How Can You protect Your Primary Home?
Often times our clients most important asset is their primary home. Normally,
we would title all real estate to a Limited Liability Company. However,
there may be a negative tax consequence with titling your primary home
to an LLC. Below are additional strategies to protect your primary home:
Maximize the Homestead Exemption for a Primary Residence is one of the
best strategies to utilize. For example, if your home is worth $200,000.00
and you have a $75,000.00 mortgage, then you may pay the entire Mortgage
Balance off so that the Homestead Exemption (and creditor protection)
is maximized from $125,000.00 to the full $200,000.00 (value of the property).
Each state has different homestead laws. Check your state here:https://www.assetprotectionattorneys.com/Domestic_Asset_Protection/List_of_States_For_Financial_Planning_Exemptions.aspx
A second method to protect a home is by using the Tenancy by the Entirety
ownership (only available for married couples). In the case of Tenancy
by the Entirety owned property, a creditor may only make a claim to the
Real Estate if both Spouses were responsible for the claim(s) of such
creditor. Tenancy by the Entirety is only available in certain states.
See the list of states at:https://www.assetprotectionattorneys.com/Domestic_Asset_Protection/Tenancy_By_The_Entirety.aspx
- In the states that do not have a viable Homestead Exemption (full creditor
protection) for a Primary Residence, a homeowner could equity strip the
equity of their property by placing a lien on the property with a mortgage
and promissory note. This makes the home a much less desirable asset for
creditors to take to satisfy in satisfaction of a judgement. That does
not mean that the creditor will not satisfy their judgement in other ways,
however, at least the home would be safe. Combining mortgages against
the home with the protection of their state's homestead laws are the
two chief strategies. This dual strategy would leave little or no equity exposed.
- Finally, purchasing an Umbrella Insurance Policy on the property is advisable
(in addition to an Asset Protection Plan). If you claim is covered by
insurance, rarely will any creditor file a lawsuit in court for the excess
of the insurance Proceeds paid out and/or any additional compensation
above and beyond the insurance payments.
Contact The Presser Law Firm, P.A. for a complimentary consultation to
learn more about Asset Protection, Business Law, Estate Planning, and/or
any other legal needs that you may have.
The Presser Law Firm, P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(561) 953-1050 or e-mail Info@AssetProtectionAttorneys.com