Using an LLC to Protect Your Wealth

Written by James O'Keefe


Continued from page 1

The partnership agreement could further state thatrepparttar limited partnership shall haverepparttar 112547 right to buy outrepparttar 112548 general partner for his share ofrepparttar 112549 partnership and appoint a new general partner to replace her (the "you" in this example isrepparttar 112550 husband; we are makingrepparttar 112551 wife general partner because we assume that husband's risk of getting sued is higher; ifrepparttar 112552 opposite were true, then we would arrangerepparttar 112553 partnership accordingly).

Let's say that you are sued and a creditor obtains a $50,000 judgment against your name. The creditor can attach your limited partnership interest but only torepparttar 112554 extent of your income as a limited partner (called a "charging order"). The creditor who attaches a limited partnership interest cannot participate inrepparttar 112555 management ofrepparttar 112556 partnership, and thus cannot forcerepparttar 112557 general partner, your spouse, to distribute income. As general partner, your spouse stops payingrepparttar 112558 limited partners' distributions, because in her discretionrepparttar 112559 limited partnership would be better served to reinvestrepparttar 112560 capital.

One year later,repparttar 112561 creditor still has a $50,000 unsatisfied judgment. Just to top it off,repparttar 112562 partnership sendsrepparttar 112563 creditor a form "K-1" forrepparttar 112564 creditor's share of your "phantom" income (In our example,repparttar 112565 partnership assets are worth $300,000. At a 10% annual return, your share of income would be approximately $30,000 -repparttar 112566 creditor would have to pay income taxes inrepparttar 112567 ballpark of $10,000! Ifrepparttar 112568 creditor does not payrepparttar 112569 tax due on your undistributed share of income,repparttar 112570 IRS may come afterrepparttar 112571 creditor!). You will be in a strong position to force your creditor to settle his claim for a fraction of its value.

Let's say a creditor sues your spouse and tries to attack your spouse's general partnership interest. At that point,repparttar 112572 partnership exercises its power underrepparttar 112573 partnership agreement to buy out her general partnership interest inrepparttar 112574 amount of $2,000 or 2%. The partnership then finds a new general partner. With proper planning, this may not be considered a "fraudulent" conveyance becauserepparttar 112575 general partner received full compensation for her partnership share.

"Family" LLC's - To Good to be True?

Another similar tool for protecting your wealth isrepparttar 112576 LLC or "Limited Liability Company." An LLC is like a cross between a corporation and a limited partnership. All of its partners (called "members") have limited liability and all of its members can participate inrepparttar 112577 management ofrepparttar 112578 LLC without suffering any liability.

Any assets you hold in an LLC are protected from creditors inrepparttar 112579 same way your assets are protecting in a limited partnership (i.e.,repparttar 112580 creditor's remedy is limited to a "charging order"). In addition, since all members are shielded from liability, an LLC may be an excellent device for holding investment real estate -repparttar 112581 members are protected from tenant lawsuits andrepparttar 112582 equity ofrepparttar 112583 members is protected from other creditors.

James O’Keefe is the owner of My Millionaire Friend offering FREE articles, tips, hints, and real-world advice on how to make money with your website. Visit his site or join his FREE newsletter, by sending a blank email to mailto:newsletter@mymillionairefriend.com.




Small Ways to Save Big Bucks Right Now!

Written by Cyndi Roberts


Continued from page 1

5. Make one meat-less meal per week. Replace meat with lower- costing vegetables, a pasta dish, or maybe an omelette. This can be a healthful change, also.

6. Pump your own gas, instead of paying a higher price at a full-service station.

7. And speaking of cars, be sure to maintain correct tire pressure, to get maximum mileage. And change your oil and filter every 5,000 miles. Proper maintenance can mean fewer repair bills and longer lasting cars.

8. Consider changing to fluorescent lighting in your house. They use less energy last 10 times as long and produce less heat.

9. Atrepparttar grocery store, consider buying store brands or generic products. The savings can be pretty big on items like shampoo, conditioner, cake mxes, even milk. I have foundrepparttar 112546 quality to be comparable. If you don't like a particular store brand you don't have to buy it again. But at least try it, you might like it!

10. Don't let your faucets drip. A leaky hot-water faucet can waste up to a whopping 800 gallons of hot water in a year!

^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~^~ There's only one corner ofrepparttar 112547 universe you can be certain of improving, and that's your own self. --Aldous Huxley



Cyndi Roberts is the editor of the bi-weekly newsletter "1 Frugal Friend 2 Another", bringing you practical, money-saving tips, recipes and ideas. Visit her online at http://www.cynroberts.com to subscribe and receive the Free e-course, "Taming the Monster Grocery Bill".


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