ASSET PROTECTION THROUGH ALTERNATIVE ASSETS

[vc_row][vc_column][vc_column_text]Building wealth is meaningless if you don’t protect it. All it takes is one accident and one lawsuit to lose everything if you’re not adequately protected. Everyone’s heard the horror stories.  A doctor hits a pedestrian and loses everything because he didn’t have adequate asset protection.  Here at Four Peaks Partners, we are avid proponents of investing in productive alternative assets for the creation and accumulation of wealth. However, investment in alternative assets provides an added benefit, asset protection.

Building wealth requires a good offense, active investing with passive income in mind.  Protecting that wealth requires a good defense.  When looking to protect your assets, first, make it as hard as possible for any creditor to find your assets. The more hurdles they have to overcome, the better it is for you. Second, if they do locate your assets, make it hard for them to seize those assets.

One common strategy to make it hard on creditors to locate your assets is to not hold any assets in your personal name.  A simple credit and background check can easily reveal your personal holdings.  For investments in real estate, whether directly or through a private placement, an effective asset protection strategy is to hold title in the real estate or private placement interest through a limited liability company (LLC) or limited partnership (LP).

Again, on the theme of shielding your assets, layering is an effective technique.  Layering involves investing through multiple business entities set up through a myriad of jurisdictions.  So, instead of owning a building directly in your personal name, you would acquire it through an LLC organized in Wyoming that is not owned by you directly but by another LLC organized in Nevada that is owned by you.  An investment in a private placement takes care of one of these layers for you.

Now that you’ve made it hard on a creditor to find your assets, you need to make it hard for the creditor to seize those assets if they’re found.  Holding your assets through a layer of LLC’s would make it very hard on a creditor to seize them.  That’s because in an overwhelming majority of states, the only remedy a creditor has against an LLC that is owned by you personally is to obtain a charging order from the court.  The charging order is essentially a right to obtain distributions made from the entity (your LLC) on account of your interest.

Imagine the scenario where you’re invested in a private placement that makes regular income distributions.  If you were invested directly in this private placement through your personal name, theoretically, with a charging order a creditor would be able to seize any distributions the private placement company made to you.  However, if you owned the private placement interest through an LLC, the distributions to your LLC would not be affected by the charging order.  The charging order would only affect the distributions made by this second LLC that is owned by you personally.  Because a charging order only puts a lien on your distributions, it can not force your LLC to make distributions.  The simple way, therefore, to get a charging order is to never make distributions.

Of course, a charging order would prevent you from receiving direct distributions from your LLC, but nothing prevents you from reinvesting that money into other income producing alternative assets and building wealth through that LLC.  You may reach a point where you accumulate such substantial assets that you may decide to pay off the judgment to get rid of it or, in the alternative, never make another distribution to yourself.  At the time you set up your LLC, you may consider adding another family member as another member of your LLC in case you’re ever in the situation of dealing with a charging order.  In that case, if a charging order ever comes into the picture, the LLC can always make distributions to your spouse or child.

In conclusion, alternative investments in income producing real estate, whether invested in directly or through a private placement, if done correctly will provide a layer of asset protection and make it harder on your creditors to find and seize your assets while generating income to grow your wealth.[/vc_column_text][vc_text_separator title_light=”1″ title_level=”h4″ title=”DISCLAIMER” color=”black” border_width=”2″ el_width=”70″][vc_column_text]

The information contained in this article is provided for educational and informational purposes only. The contents of this article are not and should not be construed as legal advice. This article contains general information from a variety of sources and might not reflect current legal developments, verdicts or settlements. We do not undertake to update material in our web site to reflect subsequent legal or other developments.

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DISCLAIMER

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein.

THE OFFERING IS MADE ONLY BY THE PRIVATE PLACEMENT MEMORANDUM. THIS MATERIAL MUST BE READ IN CONJUNCTION WITH THE PRIVATE PLACEMENT MEMORANDUM IN ORDER TO UNDERSTAND FULLY ALL OF THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES TO WHICH IT RELATES AND MUST NOT BE RELIED UPON TO MAKE AN INVESTMENT DECISION.

