My Business discusses how a sound and effective asset protection system will help business owners reduce, if not eliminate, the risks posed by lawsuits and other legal attacks.
A comprehensive, well-planned asset protection system is a surefire way for business owners to protect their assets and properties—whether it be personal or business—from lawsuits that threaten to make serious damage to, in the worst case, wipe them out altogether.
Small or medium-sized enterprise owners should consider utilising the following strategies:
- Asset protection trusts
- Asset protection tools
- Combination of legal tools
Learn more about asset protection planning.
Asset protection trusts
Business owners can fund a trust or transfer property to a separate legal tool while enjoying the benefits of their asset(s). These trust instruments are legal asset protection vehicles that enable business owners to maximise a variety of particular benefits depending on what their specific needs are.
Different trusts offer different protection features—some are stronger than others. It is important for business owners to ensure a thorough understanding of what kind of asset protection that they need and how they will benefit from it.
Asset protection tools
Business entities and relevant legislation can help in establishing a limit to the liabilities of business owners. Aside from trusts, corporations, LLCs and other similar structures allow for a business to incorporate into their systems—protecting owners from business lawsuits.
Their structures give rise to the “company or corporate veil,” which can be used to strengthen asset fortresses especially when legal actions are taken against you. The company is treated as a separate legal person, reducing or terminating risks of exposing personal assets to liabilities resulting from business conduct.
Remember that comprehensive and effective planning and the establishment of these business structures will help business owners maximise asset protection features. These models also offer business deductions, especially tax advantages.
Combination of legal tools
The strongest asset protection plan is one that incorporates the best asset protection features from different legal tools and business structures. Business owners should seek expert and professional advice to develop an effective asset protection strategy that best fits their individual needs. The goal is to design the most effective asset protection instrument in the proper jurisdiction while best serving their personal and business needs.
Business owners should also take into consideration their short- and long-term financial goals and estate planning objectives when putting together a comprehensive asset protection plan. A thorough understanding will also help in creating a clearer picture of their asset protection needs, as well as all lawsuit requirements. Always remember that the best asset protection method is developed long before there is any sign of a lawsuit.
Before business owners proceed with designing their own asset protection system, keep in mind that the best system locks in and fortifies assets against most, if not all, forms of lawsuits and other legal attacks. It is always advisable to seek professional advice from qualified practitioners to best protect your assets, and do so in ways that are legal and tax-effective.