Asset Protection: Are Landlords Liable for Dog Bites?

Are landlords liable for dog bites? If so how can real estate investors protect their assets?

The short answer is – yes, they can be.

According to some data sets:

  • Someone seeks medical attention in the US for a dog bite every 40 seconds
  • Almost 5M people are bitten by dogs each year
  • 60% of dog bites happen at residences

Theoretically property owners can be held liable if a tenant’s dog attacks someone on the property, gets loose and attacks someone off of the property, and can even be fined if the type of dog is illegal in that jurisdiction, or is being neglected. Harsh, but true.

Now the exact law varies from jurisdiction to jurisdiction all around the United States. There are normally tests to determine the extent of the landlord’s liability. This commonly includes their knowledge of the animal on the premises, breed of dog, and the level of control the owner has over the animal. However, just because you appear to be in the clear doesn’t mean you can’t have problems when there are pets in a rental property.

The Biggest Threats

Whether it is a dog, an exotic animal, or the tenants themselves, landlords can find themselves on the wrong end of lawsuits, and often do.

When this happens there are two big threats to deal with:

  1. Limiting liability to avoid being personally bankrupted
  2. Minimizing the disruption caused by the lawsuit itself

Without the right investment structure many landlords are just leaving themselves wide open to potentially have their personal and family assets, and incomes levied as the result of a malicious lawsuit. Without a steel asset protection umbrella your home, cars, kids’ college funds, retirement accounts, and future earnings can all be up for grabs.

Yet, while winning these cases is important, the damage done simply by being party to a lawsuit like this can be devastating. The legal representation costs are often the least of this. There is lost time off of work, expenses dealing with the case, potential for loss of rental income and even the property itself, and the ensuing loss of other income and your reputation.

True or not, all it takes is one news story or Facebook post and all of a sudden you are only known to the whole world as “that notorious property owner whose dog mauled that poor child.”

Shields Up

Picture any battle scene you like. Knights, soldiers, or Spartans; they all carry around their shields, and enter the battlefield with their shields firmly raised between themselves and the threat. Can you imagine if they all lined up facing each other, and then only after being pelted with barrages of arrows, then went to look for their shields or to ask the ironsmith to make one? It would be way too late right?

Sadly, that’s just how many real estate investors enter the property market.

Smart steps to being protected include:

  • Acquiring title to properties under the right entity structure
  • Having sufficient insurances
  • A smart asset protection plan which separates business and personal assets and income
  • Having a great attorney on staff

Perhaps even more important is not putting yourself out there as a juicy prospective victim. If you walk around with wads of hundreds falling out of your pocket, rocking expensive jewelry, and carelessly waving your new iPhone around when traveling as a tourist, you would expect to be robbed right?

If you kept those things out of sight in your pocket, your chances of being a victim may go down by 90% or more.

The same goes for being an investor and property owner. Smart asset protection moves can preserve your privacy and dramatically limit the chances your tenant’s neighbors are going to be running around wrapped in bacon begging the dog to bite them.

Authored by Titanium Asset Protection

Titanium Asset Protection is an elite asset protection firm with licensed California attorneys on staff who specialize in asset protection, trusts, corporate law, succession planning, bankruptcy, real estate, and tax law. Our team has successfully represented clients to the highest levels of the justice system in fighting to protect them, and their finances, with lead counsel Matt serving as the Ethics Chairman for Le Tip International, The Chapter of Orange for 15 years, being an honored member of the revered Wealth Counsel.

 

The Tax Advantages of Being a Landlord

The promise of ‘tax breaks’ for investing in real estate is one of the biggest draws, but what are they?

Minimizing taxes is often promoted as one of the top reasons to invest in real estate. Yet, few investors are aware of what those tax advantages are and how they can be maximized. That often leads to thousands of extra dollars being shelled out to the tax man each year. So what are the real breaks available?

Here are five ways to lower your taxes as a landlord, plus a couple of extra power strategies to investigate…

Depreciation

Depreciation is one of the biggest tax breaks for landlords. Properties and improvements degrade and become worn over time. You can get a tax credit for that. Under the new PATH Act some types of properties can enjoy accelerated depreciation, and their landlords get bigger breaks sooner. Note that this is one of the few deductions out there that mortgage lenders will allow you to add back to your qualifying income when applying for loans.

Financing Costs

Mortgage interest, lender points, and other financing fees may all potentially become tax deductions. That can be a big motivator and perk for using financial leverage to grow a portfolio faster and earlier.

Taxes, Taxes, Taxes

Yes, you can actually write off other types of taxes you pay in conjunction with investing in real estate when it comes time to file your taxes. You can also deduct what you pay in accounting and tax preparation fees. That’s a big reason to get the best tax prep help you can get.

