Asset Protection For The Business Owner
As a business owner, you probably realize that operating and owning a
business can be fraught with pitfalls and risks. Turning a profit isn't enough;
you must also protect your business from claims and lawsuits. Debts and
mortgage obligations to third parties and vendors, claims for damages caused
by your employees, product or professional liability and consumer-protection
issues are just some of the risks you must deal with. If handled improperly,
these risks could result in the disastrous loss of both business and personal
assets. Knowing what risks you face and how to minimize or avoid the loss
they can cause can give you the chance to run your business successfully.
Read on to find out what they are.
Why Is Asset Protection Important?
The goal of a comprehensive asset-protection plan is to prevent or significantly
reduce risks by insulating your business and personal assets from the claims
of creditors. Unfortunately, if you're like most small-business owners, you are
unaware of all the potential risks that can harm your business and the options
available to protect your business and personal assets. An asset-protection
plan employs legal strategies, put into place before a lawsuit or claim arises,
that can deter a potential claimant or help prevent the seizure of your assets
after a judgment. If you haven't already put your asset-protection plan in place,
don't wait - the longer the plan has been in existence, the stronger it likely will
be. (Read Will Insurance Keep Your Business Safe? to learn how to guard
against the loss of skilled workers.)
Strategies used in asset-protection planning include separate legal structures
or arrangements, such as corporations, partnerships and trusts. The
structure(s) that will work best for you depends, in large part, on the kinds of
assets you own and the types of creditors most likely to pursue claims against
you.
As a business owner, you probably realize that operating and owning a
business can be fraught with pitfalls and risks. Turning a profit isn't enough;
you must also protect your business from claims and lawsuits. Debts and
mortgage obligations to third parties and vendors, claims for damages caused
by your employees, product or professional liability and consumer-protection
issues are just some of the risks you must deal with. If handled improperly,
these risks could result in the disastrous loss of both business and personal
assets. Knowing what risks you face and how to minimize or avoid the loss
they can cause can give you the chance to run your business successfully.
Read on to find out what they are.
Why Is Asset Protection Important?
The goal of a comprehensive asset-protection plan is to prevent or significantly
reduce risks by insulating your business and personal assets from the claims
of creditors. Unfortunately, if you're like most small-business owners, you are
unaware of all the potential risks that can harm your business and the options
available to protect your business and personal assets. An asset-protection
plan employs legal strategies, put into place before a lawsuit or claim arises,
that can deter a potential claimant or help prevent the seizure of your assets
after a judgment. If you haven't already put your asset-protection plan in place,
don't wait - the longer the plan has been in existence, the stronger it likely will
be. (Read Will Insurance Keep Your Business Safe? to learn how to guard
against the loss of skilled workers.)
Strategies used in asset-protection planning include separate legal structures
or arrangements, such as corporations, partnerships and trusts. The
structure(s) that will work best for you depends, in large part, on the kinds of
assets you own and the types of creditors most likely to pursue claims against
you.
Claim Types
The following are two general types of claims that can be made against you. For asset
protection, it's important to know the difference.
Internal claims - arise from creditors whose remedy is limited to assets of a particular
entity, such as a corporation. For example, if you have a corporation which owns a piece
of real estate and someone slips and falls on the property owned by the corporation, the
injured party is limited to pursuing the corporation's assets (i.e., the real estate). This
assumes you did not cause the injury.
External claims - are not limited to the assets of the entity, but can extend to your
personal assets as well. For instance, if the same corporation owned a truck which you
negligently drove into a crowd of pedestrians, the injured could not only sue the
corporation but also you and satisfy any judgment from corporate assets as well as your
personal assets.
Asset Types
Knowing the type of claims that can be made will allow you to better plan and protect your
property from seizure and your wages from garnishment. It is also important to
understand which types of assets are more susceptible to claims. So-called dangerous
assets, by their very nature, create a substantial risk of liability. Examples of dangerous
assets include rental real estate, commercial property, business assets, such as tools
and equipment, and motor vehicles. Safe assets, on the other hand, do not promote a high
degree of inherent liability. Ownership of stocks, bonds and individually-owned bank
accounts do not incorporate risk by their very existence.
