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The average citizen is one accident (automobile, dog bite, slip and fall, drowning, etc.) away from being on the wrong side of a lawsuit. With todays medical costs, the victim of an underinsured homeowners negligence can easily get over $100,000. If the homeowners liability insurance is below this, unfortunately it is time for asset protection. Imagine that you have $200,000 in equity in your home. The law allows homeowners a homestead exemption (the amount of which depends on age, marriage and disability). If you are single, under 65 and without a disability, you are entitled to a $50,000 exemption. If you are married, both you and your spouse under 65 and without disability, you are entitled to a $75,000 exemption.
The important thing is retention of an attorney who can draft you an airtight operating agreement. An LLC is run by its Operating Agreement. There are numerous ways the Operating Agreement can provide protection to you from your heirs’ bad credit decisions (or your heirs from your bad credit decisions).
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