Asset Protection: Equity Stripping

[Andrew C.]

Hi BP Community - I have an interesting legal situation that I wanted to hear feedback from before consulting our attorney.

I recently read the book, Loopholes of Real Estate, and there was a section on Equity stripping to protect an asset where you have significant equity built up.

My family owns a home that fits that criteria. We have done the following as preliminary asset protection.

1) 1st Line of Defense - Umbrella Insurance Policy

2) 2nd Line of Defense - Deed of House is in a LLC where the owners both have 50% stakes (giving greater protection than a sole proprietor LLC)

3) 3rd Line of Defense - 50% debt against the property which holds a primary (first) position.

 I feel comfortable with our current protection, but i want to make sure we are minimizing our risk exposure. We still have a significant portion of equity in our home (~$1mm). I am looking for recommendations to lower this equity exposure or comments on Equity stripping. 

One option we are considering is drawing a secure line of credit (HELOC) against our property. We do not have any current plans to use the Line of credit, but having it in place, may be a deterrence from litigation. I am unsure if this will work and want to hear feedback.

What are you thoughts? Any feedback is warmly appreciated. 

Thanks in advance!

Drew