Understanding the existence of these classes of assets is also very important in
asset-protection planning. Safe assets can generally be owned by you individually or by
the same entity since they carry with them a low probability of risk. However, you do not
want to commingle dangerous assets either with other dangerous assets or with safe
assets. Keeping ownership of dangerous assets separate limits exposure of loss to the
individual asset.
For example, a medical practice has obvious, inherent risks of liability. But did you know
that if you own the building in which the practice is operated, that property may also be
considered a dangerous asset? If both the practice and building are owned by you or by
the same entity, liability arising from either asset could stretch to and include the other,
exposing both your livelihood and property to risk of loss
The following are two general types of claims that can be made against you. For asset
protection, it's important to know the difference.
Internal claims - arise from creditors whose remedy is limited to assets of a particular
entity, such as a corporation. For example, if you have a corporation which owns a piece
of real estate and someone slips and falls on the property owned by the corporation, the
injured party is limited to pursuing the corporation's assets (i.e., the real estate). This
assumes you did not cause the injury.
External claims - are not limited to the assets of the entity, but can extend to your
personal assets as well. For instance, if the same corporation owned a truck which you
negligently drove into a crowd of pedestrians, the injured could not only sue the
corporation but also you and satisfy any judgment from corporate assets as well as your
personal assets.
Asset Types
Knowing the type of claims that can be made will allow you to better plan and protect your
property from seizure and your wages from garnishment. It is also important to
understand which types of assets are more susceptible to claims. So-called dangerous
assets, by their very nature, create a substantial risk of liability. Examples of dangerous
assets include rental real estate, commercial property, business assets, such as tools
and equipment, and motor vehicles. Safe assets, on the other hand, do not promote a high
degree of inherent liability. Ownership of stocks, bonds and individually-owned bank
accounts do not incorporate risk by their very existence.
Understanding the existence of these classes of assets is also very important in
asset-protection planning. Safe assets can generally be owned by you individually or by
the same entity since they carry with them a low probability of risk. However, you do not
want to commingle dangerous assets either with other dangerous assets or with safe
assets. Keeping ownership of dangerous assets separate limits exposure of loss to the
individual asset.
For example, a medical practice has obvious, inherent risks of liability. But did you know
that if you own the building in which the practice is operated, that property may also be
considered a dangerous asset? If both the practice and building are owned by you or by
the same entity, liability arising from either asset could stretch to and include the other,
exposing both your livelihood and property to risk of loss
Protect Your Company From Employee Lawsuits
Employment harassment and discrimination lawsuits are growing rapidly as more
employees become aware of their legal rights. These lawsuits are expected to escalate
even more as the awareness increases. It is no surprise that companies are going for
employment practices liability insurance (EPLI) to protect their interests. As the name
suggests, EPLI is a type of liability insurance targeted at companies and employers to
protect them against liability that arises out of employment practices. Let's take a closer
look at this type of employer protection. Here we'll introduce the general features of this
policy and show you how companies choose the policy best suited to their needs.
Coverage and Claims
EPLI covers judgments, settlements and defense expenses up to the specified policy limits
for a company, its directors and officers, and its previous and present employees. Many
insurers may not cover employment applicants, leased, temporary, part-time, seasonal
employees and even independent contractors. Hence, employers should opt for
comprehensive coverage that includes permanent, temporary and prospective employees.
The coverage includes all the office-related lawsuits such as sexual and non-sexual
harassment, religious, gender and racial discrimination, unlawful termination, negligent
assessment, breach of employment contract, mismanagement of employee benefits plans,
failure to employ or promote, denial of career opportunity, unfair discipline, invasion of
privacy, defamation and intentional infliction of emotional stress. Many EPLI policies also
provide larger coverage and cover claims brought by the Equal Employment Opportunity
Commission (EEOC) on behalf of an employee.
As with all insurance policies, the terms and conditions of the coverage may vary
considerably from insurer to insurer. The insured company must be acquainted with the
specified definition of the term "claim" within the policy.
