These are the four reasons
why you should never hold your real estate in your personal name.
Number one, unlimited liability from your property.
If you're holding property
in your personal name and something happens to your property,
for example, a tenant slips and falls, or maybe a boiler explodes
or an asbestos occurs or whatever happens to the property.
Then the owner of the property, which is you, has unlimited exposure,
meaning if there's a judgment for $1,000,000, $2 million, $5 million,
the responsible part is going to be you and they're going to be able to go after
you and all of your personal property and your personal assets.
So bank accounts, precious metals, brokerage accounts,
other properties, anything you own is fair game.
And it doesn't really matter how much equity is in this property.
This is one of the big misconceptions.
So even if the property is underwater and it has no equity
or maybe has very little equity because you've got a loan on it, or just
maybe it's just not worth that much, it doesn't matter.
This property could have zero equity, but if there's $1,000,000 judgment,
then you are personally responsible for that million dollar judgment.
Number two is insurance is not going to help you.
There's really three issues with insurance.
Number one is the exclusion.
A lot of people are making their monthly premium payment thinking they're insured.
But when it actually comes time
to collect on the policy, they realize that their accident,
their incident is not covered by their policy.
There's so many things called exclusions.
And these policies are so frickin complicated to read
that you may not realize that somewhere in the buried
in that policy there's that excludes your incident from being able to recover.
The second issue is most people are under-insured.
People have $1,000,000 policy or a $2 million policy.
But as we talked about, if somebody has a major slip and fall
or some boiler explodes,
well then the judgment may be four, five, ten, 15, $50 million.
And with legal fees these days, I can tell you that million dollar policy
will probably be eaten up mostly by legal fees, getting to a trial
and defending your claim.
So most people are under-insured.
And number three
is that the insurance company may not even be around
when it's time to collect
a lot of these insurance companies these days are either online
or just very small outfits that if there's a major catastrophic event
and it's time for you to collect, they may not be there.
So it's really important that if you have insurance,
which you should make sure you go with a reputable insurance company.
Before I get to number three, if you're finding value,
this video smashed out like button, but number three is your property is exposed.
So same situation.
But instead of a tenant slipping, falling
or something happening to the property, something happens to you.
Most people forget that we as individuals are these walking liabilities out there.
We're always there day in and day out, exposing ourselves to liability.
So for example, you might get into a car accident
or you may back up from the driveway and run over the kid on the skateboard,
or you may get into a business dispute.
Something happens to you unrelated to your property as well.
In that case, if you have a car accident and there's, you know, a $1 million
claim against you, that I can come after your property, I can come after
anything that you personally owned, bank accounts, precious metals and properties.
And so by having some kind of an entity structure, actually own the property
instead of you directly, then you may be able to avoid the creditor
getting a hold of your hard earned assets.
And number four is privacy.
Now, we should never rely on privacy
as our exclusive way of protecting our assets.
But I used to work for a plaintiff's attorney,
and so I know that the first thing that somebody does
when you get into a car accident or some dispute is
they're going to do an acid search on you.
And so if they do an acid search and you own the property
in your personal name, they're going to find it.
They're going know exactly what properties you own,
what bank accounts you own, what brokerage accounts you own.
It's very easy information to obtain.
And so by having some kind of a structure, some entity structure
between you and your property, it becomes much harder for a plaintiff's lawyer
to actually find out whether there's any assets for them to go collect
when there's a judgment, because most people forget there's a two step process.
Step number one is getting the judgment.
I've got to get the judgment against the person first.
And number two is I've got to collect.
And if you know
anything about plaintiffs lawyers, you know, they work on a contingency
fee basis, meaning they don't get paid unless they're able to recover.
So they're not going to go after you if they can see that the
you don't have any assets
or they can't find any asset,
they're much more likely to settle for insurance policies
because they don't want to go spend two or three years of their life
getting a judgment against you if there's nothing there to collect.