18 June, 2020
Asset protection is a crucial topic of discussion in the finance sector. Unfortunately, most personal blogs never shed too much light on what it’s all about. In return, the lack of available info to refer to sees most people spend less time worrying about the topic. If you are out there wondering what asset protection is about, this article is for you. Here, we will talk about everything you should know about asset protection.
1. The Right Business Entity
When it comes to setting up a business entity, there are tax-planning considerations that you have to keep at the back of your head. Well, with a sole proprietorship, you may enjoy the tax benefits that tag along. However, this may not work when it comes to asset protection. With a sole proprietorship, your assets are usually exposed to a potential lawsuit. To prevent such occurrences from happening, it will help much if you opted for a corporation or a limited liability company (LLC). By so doing, you will be making a significant step in your business development while protecting your assets.
2. It Pays to Use Proper Contracts and Procedures
More often than not, creditors may take advantage of you, and that’s if you act negligence and fraudulent operations. These shortcuts can see you lose your assets. Rather than using shortcuts, it’s recommended that you go for good lease agreements for your rentals. Properties should as well be placed in the company name. Also, you must ensure that you have subcontractor agreements and contracts for every project rather than relying on emails. The hiring of individuals to work under the table should as well be discouraged in your business. It would be best if you instead used licensed, bonded, or insured pros when transacting any business.
3. Legal Concept
If you went digging shallowly over the internet, you will realize that much has been written about the legal concept of asset protection. Now and then, asset protection has a reputation for illegal or unethical activities, including offshore trusts and Swiss bank accounts. As stated by the attorneys from https://www.atlantaestatelawcenter.com/, asset protection should be a sensible, legal, and ethical component of every investor’s wealth-building game plan. You should, therefore, work closely with reputable attorneys to document your transactions and tax legally. A perfect attorney should assist you in structuring and titling of assets that best suit them against anyone that may be trying to take them.
The attorney should help you with the structuring and organizing of the legal work, but he or she should help you understand what you are getting yourself into when signing those agreements. Doing so helps protect your assets in that you will hardly fall under the wrong hands of your enemies.
4. The Insurance Company You Choose Does Matter
Insurance is an essential part of your business. Therefore, it shouldn’t be forgotten in the startup budget. Including insurance in your business gives you the ability to protect your asset, that’s if an incident takes place in your business. When it comes to finding an insurance company, it’s not about taking a policy only, but going in the correct one. Say, for instance, rental property as compared to a retail store asking for different insurance types.
5. Place Certain Assets in Your Spouse’s Name
If you happen to work in a risky job setting, it’s extremely a wise move to place assets in your partner’s name. By so doing, you will be protecting your assets as the creditors can’t reach for the separate assets. Protecting assets using this method require a strategy whereby valuable assets are held as the separate property of the spouse with less risk exposure. In the marriage context, to protect assets, prenuptial, or postnuptial marital property agreement can be beneficial. When using this strategy, you should consider the implications of deeding property into one or the other spouse’s name. This is because you could be seriously affecting the division of your assets in case a divorce happens.
6. Homestead exemption
There are many exemptions when it comes to the protection of assets. However, one of the most potent exceptions available is one afforded to your residence. This is usually a statutory exemption in most states that protects a certain amount of value of a person’s home from bankruptcy or creditors.
The protection of assets is an important concept worth the discussion. The problem is that it’s hardly discussed. Most platforms fail to reveal the light on what is to be known. If you are out there wondering what asset protection is all about, this article is for you. By reading through the piece, you will learn the top six critical things you should know about protecting your wealth.
