John Hoff’s last blog post..Welcoming Theresa Hoff - Director of Incorporation and Living Trust Services by eVentureBiz

Here’s some answers for you:

How does putting your house in a Living Trust protect it any more than having it sitting outside the FLP like the car?

Putting your house inside a Living Trust provides protection from, well - you.
For example, if you’re driving one day and get in an accident, in most cases your house will be protected if it’s inside a trust. If is wasn’t, this may not be the case.

If something happened with the house that caused someone to sue you, they wouldn’t be able to get to any of your assets inside the FLP either way. Correct?

Correct. Remember though, nothing is 100% full-proof, but for the most part, yes you are correct unless you commit fraud. Having the house in a Living Trust works best asset protection-wise in the example I gave you above. However, there are many more reasons to set up a trust outside asset protection. We are currently writing up some articles on this and if you want to stay up to date, feel free to subscribe to our blog up above.

Also, if the house is in a Living Trust, can you still get tax deductions for the interest you pay on it?

Yes.

What is the best way to structure the FLP (% General, and % Limited) so as to provide the best asset protection?

I would have to refer you Theresa (director of our incorporation services), she knows details like that better than I do. Also keep in mind, if it’s just some assets you want to include in the FLP which you want to pass down to heirs, it might be easier to just set up a living trust instead of an FLP. But again, that’s where Theresa could help you more and a little better understanding of what it is you want to do might help.

If you have time, please feel free to use our contact form for our incorporation and trust services. It goes right to Theresa and she can help you with details and if you like, help you get set up. Don’t worry about sending your email, we won’t release it to anyone or add you to any lists.

Thanks again for the comment and stopping by.

Also, if the house is in a Living Trust, can you still get tax deductions for the interest you pay on it?

Lastly, what is the best way to structure the FLP (% General, and % Limited) so as to provide the best asset protection? (It would be my wife and me as the only two partners)

Good question and I’ll try to keep the answer from getting - too long.

I see where your concern comes in, however it works a little differently. I think maybe you have misinterpreted the purpose of setting up a business structure to protect your assets that have nothing to do with your business.

The short answer to your question, however, is insurance (a.k.a. SIIS - State Industrial Insurance System).

Every legit business needs to provide workman’s comp if you have 1 or more employee(s). So if you have an employee who gets hurt and racks up huge medical bills because you provided an unsafe work environment, your insurance (workman’s comp) will pay for it. Furthermore, if the worker was seriously injured and could no longer work, SIIS would pay him/her disability.

You could equate the landscaping example to an employee working at a Hilton Hotel, for example. Let’s say you’re the owner and for some reason, you decided to mop a floor (and because you’re the owner doesn’t necessarily mean you are experienced in mopping floors).

You forget to put out the “wet floor” sign and an employee slips and falls. Because your company must have insurance, you send your employee to the hospital and your insurance pays the bill.

In this example, do you think it would be right if that employee lawfully could sue you personally because you forgot to put out that “wet floor” sign and attach your Malibu vacation home to a judgment against you?

Of course not.

The LLC in both the Hilton example and landscaping example protects assets you own and have nothing to do with “landscaping” from being exposed to what that business does.

Does this means then an owner of an LLC can get away with anything then?

Nope.

If you commit fraud or willfully do something that can cause injury to another, then no business structure will protect you and your assets.

To specifically answer a couple of your questions and comments:

Is this ever exploited? - I’m sure people have tried.

What happens if it (setting up a business structure) is used to skirt the law? - If you’re doing something illegal, it won’t protect you.

In this basic case, can a person turn to this structure after the injury to protect his “business investments”? - Well not if the person decides to sue you before you set up the business structure. As for if you set up an LLC and then they decide to sue you, you would have to check your state’s laws on how they would deal with such occurrences. LLCs, corporations, and their owners are protected and dealt with differently depending on what state they are incorporated in.

In this specific case, can this be used to get off on a “technical detail”? - This question shouldn’t apply. The insurance would cover the problem. But if you committed fraud or broke the law and that’s the reason why the person got hurt, then you cannot avoid a lawsuit no matter what business structure you have set up.

Good question and did that all make sense?

You set up a corporation in NV and in a way that you are anonymous.

Now your corporation can own a business, real estate, assets, etc. This corporation wants to run a business, so it gets a business license. Yes you have to put your name on the business license but what shows up if someone does a search on who has that business license is a corporation, not you.

Theresa’s last blog post..Allowing Readers To Subscribe To Your WordPress Post Without Commenting