It is every entrepreneur and businessperson’s dream to see their efforts pay off. But the road to success, especially in the world of business, isn’t simple. You need consistency and dedication to grow a lucrative and successful career in business. This isn’t something that can happen overnight. To some, it’s a lifelong journey. Unfortunately, with just a single mistake, everything you’ve worked hard for can be lost.
The United States is considered one of the most litigious countries in the world. Businesses are always at the risk of facing legal complaints of various natures that can end up in claims and paying up damages.
The majority of lawsuits filed against businesses just want your money and assets. To protect their hard-earned wealth and assets, businesspeople and entrepreneurs in the US must employ solid asset protection strategies. This should help avoid lawsuits and claims from frivolous creditors, and ensure that you continue to grow your wealth and achieve financial success.
There are many different successful asset protection strategies that business owners can use. Here let’s take a look at different ways to protect your wealth.
Asset protection starts with choosing the right business entity. If possible, avoid sole proprietorship as it exposes your personal assets to possible legal actions. Operating as Limited Liability Company (LLC) or as an S Corporation provides better protection of your wealth. However, the business structure that best suits your enterprise would depend on many factors such as ownership, operations, and tax-planning considerations. Working with a legal expert would help you decide which structure would provide the best asset protection and would be most advantageous in your case.
Maintaining your corporate veil is another basic asset protection strategy. Never mix up your personal assets with that of your business. Set up a separate bank account for your business and another for your personal finances; assign company properties under the legal entity, and always use company name on all legal dealings. Make sure that you maintain corporate records and have an accurate recording of your meetings.
Equity stripping is a strategy employed to reduce the value of the shares issued by a property or company. By reducing the equity of your business, you can minimize the exposure of your assets in case of a lawsuit. This would help you avoid losses while still allowing you to use income from the assets.
Safekeeping your assets in offshore jurisdictions is a common asset protection strategy used by many business owners. You will need the help of professional international asset protection consultancy services to ensure that the offshore company or trust is established and managed properly. It is very important that you put your assets in a jurisdiction that offers the best financial benefits and asset protection.
Taking out a private placement life insurance can shield your money against creditors and litigants. It also offers attractive tax benefits. In some jurisdictions, this type of life insurance can provide significant asset protection. However, private placement life insurance isn’t for everybody. It is often designed for wealthy businesspeople with annual income in the millions.
Placing your assets under your spouse’s name can also help protect your assets. Generally, assets that are not under your name are less exposed in case of litigation. Valuable assets can be assigned under your spouse so they are not subject to seizure arising from litigation. Marital property agreements (prenuptial and postnuptial) can be very beneficial for business owners. Take note, however, that this can lead to a serious legal dilemma in case you end up in a divorce.
Lacking an asset protection strategy is one of the biggest mistakes you should never commit. Without a solid asset protection plan, you are at risk of losing your lifetime’s worth of hard work. Successful business owners must be ready for everything – including the worst. There are a variety of effective asset protection strategies available for you. Consult experts and explore the options. It is vital for your continued financial success and wealth growth.