

I’ve known Doug in many contexts, as a friend, as a client and as a business partner and he impresses me on all levels. He’s dependable, smart, generous and I wouldn’t hesitate recommending him and his law firm to anyone.
He’s the best and most ethical lawyers providing asset protection with rock solid strategies to give you peace of mind about your wealth. Straight forward, and straight talk. Doug is exactly the lawyer I want on my side. If I send someone to Doug, I know they’ll thank me for it!

Social & Solar Entrepreneur, Pan Afrikan Theorist, Translator/Interpreter,
Founder & Visionary Leader @ Afrikanpride.
March 12, 2011, Marlon E. D. J. worked with Douglass but at different companies

Doug is one of the most powerful thinker i have came across. During the short time that i have known Doug he has been a great source of inspiration. He has a simplistic yet effective and accurate way to analyze anything you bring to his attention, and then by asking you key questions he gets you to see the light at the end of the tunnel. Besides being extremely bright, he is a genuine and caring individual which is why I feel fortunate to know him. I can say without a doubt that he his the person you would want to talk to if you were in need of a person with his expertise.
Most of the lawyers out there will probably meet your needs, but if you are looking for someone to exceed your expectations and give you that wow factor, look no more he is the person for the job.

Patricia Salter

Associate Dentist at Smileology
December 1, 2010, Patricia was a client of Douglass’

I have been a client of Douglas Lodmell’s since 2001. My main concern was asset protection in this litigious society. I can sleep alot better at night knowing I have the instruments in place to protect the fruits of my labor, and that they will not end up in the hands of a slick trial attorney.

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