Originally Posted by inquisitive
I just read that 65% of American millionaires have no asset protection plan.
Let's say someone has several million dollars that they would like to protect against frivolous lawsuits, as well as lawsuits related to professional liability. Is it possible to open a corporation or other business entity that would hold this amount of money and trade this money in stocks? Since a corporation is a different legal entity, it should not be available for lawsuits except for lawsuits directly against the legal entity, and since it is just involved in the stock market and no other business transactions, there shouldn't be any other reason for it to be sued. Is this correct?
Corps (LLCs are commonly use to do this), doesn't protect you from you.
Most commonly used to hold rentals, 2 examples to illustrate, you have
a rental house in an LLC:
1. you hire a license contractor to build steps, the steps collapse, the
injured sues the LLC and the contractor because they share responsibility.
IF you finance the house, you only lose your equity, they get the
house and the mortgage that goes along with it.
2. you build the steps yourself or you hire a couple of college students to
build them, in either case you are deem responsible because either you
built them yourself or you failed to do due diligence and hire a license
contractor, you are deem responsible. They sue you, which means they
can get all your assets including any corporations you own.
In most states your retirement assets are protected and many your
house is protected (Florida). So if you are a Doctor in Fl, you max out
your retirement assets (401K, annuities, IRAs) and buy the biggest
house you can afford and put your practice in a LLC in case another
doctor/nurse in your practice screws up.