How It Works
Equity stripping combined with an ERP is remarkably efficient and convenient to establish considering the advantages which can be obtained. We do not need a complicated, high maintenance plan. An ERP will usually fit within a popular asset protection structure.
Most asset protection plans involve a specially designed trust, capable of holding all or most personal assets. The family home, interests in FLP’s or LLC’s, as well as bank and brokerage accounts are each separately protected within the trust structure. Because of law changes and new developments we have many options open to us allowing great flexibility, protection and privacy within the trust arrangement.We can add additional features to the trust, appropriate for holding equity in real estate and business assets. A contract is developed, supported by a lien or mortgage on the underlying assets and this “equity” is gifted or “sold” to the trust or to an entity owned by the trust for that particular purpose. The equity can then be borrowed against for investment or business purposes. Banks and finance companies specializing in these equity backed loans often lend 90% to 100% of the value of the collateral with a reliable appraisal and proper legal documentation.
In the even of a lawsuit or claim, the lien of the ERP is superior to the claim of the judgment creditor. First, proceeds go to the ERP. Only excess proceeds, over the ERP amount, are available to satisfy the judgment claim. Care must be taken when the ERP is created and reviewed regularly, to insure the correct value of the underlying assets.
When used in this manner, as an integral component of a sound plan, an ERP minimizes the liability risk to business assets and protects accumulated real estate equity in the most convenient and adaptable format developed.