Perhaps you’ve heard the story of a successful businessman who suddenly loses all his fortune and ends up being a bum. This isn’t a fictional story. In a very litigious country such as the United States, such stories are real and not uncommon.

In the past, asset protection was a common thing for wealthy families and high-net-worth individuals. But businesses can also get sued. Unfortunately, not every business is aware of this risk as well as available asset protection strategies they can implement.

What is asset protection?

Asset protection involves analyzing your assets and protecting them against an unexpected risk of loss. These strategies are implemented to protect your personal or business assets from risks such as litigation, divorce settlements, insurance claims, and bankruptcy. Without proper asset protection, you’re effectively putting at risk everything you’ve earned.

Who needs asset protection?

All businesses, regardless of size and industry, are at risk of a bankruptcy, lawsuits, and claims. This means asset protection is needed by all businesses, whether it is a small, midsized or a large company.

Some think that small privately held businesses don’t need asset protection. But the truth is that small business are at greatest risk because legal costs and expenses often come from the business owners, and not from shareholders.

With an effective asset protection strategy, you are securing your properties in case your business is put in a major legal predicament. There are numerous asset protection strategies that you can implement to insure your assets. With the help of expert international business consultants with experience in international asset protection, you can come up with an excellent asset protection strategy that is best suited in your situation.

Why excellent asset protection is necessary for businesses?

Business owners may be filed with all sorts of legal claims and lawsuits – with the main objective of getting your fortune. Over the past years, we’ve seen a surge in wage and hour disputes, wherein a group of employees organize themselves to file a lawsuit against the company on the grounds of unpaid or underpaid work hours. Typically, these lawsuits are instigated by a plaintiff lawyer, hence, giving the employees ample legal assistance. But the worst part is that many insurers won’t cover these types of claims. As a result, the entire assets of the company become subject to creditor claims and legal seizure.

Wage and hour issues are just one of the numerous lawsuits a company may face. Creditors could be running after your assets. Sometimes lawyers band together individual plaintiffs to intimidate a business into a settlement or face years of costly legal battle.

Although our justice system remains fair and equitable, the chances of being on the losing end of a major litigation aren’t nil. In these major legal cases, losing could mean losing everything you’ve worked hard for. That is why asset protection is very important. If you haven’t thought about investing in an excellent asset protection strategy, you better act now.

What can you do to protect your business?

There are many asset protection strategies you can implement. One of the most commonly used asset protection strategy is setting up legal entities, such as corporations, partnerships and trusts. For instance, if you own a major company with extensive operations, you can create different companies for each brand to minimize exposure. Similarly, you can create separate legal entities for different intellectual properties of the company and then licensing them to the operating company. This way the entities are not wholly owned by a single company thereby isolating them in case of a lawsuit.

 

Meanwhile, if your company has substantial liquid assets and retained earnings, you can set up offshore companies in jurisdictions that offer business-friendly tax regulations and more protective laws.

 

There are also certain types of retirement savings plan, known as Private Retirement Plan (PRP), that provide a blanket protection to your assets in case of lawsuits or even bankruptcy.

Another asset protection strategy is by distributing your personal assets to your spouse or company assets to shareholders to minimize exposure to business liability. You can also lease equipment or property instead of owning them to reduce the assets in your company’s balance sheet.

 

Explore strategies that are applicable to your business with asset protection consultancy services. By implementing a solid asset protection strategy, you can avoid opportunists from filing unscrupulous and whimsical lawsuits against your company. Should they pursue filing a lawsuit, an effective asset protection could compel the parties to reach a settlement that is generally favorable to your company.

Final thoughts

Business owners work day and night to build their wealth and fortune. You don’t want your hard earned money and property in the hands of opportunists. You deserve to protect your assets so you can achieve financial security and enjoy continued financial growth.