Asset protection protects you from sudden catastrophes in businesses. It is perceived that large corporations have the finances to afford asset protection. Small businesses need asset protection too. They are more likely to suffer setbacks because they are either startups or businesses barely making payroll. They also have loans and other financial resources to pay back.
Asset protection eases the blow of lawsuits, determined creditors, risk and more. Before you choose an asset protection provider, consider the following.
1. Inventory
Small businesses need to count inventory. It should be a complete and thorough list of debts and assets. It should be updated every six months. Go beyond the company and look at personal debt and assets. Stock in other companies, retirement accounts and company/personal cars have value. It shouldn't mix with professional assets and debt, but you should be aware of them. Add anything else that's valuable and is up for grabs in a lawsuit.
2. Research
Exemptions and protective entities must be thoroughly researched. Personal residence, pension, retirement fund, and life insurance have the possibility to be exempt due to federal or state law. Exemptions protect assets in your name from being at risk in court or through creditors. The remaining assets need protective entities. Protective entities have many layers; this makes it hard for creditors or courts to take it from the business. You can also equity-strip the asset, but you will need to contact us for more information about that.
3. Guarantee
Personal guarantees are a pledge to be responsible for debt. The downside is losing company protection. A personal guarantee doesn't work with asset protection. Banks and lenders will try to get it, but turn the tables. Place a time limit on personal guarantees or choose one asset as collateral. That way your company will follow the rules while salvaging your assets using asset protection (via estate planning). If banks and lenders remain persistent, don't take the bait. Find someone else.
4. Contracts
Never sign a contract without a lawyer present or without review by a lawyer. Contracts are tricky, and banks/lenders will make sure the contract tips in their favor. Tip it back in yours by adding liability protection in the contract. Add a limit on damages and the damages you refuse to be responsible for in the contract. If a company doesn't agree don't settle for their demands. Sign contracts on behalf of the company, not on your behalf. There's a high chance that if the contract sours it will become a personal liability not professional liability.
5. Insurance
Asset protection isn't enough for some creditors. They will take the risk despite the protection. Add another layer of protection by purchasing liability insurance and property insurance. Liability insurance will cover personal damage and damage to property. Property insurance is another layer to project company assets.
"The Five Things You Should Know About Asset Protection Trusts" must be reviewed carefully. A qualified estate planning attorney is highly recommended for asset protection assistance. They can assist with legal terms and conditions and answer any questions you have prior to purchasing this investment. Small businesses should buy this as soon as possible.
