Fundamental asset protection planning and protection starts by executing tried-and-true strategies, affordable and simple habits. You do not have to reinvent the wheel as there are enough approved strategies designed to help your asset protection planning. Besides, there are established laws on the books you can execute efficiently and be sure they will deliver you implausible protection in the event of a lawsuit.
Here are some of the strategies to consider in your asset protection plan.
Choose the right corporate entity
There is a range of tax planning options, functioning as a sole proprietorship is not the best alternative for asset protection. As a sole proprietorship, your assets are subject to potential lawsuits. Setting up a corporate say a limited company (LLC), is a key step in the development of your business and protecting your assets.
Maintain your corporate veil
While you have set up an entity, having its incorporation articles in your drawers are not enough to save you against litigation processes. There is a need to have a separate checkbook and bank account for the business. However, consider using the company name on all the documents, maintain the corporate records and log the minutes during your annual meetings. Besides, LLCs are never exempted from annual maintenance processes.
Use proper procedures and contracts.
Acting negligently and fraudulently is a sure way for creditors to pierce your corporate and attack your assets. You can only avoid this by having proper lease agreements for rentals and placing the corporate property and equipment under the company name. Besides, keep the subcontractor’s agreements and contracts of every project properly. Do not rely on the mails when it comes to essential relationships, and it is not advisable to hire people to work secretly. For this reason, you hire licensed, bonded, and insured professionals to help in the running of your company or business. This is not limited to asset protection professionals, tax and legal advisers, technicians, and contractors.
Buy legitimate business insurance.
Insurance is key when it comes to asset protection, and as such, it must be included in your startup budget. Assuredly, insurance will keep you to financial and asset position in case of accidents. As such, ensure you have a legitimate insurance policy because not every insurance that will suit your company. For instance, rental properties and professional practices need different types of insurance policies.
Obtain Umbrella Insurance
Umbrella insurance is good for personal and businesses as it operates as an umbrella of any other insurance risks other insurance policies may carry. It will cost you an average of $300 to $500 annually for property worth $1-$2million. It is the best as it will protect you in every stance. As a rule of the thumb, no insurance will cover criminal, reckless, negligent actions and fraudulent activities.
Consider homestead exemption
Homestead exemption is the protection accorded to individual and personal residences and is one of the most powerful exemptions available. Homestead exemption is available in most states that protect people’s home properties against bankruptcy or creditors.
Consider tenancy by the entirety
Title your personal home property as “tenancy for entirety” if allowed by your state. This is very important, especially in cases of divorce. When your spouse claims property, the property can never be split by litigation. This strategy is statutorily based, making it very significant. You will never be required to pay big bucks to execute and maintain the designation. Ensure your property is a titled property and as such, you can assuredly protect your home when such provisions are allowed by your state.
Consider implementing the highlighted strategies for proper asset protection planning like what is provided by Economic Strategist.