If you title your investments to a limited partnership, can you also encumber the investments to add protection?
Yes, and in some instances you should encumber investments titled to a
limited partnership or LLC. Most frequently, we equity-strip real estate
and other tangibles. But oftentimes, we encumber investments and other
assets as well. One method would be to cross-collateralize real estate
loans by pledging your investments (stock, bonds, etc.) as additional
collateral. You can also equity-strip publicly-traded shares by borrowing
on margin (up to 50 percent of share value). One danger from pledging
your investment assets to secure real estate or business loans is that
the lender has direct recourse to your investments should you default
on your loan. For that reason, you want to collateralize these loans only
to ‘cooperative’ lenders. Or you can borrow directly against
your investments and safeguard the loan proceeds internationally.