Sam had worked hard for over thirty years to build a thriving business. He was nearing retirement with $20 million in assets, $10 million of which were outside of his business. One day a roofer, John, who was in his sixties, stopped by and offered to put Christmas lights on the office building. Sam agreed. John climbed onto the roof and, sadly, not being as surefooted as he once was, he took a wrong step and fell off the roof. That one step in the wrong direction came with a steep cost for both John and Sam.
John was a coma for two weeks. Even after he emerged from the coma, his recovery took months. John was inundated with medical bills and could no longer work. So, he sued Sam. In the end, Sam’s tab for the unfortunate event ran into seven figures. As his assets evaporated quickly, he wished he’d paid more attention when his financial advisor had recommended he set up business structures and invest in liability insurance that would protect his wealth.
Small Businesses are at Risk
According to Lisa A. Rickard, president of The U.S. Chamber Institute for Legal Reform (ILR), “America is known as the land of the free, but it is also the land of unnecessary lawsuits.” In fact, a research study by Penn Schoen Berland and Public Opinion Strategies revealed that 43% of small business owners had been threatened with or involved in a civil lawsuit.
You don’t want to bet your business against these odds. The longer you’re in business, the more exposure you have. And lawsuits are not only a threat to your company’s assets, in some situations claimants go after your personal assets.
Critical Components of Asset Protection
Because of these risks, asset protection is essential. Since there is no cookie cutter solution for asset protection, however, you need a financial professional to guide you through your options. We can help you take the following actions and consult with you to offer other solutions to protect your wealth.
1. Insure Your Personal Assets and Company Against Risks
You need separate insurance to cover your personal wealth and your business. Invest in:
- Umbrella Insurance – This insurance goes above and beyond the coverage of your homeowner’s or automobile insurance, providing additional liability coverage. It offers you protection from major claims and lawsuits, thus, defending your assets. The greater your wealth, and the more risks you face, the higher your coverage limit should be.
- Business Insurance – Make sure you have business liability insurance to safeguard against those it-will-never-happento-me occurrences.
2. Work with an Asset Protection Attorney
Attorneys can set up legal protections for your company. For example, as implied in the name, the limited liability company (LLC) structure offers protection against liability. Also, in several states, including Nevada, you can set up asset protection trusts.
3. Buy Protected Investments
In Nevada and some other states, the cash value of certain investment vehicles is protected. These include life insurance, annuities and properly designed pensions.
We’ve been advising clients on asset protection for over a quarter century. We can help build a defensive wall around your business and personal assets to protect them against a multitude of business risks. To do so, we work with skilled asset protection attorneys from around the country. We can also guide you through other business strengthening strategies by completing all the building blocks of The Ultimate Business Owner’s Plan.
To learn more about asset protection, schedule a complimentary consultation now.