How A Well Structured Asset Protection Plan Will Protect You and Your Business From the Lawsuit Explosion

Fridays with Vistage is a webinar series on relevant, timely and actionable business topics to help you generate results in your business. On July 31, Hillel L. Presser will present, “How A Well Structured Asset Protection Plan Will Protect You and Your Business.”  You may register for it here.  

Asset Protection won’t make you rich, but it will keep you from becoming poorer!  The objective is vital in this day and age when the real trick is not to make money but to keep it.  As society is only becoming more litigious everyday, you must build yourself a financial fortress so you and your family can gain a comforting level of financial security.  Like most things in life, Asset Protection begins with a good plan. There are Domestic and International Asset Protection strategies designed to help business owners protect their wealth. As a business owner, you may know how to make money, but do you know how to protect it?

What is Asset Protection?

Asset Protection is the legal process of titling both your personal and business assets to put them beyond the reach of future potential threats and creditors. A good Asset Protection plan should protect all of your assets from any and all financial threats.  Many people spend so much time and effort building their wealth; yet give so little afterthought about how to keep it safe.

Protectively Title Investments and Other Liquid Assets

How can you best protect your assets? There are several good options. One option is to title your cash, CDs, mutual funds and other liquid investments to one or more Limited Partnerships (LPs). Limited Partnership’s are great to protect liquid investments because; 1) The LP lets you control these assets. 2) Your LP interest cannot be claimed by your creditors.  The judgment creditor’s remedy is a charging order against the debtor’s limited partnership interested.  3) The LP is tax-neutral. 4) The LP gives you maximum ownership and operating flexibility.  5) The LP lets you better plan your estate and reduce your estate taxes. The LP is both versatile and protective. The limited partnership is only one option.  You can also protect your liquid assets by going internationally with your money.

Reducing Your Personal Exposure By Managing Properties in a LLC

It is smart to consider this point if you are a property owner.  Your personal creditors cannot claim property owned by an LLC because the LLC, rather than you personally own the property.  Your personal creditors also cannot seize your membership interest in the LLC; they can only get a charging order against your membership interest.  Furthermore, you have no personal liability for the contracts and debts of the LLC.

Real estate, particularly investment and rental properties, creates enormous liabilities ranging from breach of lease, to ‘slip and fall’.   A good asset protection plan titles each property to a separate LLC.  Liability from one property won’t jeopardize your other properties.  To add another layer of protection, have your limited partnership own your separate LLC’s.  This will also provide estate tax discount opportunities.

In sum, you want to shield yourself from both ‘outside-in’ and ‘inside-out’ liability. ‘Outside-in’ meaning that your personal creditors cannot claim your ownership of the property. ‘Inside-out’ insulates you and your personal assets from liabilities arising from your owning or managing the property.

Sleep Well Knowing That Your Business is Protected!

With a sound financial fortress you will be able to protect your hard-earned assets from lawyers, creditors, malpractice claims, foreclosure deficiencies, former or current spouses, children, relatives, and lawsuit-obsessed citizens.

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