Losses

Some real estate investors and business owners may experience net paper losses in the first couple of years. Those losses may be used to offset other earned household income. These essentially become credits against other income tax liability, and maybe rolled over to cover future year’s liability. Don’t overlook this one.

Property Management

It’s sad to see so many real estate investors running themselves ragged, taking on extra liability, and hurting their net profits all because they think they are saving by not using professional property management. Ironically those ‘costs’ can be a tax break too.

More Miscellaneous Expenses and Tax Breaks for Landlords

According to Landlordology and House Logic some of the other commonly neglected breaks for landlords include advertising expenses, payroll and commissions paid, property maintenance, insurance premiums, and legal fees.

Advanced Tax Strategies for Serious Real Estate Investors

While LLCs, SDIRAs, 1031 exchanges, and other asset protection tools can add another layer of tax write-offs and defense, and are frequently referred to as ‘advanced’, they should be utilized by far more investors. Don’t wait till you’ve got a big tax bill to try and fix the situation. These tools can open the doors to breaks for offices, vehicles, communications, education, and more, as well as shielding investors from taxes on gains so they can snowball and enjoy compounding results for decades.

Disclaimer: It is always crucial talk to your own individual licensed professionals for custom advice and to create a real tax strategy before making any financial moves.

Authored by Titanium Asset Protection

Titanium Asset Protection is an elite asset protection firm with licensed California attorneys on staff who specialize in asset protection, trusts, corporate law, succession planning, bankruptcy, real estate, and tax law. Our team has successfully represented clients to the highest levels of the justice system in fighting to protect them, and their finances, with lead counsel Matt serving as the Ethics Chairman for Le Tip International, The Chapter of Orange for 15 years, being an honored member of the revered Wealth Counsel.

 

LLC OPERATION AGREEMENT

Benefits and costs of a California LLC| Incorporate in Orange County CA

The benefits of a California LLC corporation include:

  • Personal liability protection
  • Stockholders names are not public
  • Availability of corporate retirement plans
  • Corporate fringe benefits
  • Unending corporation existence
  • Tax benefits
  • Possible S corporation status
  • A single person can hold all offices
  • Available to professionals: Doctors, Dentists, Nurses, Attorneys, Chiropractors, Pharmacists, Accountants, etc.
living trust california

Advantages of A Funded Revocable Living Trust

  • Avoids probate for your assets validly placed therein.
  • Upon death, allows quick distribution of trust assets to your beneficiaries.
  • Keeps the assets transferred through your trust private and confidential.
  • The Probate Court has no control over trust assets.
  • Avoids conservatorship if you become incompetent, or incapacitated.
  • May help to reduce emotional stress on your family.
  • Completely flexible because you can change it at any time.

Living Trusts California

A Living Trust is similar to a will, however it offers unique advantages. A will is subject to probate that will impose significant costs on the estate and those who are to inherit from you. A Living Trust is not subject to probate. Because it is not subject to probate, it keeps your assets confidential, maintains the privacy of the transfer of your assets, and you manage to avoid the high costs associated with probate. Having a Living Trust will allow you to prevent the court from controlling your assets at death or incapacity.

Changing Your Business Entity from a Sole proprietorship in Orange County

Proprietorship

What does the transition entail?
There are various ways you can restructure the legal framework of your company if you wish to add a partner to your sole proprietorship, though each option has different requirements. It’s possible to merely act as “partners” without any formal agreement, but that’s generally not a good idea. The smart choice is to create a business entity, such as a corporation or limited liability company.

Here are a few facts and considerations to keep in mind as you restructure your company from a sole proprietorship to another business entity.
Create a Corporation With Your New Partner
To do so you would first need to decide upon a name and then, assuming that name is not already taken in your state, file articles of incorporation with your secretary of state. You would next apply for a tax identification number with the IRS, and you may have to file other documents with your state’s department of revenue or other agencies. It’s best to seek the advice of a tax attorney and/or your CPA as to whether your corporation should elect to be taxed as what is known as an “S-Corporation.” If so, elect that option on the tax identification number application form. The company should have bylaws, initial minutes and a buy-sell agreement.
Form the Entity as a Limited Liability Company (LLC)

This is also done through your secretary of state and the steps are similar to what must be done for a corporation. You would still apply for a tax ID number in the same manner. The LLC will have options as to how it is to be taxed. It also could elect to be taxed the same as an S-Corporation, or it could elect to be taxed like a partnership. These are important factors and you should seek the advice of a tax attorney and/or CPA.

