Asset protection is paramount in walking the journey of entrepreneurship. The early intervention of asset protection planning will save you from financial trauma. This will protect both your valuable personal and business assets from creditors, lawsuits and malpractice. Here are the key pointers of business and personal aspect of asset protection:-
- It is a common practice of parents supporting the children by advancing funds in purchasing property which are not recorded in legal document. When there is separation between the children and the other party whom they have relationship with, the parents’ interest in advancing funds to the children are disputed. It is therefore vital that the parents initiate steps in having a legal document in place being a loan document with their children and then lodge a charge on the property.
- Whether you choose sole proprietorship, partnerships, companies, trusts with a company or corporate trustee or any other structures, it is crucial to assess the suitability of the business structure to your circumstances. Some of the factors to be considered in determining the best business structure, amongst other things, are the type of business, taxation and liability implications, operational, funding and succession aspects, as well as establishment and maintenance costs.
- The structure of asset protection assists one to shift and/or quarantine assets from both business or personal risk. For instance, having a Financial Binding Agreement in place or to place the assets on a non-risk spouse may quarantine business liabilities from personal assets.
- Seeking an accountant’s advice will shed some light in the financial aspect. Whilst Trusts are commonly used vehicle of preserving assets, one should consider whether the benefits of Trust outweigh and the maintenance cost of Trusts, which is known to be expensive.
- Do not discount the importance of taking out insurance cover such as Public Liability, Workcover, Professional indemnity etc.
- Always ensure to have agreements in place as protective measurement such as Partnerships, Directors and Shareholders Agreement. These agreements contain clauses relating to business affairs i.e. the operational, financial, liability, decision making and so on.
If asset protection has not crossed your mind, it is now the time to put in some thoughts before troubles knock on your door.