Asset Protection

The Best Asset Protection for Real Estate Investors

October 7, 2023
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8 min read

Building a real estate empire takes years and monumental effort. The last thing you want is to leave all of your real estate investments and other assets vulnerable to the claims of creditors, lawsuit plaintiffs, angry tenants, and ex-spouses.

Determining the best asset protection for real estate investors and other high-net-worth individuals like you can be tricky. That's why we've broken down a few different strategies you can use.

Asset Protection for Real Estate Investors – What is It?

As a real estate investor, you accumulate assets as both a means of estate growth and income generation. After all, the more properties you own, the more properties you can renovate, sell, and/or rent to tenants for profit.

Therefore, asset protection for real estate investors is similar to asset protection for other high-net-worth individuals but with an increased emphasis on real estate protection. Asset protection for real estate investors can include:

  • Protecting your liquid capital and funds from creditors or lawsuit plaintiffs
  • Protecting your properties from claims
  • Protecting other assets, like stocks and bonds, from lawsuit plaintiffs and creditors
  • Protecting your estate, properties, and other assets from ex-spouses

When you work as a real estate investor, your properties are your most important assets. The last thing you want is a former business partner, disgruntled tenant, or ex-spouse to be able to take those properties off your hands. If they were able to get control of your assets, your income streams might dissipate, and you may have a very difficult time rebuilding your portfolio.

Smart Asset Protection Strategies

On the bright side, there are several asset protection strategies you can implement. The most successful real estate investors often leverage each of these protection strategies in conjunction with the others, resulting in several overlapping shields or layers of defense that minimize possible risks.

Landlord Insurance Policies

First and foremost, you should have a landlord insurance policy right from the get-go. This offers specific, comprehensive coverage for owners of rental properties. Landlord insurance might even be necessary in your state to operate as a legal landlord.

In any case, landlord insurance is necessary because it protects you from losses like:

  • Injuries

Landlord insurance liability coverage will protect you if anyone is injured on your properties and decides to sue you. Liability coverage usually protects against bodily injuries, emotional distress, loss of income from injuries, medical fees, and more

  • Property damage

The damage coverage protects you from losses related to damage to your rental properties and outbuildings like garages, communal areas, and so on

  • Loss of rental income

Certain insurance policies may protect you from losing rental income if you don’t receive rent from one or more of your tenants if your property is damaged and those tenants need to be relocated for a short while. As an example, if one of your tenants has to live someplace else for four weeks for flood repairs and they normally pay $2000 in rent per month, you might receive $2000 in compensation for that lost income

All in all, it’s never a good idea to get into the real estate investment business without a good landlord insurance policy. The right insurance policy will prevent you from paying out-of-pocket for all kinds of potential dangers and hazards in this line of work.


You can also form an LLC or limited liability company. When you set up an LLC, you can hold your properties and real estate investments in the LLC, thereby partially protecting them from each other and separating your business and personal assets.

Depending on the size of your real estate portfolio, it may be wise to form an individual LLC for each rental property you oversee. A creditor is usually only limited to the assets held in a specific LLC. Therefore, if one of your mortgages goes into default, a creditor coming after you might only be able to go after the property in the relevant LLC, not your entire estate or portfolio.

Note this is also a good protective measure to defend yourself against tenants and others, as well. Say that a former tenant decides to sue you because they think you maintain a hazardous rental property. If they are successful, they might only be able to access the assets in one LLC, not across your entire portfolio.

Homestead Exemptions

In addition to the above strategies, your state might allow certain types of homestead exemptions. Homestead exemptions apply to primary residences and allow owners of properties to register those properties as homesteads. When you do this, your homestead property is unavailable to the majority of creditors.

Your state's exact laws and policies will determine whether this is truly an effective asset protection strategy for a real estate investor. For instance, Texas, Florida, and other states protect homestead property up to an unlimited value. Other states have statutory limits for homestead properties.

In addition, this strategy only protects a single property or asset under your name. Many of the other top asset protection strategies can save most or all of the assets under your name. A homestead exemption is really only a strategy to ensure you still have a place to live or your primary residence is threatened by lawsuits and other legal action.

Asset Protection Trusts for Real Estate

While the above strategies can be helpful and useful, it’s not the cream of the crop when it comes to real estate asset protection. That title belongs to asset protection trusts.

In a nutshell, an asset protection trust is a special fiduciary arrangement where you put ownership of your real estate and other assets into the hands of a trusted third party called the trustee. The trustee then oversees the administration, management, and distribution of assets within the trust.

So, how does this protect your assets as a real estate investor?

When you work with a specialized trust setup organization like Dominion, we'll help you develop and start an offshore asset protection trust. An offshore APT is held in a jurisdiction other than your native jurisdiction, like the US. When this happens, the trust is primarily regulated and subordinate to the rules and statutes in that jurisdiction, not the US.

Say that you set up an asset protection trust with Dominion’s help. A creditor decides to come after your assets because of an unpaid loan. Unfortunately, they have no ability to force or compel you to access the assets within your asset protection trust.

  • You don’t own the assets anymore – your trust does. Provided that your trust is set up properly, you can’t change that, either!
  • The trust itself is not beholden to US-based rules and precedent (again, provided that it is set up properly)

These defenses combined will do wonders to protect your estate from all sorts of legal or financial attacks.

Is an Asset Protection Trust the Best Way to Protect Real Estate?

Yes, absolutely. A good offshore asset protection trust negates any legal claims or avenues of attack that creditors, lawyers, ex-spouses, and other opponents might try to use.

Trusts remove ownership and responsibility of your assets from your hands. When you transfer, say, ownership of certain key real estate assets or liquid capital into your offshore asset protection trust, that money and those properties are no longer controlled by you.

Even if you are found liable for damages or bills, you can't pay those things with the assets in the asset protection trust. A judge can try to overturn that fact, but they'll have a very difficult time doing so if you set up your trust with the right bank and in the right jurisdiction.

Dominion can ensure that's the case. We have over 100 years of experience shared between all of our expert team members, which include trust lawyers, financial advisors, and other specialists. Over the years, we've helped high-net-worth individuals and investors just like you save and protect hundreds of millions of dollars, plus invest that money for long-term wealth generation.

You can put real estate ownership into an asset protection trust as well. For instance, if you’ve invested in several quality properties over the years and want to make sure that your creditors and lawsuit opponents never get access to those properties, putting the deeds into the trust is the ideal way to do that.

You can still set up your trust so that you have access to the real estate and so any descendants, like kids or grandkids, have access to the real estate as well. You can even set up your trust so that ownership of the real estate passes to someone else, like a child or grandchild, after you pass away. There are unlimited possibilities when you work with trust setup specialists.

Get in Touch with Dominion

At the end of the day, the only surefire means to defend your hard-won assets is to work with Dominion and use an asset protection trust. An offshore, properly written asset protection trust will make your estate all but invincible, and any creditors or lawyers that come after your assets will find a very tough fight ahead of them.

More than that, our trust setup services can also help you accomplish other goals you may have for the long-term management and growth of your estate. Whether that means wealth generation, wealth preservation, or all of the above, we can help. Contact Dominion today, and let's get started.

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