This is an important step in your business and taking on another owner carries with it a number of legal issues that must be addressed in order to proceed. Review the above information with your attorney so they may properly advise you on a course of action.

Changing Your Business Structure
What about a buy-sell agreement? Also known as a shareholders agreement, this is a contract between you and your partner that would address the right of one of you to buy out the other upon the happening
of certain events. Those might include disability, death, divorce, and a number of other events. Keep in mind that you should transfer ownership of at least some assets from your sole proprietorship to one of the aforementioned entities when restructuring your business.

Common Estate Planning Myths

Common Estate Planning Myths

Common Estate Planning Myths

Estate planning is a powerful tool that among other things, enables you to direct exactly how your assets will be handled upon your death or disability. A well-crafted estate plan will ensure you and your family avoid the hassles of guardianship, conservatorship, probate or unpleasant estate tax surprises. Unfortunately, many individuals have fallen victim to several persistent myths and misconceptions about estate planning and what happens if you die or become incapacitated.

Some of these misconceptions about living trusts and wills cause people to postpone their estate planning – often until it is too late. Which myths have you heard? Which ones have you believed?

Myth: I’m not rich so I don’t need estate planning.
Fact: Estate planning is not just for the wealthy, and provides many benefits regardless of your income or assets. For example, a good estate plan includes provisions for caring for a minor or disabled child, caring for a surviving spouse, caring for pets, transferring ownership of property or business interests according to your wishes, tax savings, and probate avoidance.

Myth: I’m too young to create an estate plan.
Fact: Accidents happen. None of us knows exactly when we will die or become incapacitated. Even if you have no assets and no family to support, you should have a power of attorney and health care directive in place, in case you ever become disabled or incapacitated.

Myth: Owning property in joint tenancy is an easier, more affordable way to avoid probate than placing it in a revocable living trust.
Fact: It is true that property held in joint tenancy will pass to the other owner(s) outside of the probate process. However, it is a usually a very bad idea. Placing property in joint tenancy constitutes a gift to the joint tenant, and may result in a sizable gift tax being owed. Furthermore, once the deed is executed, the property is legally owned by all joint tenants and may be subject to the claims of any joint tenant’s creditors. Transferring a property into joint tenancy is irrevocable, unless all parties consent to a future transfer; whereas property owned in a living trust remains under your control and the transfer is fully revocable until your death.

Myth: Keeping property out of probate saves money on federal estate taxes.
Fact: Probate, and probate avoidance, are governed by state law and address how property passes upon your death; they have nothing to do with federal estate taxes, which are set forth in the Internal Revenue Code. Estate planning can reduce estate taxes, but that has nothing to do with a discussion regarding probate avoidance.

Myth: I don’t need a living trust if I have a will.
Fact: A properly drafted trust contains provisions addressing what happens to your property if you become incapacitated. On the other hand, a will only becomes effective upon your death and specifies who will inherit the property. If you own real property, or have more than $100,000 in assets, both a will and a living trust are generally recommended.

Myth: With a living trust, a surviving spouse need not take any action after the other spouse’s death.
Fact: Failure to adhere to the proper legal formalities following a death could result in significant administrative and tax implications. While a properly drafted and funded living trust will avoid probate, there are still many tasks that have to be performed such as filing documents, sending notices and transferring assets.

 

 

“Don’t ask what the world needs. Ask what makes you come alive, and go do it. Because what the world needs is people who have come alive.”
-Howard Thurman

Do You Really Need Advance Directives for Health Care?

imageedit_13_9231081772

imageedit_13_9231081772Many people are confused by advance directives. They are unsure what type of directives are out there, and whether they even need directives at all, especially if they are young. There are several types of advance directives. One is a living will, which communicates what type of life support and medical treatments, such as ventilators or a feeding tube, you wish to receive. Another type is called a health care power of attorney. In a health care power of attorney, you give someone the power to make health care decisions for you in the event are unable to do so for yourself. A third type of advance directive for health care is a do not resuscitate order. A DNR order is a request that you not receive CPR if your heart stops beating or you stop breathing. Depending on the laws in your state, the health care form you execute could include all three types of health care directives, or you may do each individually.If you are 18 or over, it’s time to establish your health care directives. Although no one thinks they will be in a medical situation requiring a directive at such a young age, it happens every day in the United States. People of all ages are involved in tragic accidents that couldn’t be foreseen and could result in life support being used. If you plan in advance, you can make sure you receive the type of medical care you wish, and you can avoid a lot of heartache to your family, who may be forced to guess what you would want done.Many people do not want to do health care directives because they may believe some of the common misperceptions that exist about them. People are often frightened to name someone to make health care decisions for them, because they fear they will give up the right to make decisions for themselves. However, an individual always has the right, if he or she is competent, to revoke the directive or make his or her own decisions.  Some also fear they will not be treated if they have a health care directive. This is also a common myth – the directive simply informs caregivers of the person you designate to make health care decisions and the type of treatment you’d like to receive in various situations.  Planning ahead can ensure that your treatment preferences are carried out while providing some peace of mind to your loved ones who are in a position to direct them.imageedit_13_9231081772

