Business owners: 4 asset protection tips to prevent financial disaster
No matter how big or small your business is or how many assets you possess, asset protection needs to be top of mind.
Nobody wants divorce, creditors, or bankruptcy to derail what you have spent years building.
A few simple asset protection measures will keep what is yours safe in the event that someone hits you with a lawsuit or other unforeseen circumstances strike.
Here are four tips to help you manage the wealth you have built more effectively and ensure that you are well prepared for the future.
Four asset protection tips
1. Plan ahead – start now!
Many people don't look into protecting their assets until a legal claim is made against them.
Although there are ways to protect your assets after you've been served, the courts generally look favourably on those who have set up asset protection plans in advance.
Therefore, our first tip is to get started straight away, including setting up the right tax structures as soon as you start a business.
This will also save you money on government charges and set-up costs in the long run.
2. Divide your assets
The number one rule in asset protection is to never put all your eggs in one basket. Doing so could be disastrous as a lawsuit against one asset could expose them all.
You should hold all of your assets and businesses in separate LLCs or corporations.
Keep in mind that you can hold memberships or stocks in a well-drafted limited liability limited partnership (LLLP) or asset protection trust.
3. Take out professional insurance
Asset protection should supplement your insurance policies. Taking out professional and liability cover should be a priority.
Bear in mind that an asset protection plan can safeguard your assets but it won't scare away plaintiffs or cover your legal fees during a lawsuit.
4. Seek advice from asset protection specialists
Setting up asset protection trusts and structures is difficult, especially if you have no prior experience of it.
To ensure you're safeguarded from unforeseen circumstances, consider taking advice from an asset protection expert.
This will help you select the appropriate tax structure for your assets and decide on how best to structure them.
You can also seek advice on loans and superannuation funds.
Need more help with asset protection?
Perth business owner or resident with significant assets?
Contact our advisors and start protecting your assets from future claims.