Diane Kennedy's Loopholes Update

Do you really want to start over again from nothing?

In the past week, I’ve talked to 3 people who have to start over again in real life. In each case, it wasn’t because the real estate market had collapsed. But, one did lose his home. And it wasn’t because the stock market had collapsed, but they did each see a shrinking retirement fund. And it wasn’t because they lost their business, at least not yet.

They lost everything because they didn’t make a couple of important changes to their business structures. The plans were outdated, and in today’s economic climate, that can be deadly!

Apartment Building Owners Discover Insurance Isn’t Enough

A new client of mine told me his story of why he ALWAYS has a business structure for his real estate.

This happened just as he was building his real estate wealth. He had really extended himself financially and had three apartment buildings. Paying to set up an LLC was just too much and besides, he figured, wasn’t insurance all you needed?

One day he was at one of his apartment buildings, meeting with the manager, when an alert came on over the radio. A suspected murderer had escaped custody near the building.

Just then, a woman came running up to the apartment manager. She’d just seen the suspect in the hallway. They called the police.

As the police approached the area where the man had been spotted, another tenant came to him. He’d seen the man too. Not only that, he’d ridden the elevator up with him and had seen what apartment he’d gone into.

The owner, manager, witness and police all rode the elevator up to the apartment, then cautiously approached. The police, guns drawn, knocked on the door. No answer. They knocked again and they heard a baby cry. Suddenly the baby stopped crying in mid-scream. Silence.

The police then weighed their options. A suspected murderer might be in that apartment. There was clearly someone in there and that someone had just quickly stopped a baby from crying. If they went in with guns blazing, there could quickly be a hostage situation.

My client then said, “Wait! I have a key.”

He handed the key to the police who used it to open the door and rush inside.

It turns out that the man who entered was not the suspect. And it also turns out that the single mom who rented the apartment was fine, as was her baby.

But that was just the beginning of the landlord’s problems. The lady sued him for unlawfully entering his house.

Fine, he thought. He had insurance. And the insurance company were quick on the spot with their attorneys. The tenant had her attorney. The insurance company had their attorneys. And there was one thing they all agreed on. It was the landlord’s fault. Oh, and his insurance company didn’t cover his action due to some breach or another.

So the owner had to get his own set of attorneys. And, after one week’s worth of depositions with 3 attorneys he paid for at $300 per hour or so, they finally all settled.

And that’s why my new client would NEVER own property again without using a business structure.

Lesson: Make sure you’re protecting your assets. You can’t count on someone else to watch out for you. It’s up to you!

Woman Loses Out on Refinance Dollars Due to Rule Change

The news is full of upside down houses. (No, not from a tornado, but from the storm of the housing downturn.) But the reality is that isn’t true in every part of the country. In fact, I have clients in the Midwest who are still steaming ahead, making money. Values are increasing. And there are still loans available. There are even loans available, just like in the good old days, that allow you to pull equity out.

And that was the strategy for Ann. She bought houses, fixed them up, refinanced them to pull out her costs and then sold them on Rent to Own programs. Everything was full steam ahead until she ran afoul of the new Freddie Mac lending rules.

She had done everything right – working through a business structure to protect her assets. The problem was that she was working in the WRONG business structure and suddenly, without notice, that meant she couldn’t refinance her properties. Her business stopped dead in its tracks.

That’s when the Trust Sandwich™ was born. It’s a way to protect your property plus give you the flexibility to refinance.

The Trust Sandwich™ is just one of the new Business Structures for 2009 and Beyond that we’re putting our clients in.

Doctor Almost Loses Everything in First Strike, Looks Like Second Strike Will Take Him Out

One more story. I wish more of these were happy stories! But lately it seems like everybody I know in business is getting sued, or has been threatened with a suit. It doesn’t matter if there is any real reason behind it. Anybody can sue anyone at anytime for anything. Unfortunately, that’s one of the big downsides of doing business in the US.

Chances are you’ll win in the end, but can your business, family and emotional health handle it while you get to the end?

I just met a new client this past week who had almost gotten wiped out financially when his 15 year old son was in a car wreck that was his fault. The doctor had been careful to have a corporation for his practice. The problem was that the corporation didn’t protect the business against personal threat.

The second whammy happened when the IRS came after him. The lawsuit wiped out the money, but not the IRS obligations.

LESSON: In 2009 and beyond there is one key phrase you need to remember - Protect as you build.

In the next few days I’m going to be announcing a brand new educational product entitled “Business Structures for 2009 and Beyond”. We’re highlighting advanced strategies using LLCs, Series LLCs and Trust Sandwiches. PLUS there is a bonus section with Megan Hughes on the Trust Sandwich and a special bonus that I’ll tell you about later this week.
Times have changed. Laws have changed. People are much more willing to sue you at the drop of a hat. And, tax laws are about to change, a lot. You need to be protected and flexible.

Warmly,

Diane Kennedy

P.S. Please watch your email for the announcement of the brand new educational product with a very special limited offer.
P.P.S. If you’re growing your wealth, protect it. It’s never been more important.