Then you get “The Call.” It’s from one of those one-call-that’s-all, flea-bag attorneys who tells you that he’s representing one of your tenants who was seriously injured after falling down some steps at one of your rentals.
Of course, he fails to mention that your tenant was inebriated at the time he fell – the attorney doesn’t want things like facts and the truth to get in the way of his big, easy payday.
The attorney threatens to sue you for ten million dollars or you can simply write a fifteen thousand dollar check and avoid the lawsuit.
Oh sure, in many circles this “offer” would be considered extortion, but because it’s an attorney doing the extorting, it’s instead called the “settlement negotiations.”
You meet with your attorney ($250 per hour) trying to better understand your options. You tell your attorney that you own the rental property personally – in other words, the property is in your personal name. In fact, all of your rentals are in your name. And so is your home, your cars, your bank accounts and all of your other assets.
Bottom line: Because you own everything personally, ALL of your assets are at risk of being taken by the court system if you’re sued.
To avoid the lawsuit – even though you didn’t do anything wrong – your attorney advises you to write the $15,000 check and make the case go away.
Business owners, how’s that stomach of yours feeling right about now? Did you know that there’s a simple way to protect yourself and all that you’ve worked for.
Let’s say you buy a brand new Cadillac. You park it at the curb. A homeless man with a buggy filled with his worldly possessions walks by and for no reason runs his buggy down the length of your new car, scraping the paint as he goes by. There’s a cop standing there watching everything. You jump out and say to the cop, “This guy just ruined my new car. What are you gonna do about it?”
Ok, that’s my question for you: What is the cop – or you – gonna do about it? Will the cop arrest the guy? Doubt it. Can you punch the guy? Sure, if you want to go to jail. Can you sue him for damages? Are you kidding, he’s a homeless guy with a buggy. Even if you win you lose because you won’t be able to collect so much as a dime.
Because the homeless guy has no personal assets, he’s pretty much lawsuit proof. What’s the lesson here? If you have a lot of personal assets, then become the homeless man with a buggy. It’s easier to do than you think.
It begins with not owning anything personally. Instead, we recommend that you put all of your real estate in Land Trusts and personal property into Personal Property Trusts. Trusts are a great first step to asset protection and estate planning.
We learned how to do trusts from our long-time teacher, Dyches Boddiford. We highly recommend his two-day trust seminar that he’s teaching in September in Atlanta. To learn more, his website is Assets101.com.
Bill and Kim’s North Georgia Real Estate Investors Association meets on the 2nd Thursday of each month, from 7-9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Georgia. For more info, go to REIoutpost.com.