The best way to avoid liability is to establish an asset protection strategy before you need it. Once you have been served with a lawsuit, it is too late to start considering your asset protection options.
If you own several rental properties, it is wise to separate each property into a different entity. In the event that you are sued, only one property can be named in the suit. Many companies do this with equipment or vehicles. They run their main operating business in a corporate structure and hold property and equipment in a limited liability company.
Make a list of everything you have to lose. You might be surprised to realize you have more than you thought. This list will become invaluable when putting together your asset protection plan. Be sure to include a column for your business assets and your personal assets.
You know the old saying “I’d rather be rich than famous”. When you’ve worked hard to get where you are in life, it’s difficult not to flaunt it, even a little bit. If you are a small business owner, you are already perceived as being wealthy by your neighbors, family and employees. They don’t realize how hard you work just to keep the business going. It’s important to keep a low profile and to not voluntarily give anybody reason to think you have more than you do. The only way to truly protect your assets is to take away the incentive to be sued.
If you can avoid it, try never to sign a personal guarantee for a loan, lease or contract. Once you have signed a personal guarantee, you have just let someone by-pass your corporate structure to attack your personal assets if something goes wrong. One way to avoid this is by allowing your company to establish its own credit rating score.
Don’t make the mistake of thinking that just because you have insurance you have nothing to worry about. In fact if you have a big insurance policy you could be putting yourself at risk. When an attorney sees that you have a nice big insurance policy they know most insurance companies will settle vs. allowing a lawsuit to go to court. Now that is fine, that is what you paid for. But when you go to renew your policy you can bet you’ll be paying for it on the back end. That's if they allow you to renew.
Fraudulent Conveyance: If you are named in a lawsuit or think you might be named in a lawsuit, it is too late to transfer your assets to someone else for “safe keeping”. This is called fraudulent conveyance and it will allow the courts to attack those assets even after you have transferred ownership to someone else. That is why it is important to put together an asset protection plan while your legal seas are calm.
Wishing, wondering and waiting won’t protect your assets. Don’t let inaction be your asset protection strategy. Call 1-800-648-0966 today or get started on-line and take the next step.