4 Things to Know About Homeowners Insurance in Orange County Califorina

Homeowners Insurance

A solid homeowners insurance policy can provide peace of mind about securing one of your most valuable assets. Unfortunately, many homeowners don’t fully grasp what exactly is covered under that policy, and most importantly, what isn’t.Homeowners insurance policies generally cover your home itself and other physical structures on the property. Your personal belongings also fall under most policies, along with property damage and bodily injury sustained by you or others on your property. You, your spouse and children, and any guests, tenants, or employees in your home can all be covered under this policy, just be sure to check when you purchase the policy.Sounds like they’ve got you covered, right? Not so fast; there are a number of possible perils that are often not covered under basic homeowners insurance. Knowing what falls into this category can save you a lot of time and trauma if you ever experience one of these situations in the future.

The two main exceptions are earthquake and flood damage. The impacts of these natural disasters would not be covered by your standard policy. Earthquake insurance and coverage for some types of water damage can often be purchased as an addendum, but flood insurance must be purchased on its own as a separate policy.

Further, standard policies don’t cover damages to your building as a result of your failure to perform regular maintenance on your property. Insect, bird, or rodent damage, rust, mold, and any kind of wear and tear on your property is typically not covered. Neither are hidden defects, mechanical breakdowns, or food spoilage in the event of a power outage. Though there is no current concern for this, damage caused by war or nuclear exposure is also not covered.

Some things have minimal coverage built into your standard policy, for which you can purchase additional coverage as an addendum. Valuable property, including firearms, jewelry, silverware, etc., is usually covered by a standard $1,000. Insurance for replacement value of lost or damaged property is usually determined on an itemized basis that takes depreciation into account. You can expand this coverage by paying to remove depreciation from consideration.  Liability coverage can be increased if desired as well.

These should serve as general guidelines for your homeowners insurance, but be sure to consider the details on your specific policy.  It’s important to consider exactly what you have covered in order to determine what additional types of insurance you may want to purchase.

Bankruptcy: Things You Need to Know

bakruptcybankruptcy

BankruptcyWhen President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the laws governing the filing of bankruptcy changed drastically. One major change under BAPCPA requires all debtors filing bankruptcy to attend two credit counseling courses, one before filing and one while a case is pending.While some aspects of the U.S. Bankruptcy Code did not change at all when BAPCPA was enacted, some underwent minor tweaks while others were overhauled completely.   An example of a section of the bankruptcy laws that was amended revolves around the options available to a Chapter 7 debtor if their case includes secured debt. Financial obligations are secured if there is collateral a creditor can recover from a debtor if they don’t pay their bills on time. For example, if a debtor gets behind in their home mortgage payments, the bank or whoever lent them the money to buy the house can foreclose on it.

There are three options available to a Chapter 7 debtor whose bankruptcy includes secured debt. To reaffirm a debt is to sign a contract with the creditor indicating the debtor wants the debt to continue even after their bankruptcy is discharged. Surrendering occurs when the debtor returns the collateral to the creditor. The third alternative is redemption.When a debtor seeks to redeem secured property, it means they want to keep it. This is accomplished by submitting one lump sum payment to the creditor for the value of the collateral.While this may sound simple, there are a few limitations on a debtor’s ability to redeem secured property. First, the secured property has to be worth less than what the bankruptcy laws allow a debtor to own, and those limitations differ from state to state. Secondly, the bankruptcy court has to abandon its interest in the collateral, meaning it has no interest in taking it from the debtor to sell to repay some of the debts that debtor owed.

Another tricky aspect of redemption is also related to the jurisdiction where a bankruptcy case is filed. Since each state has its own rules, called exemptions, about how much a debtor is allowed to keep after filing bankruptcy, a redemption may not be possible, for a few reasons. For example, some states only allow a debtor to have $400 cash on hand when they file a Chapter 7 bankruptcy. If a debtor in that state wants to redeem collateral for $500, they have more cash than their state laws allow. While some states do also offer a ‘catch-all’ exemption so a debtor could potentially redeem the item in question, that option is not available everywhere, so it’s important to consult with an experienced bankruptcy attorney on that matter.

 

bankruptcy