1. What is asset protection?
Asset protection as depicted in Hollywood movies (i.e. hiding all assets from all creditors no matter what) does not truly exist. In the real world, asset protection means setting up layers of barriers and impediments. No plan is truly impenetrable, but various steps can be taken to make the process undesirable to the majority of potential creditors.
2. When should I consider asset protection?
The best time to put an asset protection plan in place is BEFORE you are facing a lawsuit. This will increase the available options and decrease the likelihood that your plan will be deemed fraudulent. That said, some measure of asset protection might be available to you once a claim has arisen. So, either way, you should speak to an attorney right away.
3. How does asset protection work?
Unfortunately, there is no cookie-cutter “solution” that fits all situations. However, there are two common themes: creating a separate legal entity(ies) for business endeavors and securing adequate insurance.
There are various types of legal entities, including partnership, limited liability company, and incorporation.
Each type of entity comes with particular rules/requirements, a default organizational structure, and varying levels of liability protection. If you meet with an attorney, you can discuss the management and ownership structure which fits your business, as well as the type of liability protection that would best suit your needs. Once you have sorted out the legal entity issues, you should be to meet with an insurance adjuster.
Whether you know it or not, you want and need insurance.
You should consider both the value of the assets that you are hoping to protect from creditors and the nature of your business when determining the level of insurance limits to obtain. Making mistakes in your asset protection can be costly. Our attorneys can help you customize a plan that meets the needs of your unique situation. To schedule a free business consultation, contact us today at 855-522-5291.