In this two‑minute tax and legal tip, Mark J. Kohler outlines six effective strategies for protecting a personal residence from lawsuits and explains why three commonly suggested approaches do not provide asset protection. He begins by promoting a longer radio show for deeper coverage, then details each strategy: (1) Homestead exemption, which shields a state‑defined amount of home equity; (2) Tenancy by the entirety, a marital ownership form that can block creditors against one spouse; (3) Equity stripping, using loans or trust deeds to encumber the home and move equity out of reach; (4) Umbrella insurance, an affordable liability policy that can cover home‑related claims; (5) Placing a spouse on title, which in some states can keep the home out of a suing spouse’s reach; and (6) Domestic Asset Protection Trusts (DAPTs), which can lock home equity away permanently. He then warns that revocable living trusts, transferring a home to an LLC, and irrevocable trusts are ineffective or risky for asset protection. Kohler concludes with a call to action for consultations, his book “Lawyers or Liars,” his website, newsletter, and other resources, emphasizing the importance of protecting one’s home as a key wealth‑building asset.
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Hi, Mark Kohler here with another two minute tax and legal tip. Whether you're an entrepreneur or a corporate employee, protecting our most valuable asset oftentimes our home is absolutely critical. Now I recently just recorded a radio show on this a full hour the links below. I highly recommend you listen to it for more details. But in this short little clip, I want to give you six options to consider in protecting your personal residence. Number one, homestead exemption. This is an exemption that protects a certain amount of equity in your home no matter what type of lawsuit. Now, the amount is going to vary from state to state. Some states it's great. Some states it's terrible. Think of states like Florida where it's an unlimited homestead exemption. O.J. simpson moved to Florida, bought his home completely protected in that lawsuit. Just a thought. Number two, tenancy by the entirety. This is a certain strategy where you use language on the title of your home called tenancy by the entirety, wherein if one spouse gets into a lawsuit, the creditor cannot touch the home because it's not fair to the other spouse. Some states this is even good after divorce or death. You'll want to look at which states have this. About 15 to 20 states give a decent tenancy by the entirety protection statute. A lot of states don't even have it. Find out what's up in your state. Number three, equity stripping. This is a strategy of leaning your home and taking some of the equity and protecting it through the use of a loan and a trust deed recorded against your house. This might be a heloc, or you may even set up an entity to lien your own home. All sorts of options. Look at what's good and bad in that strategy. Number four, umbrella insurance. Very, very common. Love umbrella insurance and it can be very affordable. It may not be the primary strategy you use for your home, but it's also insurance you can use for all sorts of things and protecting you against potential liability and protecting the equity of your home. Get some quotes, shop around and learn more about it. Number five, some people go to the extent of taking their spouse off title and think of maybe even a doctor where he's worried about a potential lawsuit so he puts his wife on title to the home to so if he gets sued around the operating table, they can't touch the house because it's in his wife's name. Some states this works, some states it doesn't. It also depends on the type of lawsuit on whether or not taking your spouse off title can help you. And you got to be very careful with this strategy. Look at what the options are where you live. Number six DAPs or domestic asset Protection Trusts. These are amazing trusts that are getting more and more popular. Used when more and more states to protect the equity of your home in perpetuity for an unlimited value. They're amazing. Study up and learn about them now. After listing these six strategies that do work, I want to tell you what doesn't work. Think of the Revocable Living Trust. Very, very important and critical for estate planning, but it doesn't give you asset protection. Also, be careful putting your home into an LLC or limited liability company. You could shoot yourself in the foot for a tax strategy and an LLC is meant for businesses, not your home. Then finally, think of irrevocable trusts. Be very careful. If someone's trying to sell you on an irrevocable trust and putting your home in it, they're irrevocable. Notice the term. In summary, these are some important considerations. Please give our law firm a call. We'd love to do a consultation with you to help you with your asset protection strategy. Also check out my book Lawyers or Liars. I cover all these topics and more on asset protection. That works. Folks, this is an important topic and protecting your home could not be more important. As you're an entrepreneur building wealth and building equity in your home, give us a call. We'd love to be of service. If you thought that information was amazing and helpful. I have so much more to share with you. Please look at the links below and head to my website marcjkoler.com you can subscribe to my weekly newsletter. Check out my weekly radio show. I have my online videos for tax and legal strategies that will save you thousands. Ways to learn quickbooks with my fun videos online and also if you enjoyed it, please leave a comment and give it a like and follow me on YouTube. I promise that these videos will change your life. Thanks so much.
