Do Business Owners Need Asset Protection?
Here at the Sierra Crest Business Law Group, we have a lot of conversations with business owners, and a lot of them involve how to protect their wealth and their assets from predators, creditors, and other unsavory people.
So let’s get into it. Why would a business owner want asset protection? As a business owner, you are trying to build wealth, and you’re also trying to keep wealth. Let’s face it; Business can be rough. So you’ve got people, you’ve got customers, you’ve got vendors, you’ve got employees, you’ve got partners, all of whom could one way or another make a claim against you and try to take money from you. Then there are people who are totally outside of the business. You’ve got your tenants, you’ve got people on the highway who are exaggerating automobile accidents. You’ve got any number of people out there who one day or another will try to take your money.
Now, what is the best approach for you as a business owner to protect your assets? The best approach is really to use the layering system. Think about if you go out on a hike in the mountains, you’re going to have multiple layers. You’re going to have your base layer, you have an outside layer, you have a protective shell. All these layers work to protect you better than any single one layer by itself.
Another example would be in your automobile. You get in your car or your SUV, you’ve got a seatbelt, you’ve got airbags, you’ve got glass protection on the windshield, you’ve got stretchy fenders that absorb shock. You have multiple systems that all layer together to give you max protection.
Layering Your Business To Protect Your Assets
So when it comes to asset protection for business owners, what are the most important layers? Well, one layer you want is your entity. So you have a corporation or limited liability company that protects you as the owner from business claims.
Another layer that you’re going to want is to have appropriate insurance that doesn’t have huge holes in it.
Another layer for your asset protection trust, your wall, would be to have in the business appropriate policies and procedures that are designed to keep your business out of trouble with claims.
The next layer would be to have the right contracts that are written and designed to protect you and protect your wealth. Here in Nevada, we have a Nevada Domestic Asset Protection Trust, which is a really special vehicle. You can put some assets in that trust, and you can still use them during this time, but after two years in the trust, they become hard. Creditors and predators can’t touch those assets, even if they get a big judgment against you.
Our Business Legal Counsel Is Your Base Layer
One layer you always want to have is to use a business attorney. You want to be candid with your business attorney about what’s real in your business, and then listen to his or her recommendations and follow them.
If your hiking gear is 20 years old and it’s got holes in it, it may be time to update. If your car is 15 years old and you’re not even sure if the airbags work anymore, it’s time for an update. If your asset protection for your business, which is more important than any of those things, is old, rusty, missing layers. If you’re not sure if they’re really designed to work, it’s time to update that.
When it comes to advising and counseling business owners what the best way to protect themselves and their businesses, we’re there for you. We’ve helped Reno business owners for over a decade with issues related to toxic business partners, the biggest risks to being in business, and tons of other issues.
If you have questions about how to protect yourself, your wealth, and your business, give us a call.