There are myriads of popular structures for asset-protection vehicle to choose from. Let’s take a look at the particular asset types and check what may be best suited for your purpose.
Owning a professional business or practice, specifically, implies your liability for claims and risk of loss is high. This business type is, therefore, a dangerous asset. Getting your practice or business incorporated has long been regarded as an ideal strategy for the prevention of seizure and liability of your personal assets that could arise from claims or lawsuits against your business. C Corporation, however, is quickly replaced by the limited liability company as the best asset-protection entity.
Why be LLC May the Best Choice?
LLC, while offering similar protection to C Corporation, offers more flexibility, efficiency and has lower set up costs.
If the business entity lacks the ability to protect you personally, seek protection in other entities like a family limited partnership (FLP), LLC, or a trust for your personal assets. In situations where you get personally sued, some or all your personal assets would be protected by a single or multiple entities making it pointless for creditors to pursue them.
Finally, professional business or practice owners should prioritize incorporation with either an LLC or a C corporation. These business entities, though not an assurance of protection against claims of malpractice, they provide you with shelter from corporate financial obligations unless the debt is personally guaranteed by you.
Another benefit is the possible protection against other business claims without direct relations to your professional actions like claims of suppliers, employees, tenants or landlords.
Is it advisable to Ever Participate in a General Partnership?
The response to this is an unequivocal “no” almost always. Being a co-partner means you are responsible for your partner’s actions and partnership debts regardless of your knowledge or participation. As part of a general partnership, the liability of your personal assets is greatly expanded for all claims related to your business relationship.
If you are in a general partnership then use other methods for protection of your personal assets. Without an ideal protection plan, you risk losing everything for merely being in association with partners who may not be as prudent as you are.
There are numerous vehicles for asset protection—there is no single perfect plan that will suit everyone because everyone’s circumstances are different. It is advisable to use services of a professional in asset protection like a financial advisor or an attorney in the development of the ideal asset-protection plan for your business and investments.
These days it is possible to insurance virtually everything, which may include your life, health, property, business, income, travel, goods, services, etc. The downside is that there is a cost attached to insurance which pinches especially when you are starting out and struggling to make your ends meet. Once you have the cash flow and funds, insurance decisions are easier. Ensuring risks is very important part of wealth protection because an uncovered risk can ruin you for life.
There are myriads of insurance products. It is important to qualify and quantify your risk and shop around for the correct policy that covers your risk at minimum out of pocket cost.
Over-insuring is equally bad for your finances as is under insurance; prudence is the key. Fine judgment is needed when taking out insurance policies. Your premiums can come down dramatically depending on the excess amount (this is the amount you are willing to pay from your pocket in case of an accident).
You should also see if a policy is important or not in the first place. For instance, if your children are grown up and well settled, and you have adequate assets for your retirement then there is no point in taking out a life insurance policy. If, on the other hand, you have a young family dependent on your income then it is extremely important for you to take out an insurance policy protecting your life and income.