Forming a Corporation

Forming a corporation is one of the most popular asset protection strategies. There are many types of entities to chose from to take assets out of your name. Forming a corporation not only helps you with tax deductions, but forming a corporation helps you with asset protection.

Examples of entities you can use to take assets out of your name:

• partnerships
• S corporations
• C corporations
• limited liability companies (LLC)

Most attorneys and accountants will tell you that in real estate a limited liability company (LLC) is the way to go if you own real estate. Limited liability companies (LLCs) has all the attributes of the other types of entities and lots of flexibility.

What happens to my assets when I get sued?

When a person get sued, their personal assets in their name are frozen. That means, if you own 15 houses worth $5 million dollars and they are in your name when you get sued, the court will attach the houses and you cannot sell them or refinance them. Your bank account is in your name and the court will attach the bank account which means you cannot write  a check from it. Then the court will order the houses to be sold to pay off the judgement.

Successful real estate investors form corporations

Successful real estate investors with large apartments or alot of properties do not own their real estate properties using land trusts. Their real estate properties are owned by limited liability companies (LLCs).

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