Summary: Vacation Rental Asset Protection
- The Biggest Killers of Wealth: Taxes + Lawsuits
- Vacation Rental Asset Protection: A Short Story
- How do I protect my vacation rental? 3 Steps
Do you know the Biggest Wealth Killers?
It is said that the biggest killers of wealth are taxes and lawsuits. One of the consequences of NOT being properly protected with owning real estate is a Lawsuit. For this reason, we are big believers in vacation rental asset protection and vacation rental insurance.
Is your property titled in your name? Could be a big problem if the wrong tenant gets in. In a case like this the persons whose name is on title could very well be risking other assets their name is on, including their primary residence, personal bank accounts and other assets like the family legacy.
Vacation Rental Asset Protection: A Short Story
“Imagine for a moment, you are at home sleeping and the phone rings at 11pm at night. Half asleep and startled you answer, it is your Property Manager. Hastily she says to you, “We have a problem, one of the teenage kids of the current guest was on the roof, drinking alcohol, partying with friends and fell off the roof. We have everything under control here, we don’t know how severe the fall was but the parents are on the phone with an attorney right now. What do you do next?”
This is one of the worst fears and nightmares of anyone that owns real estate, accidents! Accidents will happen, are we prepared for them? When a home is titled in the personal name of the owners, not only are they at risk most if not all of their personal assets can be too, including any college funds, legacy reserved for children, savings, equities and possibly primary residence. We believe in asset and wealth preservation. We do not “own” anything but control all of our assets via a combination of revocable living trusts and limited liability companies. There is no one “right” way to structure assets, some simply have more layers or protection and take advantage of incorporating in states, like Nevada, that have more protection for business owners.”
Excerpt From: Michael Hamilton. “Vacation Rental Confidential.” Apple Books.
How do I get Vacation Rental Insurance? Vacation Rental Insurance: The Breakdown
How to I protect my Vacation Rental?
Disclaimer: We are not attorneys, the following information is based off of what we do at Live Swell and is for educational purposes. It is important that you speak with your team of professional and choose what is right for you and your specific scenario.
Step #1: Get the Title Out of Your Name
The individual or entity “on-title” of a property is the one named in a law-suit. This step reduces (but may not 100% eliminate) personal liability
Step #2: “Re-Deed” the Property To An Entity You “Control”
The property needs to be “titled” if we are removing a person/individual from it. We title our properties in a “revocable living trust.” The “beneficiary” of the trust is an LLC that we own. So we “own nothing, control everything.” This is not the only way to “re-deed” a property, some people choose to deed it directly to an LLC or close in an LLC. The revocable living trust simply adds another layer of protection, helps avoid probate and protects privacy.
Can multiple properties be “deeded” to the same LLC?
Yes, however it is important to be careful as now multiple assets are exposed if there is a lawsuit. Property #1’s lawsuit could potential force the sale of another possibly. For this reason, as well, we choose to leverage the trust.
Step #3: Ensure Your Vacation Rental Insurance does not have “Coverage Lapses” and Get the Right Vacation Rental Insurance
Thanks Warren! Enough said!
Rad News for our blog readers!
- Vacation Rental Confidential – Just released! “Information so valuable it should be kept a secret.” Written by Michael Hamilton, VR Confidential showcase’s the Live Swell proven process and will serve as blueprint to increase the likelihood of Vacation Rental success to truly build your dream. Get your copy here
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