Reib Law - November 2021

Reib Law - November 2021

SHATTERPROOF NEWSLETTER

NOVEMBER 2021

WWW.REIBLAW.COM | 940.591.0600

4 ASSET-PROTECTION TRICKS USED BY THE SUPER WEALTHY

No matter what line of business you are in, the reality of being a successful entrepreneur is that you open yourself up to a number of unique risks — and the more successful you become, the more risks you face. Asset-protection planning is intended to reduce or eliminate the risks of being in business by shielding business and personal assets from potential threats. Unfortunately, trying to protect your assets due to a claim or lawsuit might actually get you charged with fraud.

The following four strategies form the foundation of any comprehensive asset-protection plan.

1. LIMIT LIABILITY WITH BUSINESS ENTITIES. As an entrepreneur, one of the most fundamental asset- protection strategies is setting up the proper entity structure for your business. By structuring your business as a limited liability company (LLC) or corporation, you can shield your personal assets from liabilities incurred by your business. Such structures establish your company as a separate legal entity distinct from you as an individual, which prevents you from being personally liable for the company’s debts or legal liabilities. As long as you properly maintain the separation of your corporate and personal assets, both LLCs and corporations effectively create a barrier between you and the activities of your business. In that case, creditors, clients, and other potentially litigious entities can go after your business assets but not your personal assets. As an Access member, keeping up with your entity’s administrative and compliance formalities is a snap. If you want to find out if your assets are protected, take our FREE assessment and find out. 2. INVEST IN INSURANCE. While setting up a separate legal entity can safeguard your personal assets from your company’s liabilities, an entity will not protect your business assets — that’s where business insurance comes in. And since a single catastrophic event or

lawsuit can wipe out your company, it’s vital that you have the proper insurance coverage in place from the moment you open your doors. The type and amount of coverage your company needs will largely depend on your particular company and its assets. Before you sit down with an insurance agent, meet with us. We’ll evaluate your business assets and underlying risks to identify the optimal levels of coverage you should have in place. 3. PUT SOUND LEGAL AGREEMENTS IN PLACE. Although using proper contracts and other business agreements might not seem like a major priority for asset protection, the value of these documents should never be

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As your Access Lawyer, we're specifically trained to help entrepreneurs like you put these cornerstone systems in place, providing your company with a shatterproof foundation. To see how stable your foundation is, take our Shatterproof Business Audit and assess your confidence in how much your legal, insurance, financial, and tax foundations will support your business growth. Just go to REIBLAW.com/shatterproof-audit and complete your audit. We will send you back a report card.

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or grandparent. The one hitch here is that you have to have parents or grandparents who thought ahead and left you an inheritance inside an irrevocable trust at their death, or who are willing to set up an asset protection trust for you during their lifetime. If you already have an ongoing business you want to protect using asset protection trusts, you can transfer your business into a creditor-shielded asset protection trust. If this is something you’d like to consider to protect your assets from future creditors or from significant estate taxes, contact us now to discuss the options. To ensure these strategies are put in place and maintained properly, having an experienced business law firm like ours on your advisory team is a must. As your Access Business Lawyer®, we'll help you develop, implement, and enforce a full array of asset protection strategies at every stage of your company's evolution. Contact us today to schedule an analysis of your business’s current risk exposure so we can ensure your company’s legal foundation is strong enough to withstand whatever threats you might face.

underestimated. These agreements are designed to protect your company’s most essential elements: your personal liability, personal and professional relationships, intellectual property, and trade secrets. In all cases, you must enter into legal agreements in the name of your business entity, not in your personal name. And be sure your legal agreements include provisions requiring conflict resolution through mediation and arbitration, whenever possible, before litigation. When it comes to limiting liability through contracts, state laws vary widely, so allow a licensed business attorney to draft and review your agreements. 4. PROTECT YOUR BUSINESS WITH TRUSTS. If you’re looking for the maximum level of protection, you may want to consider using specially designed trusts to safeguard your business. Such trusts are set up so the trust owns your business; then, creditors or lawsuits can’t reach your company and its assets. The most airtight protection is provided when you never own your business to begin with, and you start the business as the trustee of an irrevocable trust set up for you by a parent

– Scott Reib

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