Protecting Your California Real Estate
Did You Know? Did you know that Prince passed away without a will, leading to a lengthy probate battle over his $156 million estate? It’s true! Even celebrities like James Brown and Aretha Franklin left complicated estates that took years to resolve. PROBATE CASES CAN INVOLVE UNCLAIMED ASSETS In some probate cases, long-lost or unknown heirs suddenly appear when a will is contested. Treasure hunters and genealogists even specialize in tracking down heirs for estates with unclaimed assets! OUTDATED WILLS CAN LEAD TO COMPLICATIONS Sometimes, people forget to update their wills, which creates a mess. Family dynamics can shift over time, and outdated wills may leave assets to people no longer close to the deceased or exclude new family members.
How a DAPT Can Shield Your Assets
A Domestic Asset Protection Trust (DAPT) is a useful tool for California real estate investors who want to shield their assets, but it’s important to note that California does not recognize DAPTs. This raises the question: How can you utilize a DAPT to protect your California real estate portfolio? The answer lies in leveraging states’ laws that permit DAPTs, allowing you to create a structure that protects your real estate assets from potential creditors and litigation. ESTABLISHING A DOMESTIC ASSET PROTECTION TRUST THROUGH A LIMITED LIABILITY COMPANY A DAPT is a self-settled irrevocable trust, meaning assets (such as real estate) are no longer formally owned by you. The most tremendous benefit comes if you are personally sued. While holding California real estate in an LLC formed in another state is beneficial for asset protection purposes, there is no guarantee a judge will respect the reverse piercing protections of these LLCs, and your real estate within the DAPT could still be at risk. The protection is almost guaranteed if a DAPT owns the LLC that holds your California real estate. Of course, a DAPT will shield you from potential litigation arising at a rental property or other properties held within the DAPT. Because California does not recognize these, you would need to establish them in one of the states that do and then transfer the LLC into the DAPT formed in that same state. Using an LLC to own California real estate investments is a common decision to separate property owners from the actual operations and risks associated with an extensive portfolio. This shields you from future creditors, litigation, and other financial issues that you would otherwise be exposed to if you did not establish a DAPT for your California properties. At Dahl Law Group, we have extensive experience helping California real estate investors protect their properties and businesses through various legal strategies, including DAPTs. We will work with you to explore all available options to protect your investments, and a DAPT may be your best solution. Contact Dahl Law Group today at our Sacramento or San Diego office to get started on creating a plan that protects your assets and secures your financial future. ESTABLISH AN OUT-OF-STATE DOMESTIC ASSET PROTECTION TRUST
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