Equity Reduction Plan Helps Protect Real Estate and Business Assets
An Equity Reduction Plan (ERP) is designed to protect business or real estate assets, and can be a highly effective form of asset protection for those who have significant real estate holdings or own their business or professional practice (doctors, attorneys, etc).
Within the structure of an ERP, a practice called "equity stripping" can be utilized to move the equity or value of an asset to a protected position while still retaining original ownership. The advantages of this include:
· Avoids transfer of real estate ownership and the attendant property and transfer taxes
· Protection of multiple properties without the need to create separate LLCs
· Protection of property equity from an inside liability claim
· Protection of cash flow
· Protection of assets used to run the business
· Leverage of asset equity to generate business or investment income
When creating an ERP, it is important to accurately valuate the underlying assets and to keep that valuation current through a regular review process. In the event of a claim or lawsuit, the ERP lien takes precedence over the claim of any creditor; any judgment proceeds go first to the ERP and only excess proceeds are made available to satisfy any judgment claim.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.