In this chapter, we have discussed major benefits which can be accomplished with the LLC.
First, the LLC can be an important element of a plan that produces an excellent level of asset protection. Lawsuits and claims, which are based upon a knowledge of your personal financial matters, will be discouraged before they begin. When your assets are held in a protected form, a plaintiff or his lawyer looking for a Deep Pocket Defendant will not find reachable assets when they investigate you. Since lawyers only sue if they believe they will be able to collect a judgment, using an effective plan will discourage most people from filing a lawsuit against you. Although the LLC by itself won’t protect you from outside liability, the strategies discussed in these chapters will help you construct a plan that shields membership interests from potential loss.
Second, if someone does file a lawsuit, we want to protect your assets from liens and attachments. Prejudgment attachments are filed during a lawsuit and can freeze your real estate and bank accounts. Without access to funds to pay your personal and business expenses or to defend the case, you are, as they say, dead in the water. You will have no choice except to make a fast and unfavorable settlement—giving the plaintiff all or most of what he wants. Similarly, a judgment lien will attach to all property that you own. You will be unable to sell, refinance, or collect rents on your property; and all accounts will be seized. An asset protection plan will allow you to shield your property from liens and attachments during the lawsuit and after a judgment. Clearly this puts the negotiating chips on your side of the table and provides you with powerful leverage to create a successful result.
Third, Safe Assets such as your home and savings must be protected from the liability that can be caused by Dangerous Assets. There are hundreds of different ways for you to lose the nest egg that you have put together over many years of work. No matter what you do for a living, it will be hard to save up that money all over again. Sound planning allows you to insulate yourself from the potential liability of a Dangerous Asset. When risk is properly contained in this fashion, you can proceed in the world with confidence that your savings will be secure and available when you need them.