The offering of securities described herein will not be registered under the Securities Act of 1933 (the “Securities Act”) or the securities laws of any state and the securities are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such laws. Neither the Securities and Exchange Commission nor any other federal or state agency has passed upon the merits of or given their approval to the offering of the securities, the terms of the offering or the accuracy or completeness of the offering materials. The offering of securities is being made only to Accredited Investors, as defined in Rule 501(a) of Regulation D of the Securities Act. An investment in the securities is highly speculative and involves substantial investment and tax risks. All prospective investors must review the Private Placement Memorandum in its entirety, including the section entitled “RISK FACTORS” before investing.

An investment in Four Peaks Capital Partners, LLC is highly speculative and involves substantial risks, including, but not limited to: (1) Four Peaks Capital Partners, LLC success depends upon the performance of the Manager in managing Four Peaks Capital Partners, LLC and its investments, including decisions involving investment of Four Peaks Capital Partners, LLC’s capital and the acquisition and disposition of properties and there is no guarantee Four Peaks Capital Partners, LLC will raise enough capital to perform its investment objectives; (2) There can be no assurance that a prospective investor will receive any return on investment in Four Peaks Capital Partners, LLC and/or realize any profit on a prospective investor’s investment in Four Peaks Capital Partners, LLC and a prospective investor could lose all or a substantial portion of its investment; (3) The Manager has limited or no net worth and there can be no assurance that the Manager will have sufficient funds to meet its obligations to Four Peaks Capital Partners, LLC or to otherwise financially support Four Peaks Capital Partners, LLC; (4) The Class A members and Class B members have no power to take part in the management of Four Peaks Capital Partners, LLC and have limited voting rights and will not have the opportunity to evaluate or approve any of Four Peaks Capital Partners, LLC’s investments; (5) The Class A Interests and Class B Interests will be illiquid, and the transferability of the Class A Interests and the Class B Interests will be substantially restricted; (6) Four Peaks Capital Partners, LLC may not have the cash flow necessary to make distributions to its members; (7) Four Peaks Capital Partners, LLC will not diversify its investments and, therefore, the success of Four Peaks Capital Partners, LLC will be dependent upon the success of the properties; (8) There are substantial risks associated with real-estate investments and ownership of storage facilities and mobile home parks; (9) There are various potential conflicts of interest among the Manager and its Affiliates and their principals.
Investors must read and carefully consider the discussion set forth under the section entitled “RISK FACTORS” in the Private Placement Memorandum for a complete discussion of these and other risks pertaining to this investment.

These projections are speculative and based on specific assumptions, which, if incorrect, would cause the actual returns to differ materially from the projected returns. You should review the entirety of the assumptions and risks set forth in the Private Placement Memorandum.

Any underlying assumptions and any forward-looking statements herein may not be accurate, the projections herein shown may not occur, and actual results could differ materially due to risks and uncertainties that are beyond the Company’s ability to control or accurately predict. To the extent, the information in this communication conflicts with the information in the Private Placement Memorandum, the information in the Private Placement Memorandum shall govern.

The securities offered are an illiquid investment and involve a high degree of risk; Investors should be able to bear the loss of some or all of their investment. Investors should read and understand all of the risks and the entire Private Placement Memorandum before making a decision to invest. Past performance is no indication of future results and there can be no assurance that Four Peaks Capital Partners, LLC will be able to execute the investment objectives for the Properties or the Offering.

This material is for general information purposes only and does not constitute legal, tax, investment or other professional advice on any subject matter. Information provided is not all-inclusive and should not be relied upon as being all-inclusive.
Any capitalized terms used but not otherwise defined in this Presentation shall have the meanings set forth in the Private Placement Memorandum.

Any reference to “Four Peaks” “we” “our” or “fund,” regardless of capitalization, shall refer to Four Peaks Capital Partners, LLC, and its Affiliates.

For additional risks and disclaimers, visit https://www.fourpeakscapitalpartners.com
Four Peaks Capital Partners, LLC

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