Asset protection is a process of protecting a business or personal property from risks such as lawsuits, bankruptcy, claims and divorce settlements. For example, if you lose the lawsuit, you could easily lose everything you own including all of your life savings. Even successful businessmen and big corporations aren’t exempt from the risks of a bankruptcy. Only those who are wise enough to protect their money can withstand a financial blow. Because of this, no matter what industry you are in, asset protection is a must regardless of whether you run a large or midsized company or a proud owner of a small business. There are various strategies that a good asset protection lawyer can use to minimize the risks of losing your assets. Which strategy will be used depends on the amount of money and the risks involved.
Basics Of Asset Protection – Asset protection is basically separating your assets from risk. It can either be:
- Separating business assets from personal ones
- Separating various businesses from each other
- Separating asset holding entities from operating entities.
- Separating personal assets form risky and non-risky spouses.
Picking The Right Asset Protection Structure – Regardless of how complicated it sounds, asset protection can be as simple as having the business under your name and personal assets such as house under your spouse’s name. To determinate which business structure is the most suitable for your, there are several factors to consider:
- future growth and possible investments
- costs of setting up the company
Risky Business – Regardless of the asset protection structure, there are few simple things to consider:
- Knowing who you are in partnership with
- Understanding the meaning of joint liability
- Do not run the business together with a spouse
- Stay away from personal liability.
- Manage your business adequately
- Record and track all transactions
Asset protection is not simple and it is important to take adequate steps to protect your assets. After all, what is the point of building wealth if you do not protect it in a best possible way.