Asset protection is not something that should be complicated, but it only gets complicated if you don’t follow the right set of steps. With simple habits, you can ensure that your physical and financial assets are protected as much as possible, but there’s no need to believe that it’s impossible. There are so many ways that you can ensure your assets aren’t taken from you in any way, and we’ve got eight of the best possible strategies that you can implement to ensure that you can protect your assets as best you possibly can.
The Right Business
There are always things to consider when it comes to tax planning, but if you are currently working alone, it may not be the best way to protect your assets. With you being the sole business owner and in charge, you leave yourself open to exposure for possible lawsuits. If you choose instead to have the right business entity in an S corporation or a limited liability company, you can protect your assets far better. Naming your business this way can protect your business assets and ensure that you are closing the exposure to external risks. It’s more than just avoiding a lawsuit, but it’s protecting your profits and your investment at the same time.
The Right Insurance
Personal insurance like high net worth insurance should be something that you invest in, but you also need to make sure that you buy the right business insurance for your business. It’s an essential area of your business, and it should be included in the startup budget from day one of your company being open. Insurance gives you the space you need if there is an incident, and it provides you with protection if your business is a target. Just make sure that you choose the right insurance for your business; retail business insurance is going to be vastly different from medical practice, for example.
Separate The Cash
Separating the bank account and the checkbook for your business is essential if you want to maintain a corporate veil. Keep your company name on all of your documents and make sure that the company records are well-maintained for your business future. Log all the minutes and separate the money so that your business can be managed correctly and your assets protected. Startup businesses often make the mistake that they put their business expenses in with their personal expenses, and when this happens, there is a gateway to exposure. Making sure that cash is separated is vital for your business to continue properly and safely.
Always Use Correct Procedure
A big part of keeping your assets safe is in the avoidance of a lawsuit. Creditors can come after your personal high net worth assets if you are acting fraudulently in your business. Having agreements for your rentals that are watertight and placing all property titles in the company name ensures that you maintain separation between business and personal assets. Make sure that your business professionals are licensed correctly and legally, too. This includes your legal advisors and your staff. Correct procedures and contracts are essential for your business to be acting professionally, and you’re protecting yourself while you do it. Contracts should be double checked by your legal team and by people you can trust. Don’t panic about asking someone to double check what you do: it’s smart business to do so!
Under The Umbrella
Earlier, we mentioned some of the insurance that you need to keep your business safe. Well, umbrella business insurance can work over all other types of insurance that you have, and it can cost up to $500 a year for up to $2 million in business coverage. Of course, you can’t then start acting in a way that will void your insurance, such as negligence or fraudulent activity – that wouldn’t be covered by umbrella insurance.
Share The Load
Your partner or spouse can help you to protect your assets by having your assets in their name. Some occupations and lifestyles are riskier than others, which means that if you separate the assets, creditors cannot reach you. So, if you put your valuable assets separately, you could continue to work in a risky manner that won’t be affected by creditors after your assets. Asset protection in marriage is essential for the least exposure to your assets. Prenups and postnups are the most beneficial here because you can then shield your assets in the right way. The one rule here is to be very careful with your assets; know that your spouse is a trustworthy person to entrust your assets to so that in the event of a divorce, you don’t lose either way.
One of the powerful asset protection options out there is in the individual residence, which is known as a homestead exemption. It protects a figure value of your home from a creditor and even from bankruptcy if it’s protected in the right way, and there is more here about a homesteading exemption so that you can learn more about it.
If one of you is sued, you can protect your property by use of something called a tenancy by the entirety. It means that you don’t have to pay out a significant amount of money to maintain the designation. Protect your home from being taken in the event you have creditors on your back and title your home correctly. You can ensure that you shield one of your most essential assets this way and provide a secure home for your family no matter what.
Asset protection – no matter how high net worth you are – is vital to ensure that you remain as covered as possible. Bankruptcy is always a risk when there are assets involved, so take the time to ensure that you have done this correctly, and you can enjoy your business and personal assets in the right way.