Premium
Generally, premium rates differ from one state to another and from one company to another.
Premiums are calculated by determining the total amount of insurance a business requires
and its perceived risk. Risk factors such as the number of employees in a company, the
turnover ratio, the presence of a proper human resources division, and any previous
harassment or prejudice suits against the company affect the premium rates of that
company.
However, many companies try to lower the premiums by adopting zero-tolerance policies
against alcohol and drug abuse, harassment and discrimination at the workplace. As a rule,
insurers evaluate a company to verify the presence of any workplace liabilities before
issuing the policy. Consequently, the insurance company will propose the necessary
changes that need to be introduced in the company. These variations help in setting up a
healthy atmosphere at the workplace and protect the company against lawsuits.
EPLI Policies Differ from CGI policies
It is important to note that coverage provided by EPLI policies and comprehensive general
liability insurance (CGL) policies are different. Unlike EPLI policies, CGL policies provide only
general liability coverage and insure against tangible damages such as claims for injury and
property damage. CGL policies tend to cover property damage and bodily injury cases, while
EPLI policies do not cover these cases and instead tend to protect the employer against
claims of wrongful termination, workplace harassment and discrimination.
Companies with EPLI policies have to inform the insurance company of any claims that
occurred during the coverage period. Only these will be covered under EPLI. With CGL, a
claim made today about damages that occurred in the past will still be covered under the
policy, even if the claim is made many years later. EPLI policies only cover the claims that
the employer reported and of which it was aware during the coverage period.
Deductibles and Limits of Liability
Deductibles apply to each claim in EPLI policy. A company can purchase insurance limits of
liability of between $1 million up to $25 million. For example, a $1 million limit implies that an
insurer would compensate only to the limit of $1 million. Usually, an EPLI policy is subject to
a per-claim deductible (which ranges from $2,500 to $25,000 per claim) and a per-claim limit
of coverage (the maximum amount an insurance company will pay to the insured company).
Finally, insurance plans have a per-policy aggregate limit of liability. While aggregate limit is
the highest amount an insurance company will pay out for the claims during the policy term
(generally one year).
Employment harassment and discrimination lawsuits are growing rapidly as more
employees become aware of their legal rights. These lawsuits are expected to escalate
even more as the awareness increases. It is no surprise that companies are going for
employment practices liability insurance (EPLI) to protect their interests. As the name
suggests, EPLI is a type of liability insurance targeted at companies and employers to
protect them against liability that arises out of employment practices. Let's take a closer
look at this type of employer protection. Here we'll introduce the general features of this
policy and show you how companies choose the policy best suited to their needs.
Coverage and Claims
EPLI covers judgments, settlements and defense expenses up to the specified policy limits
for a company, its directors and officers, and its previous and present employees. Many
insurers may not cover employment applicants, leased, temporary, part-time, seasonal
employees and even independent contractors. Hence, employers should opt for
comprehensive coverage that includes permanent, temporary and prospective employees.
The coverage includes all the office-related lawsuits such as sexual and non-sexual
harassment, religious, gender and racial discrimination, unlawful termination, negligent
assessment, breach of employment contract, mismanagement of employee benefits plans,
failure to employ or promote, denial of career opportunity, unfair discipline, invasion of
privacy, defamation and intentional infliction of emotional stress. Many EPLI policies also
provide larger coverage and cover claims brought by the Equal Employment Opportunity
Commission (EEOC) on behalf of an employee.
As with all insurance policies, the terms and conditions of the coverage may vary
considerably from insurer to insurer. The insured company must be acquainted with the
specified definition of the term "claim" within the policy.
Premium
Generally, premium rates differ from one state to another and from one company to another.
Premiums are calculated by determining the total amount of insurance a business requires
and its perceived risk. Risk factors such as the number of employees in a company, the
turnover ratio, the presence of a proper human resources division, and any previous
harassment or prejudice suits against the company affect the premium rates of that
company.
However, many companies try to lower the premiums by adopting zero-tolerance policies
against alcohol and drug abuse, harassment and discrimination at the workplace. As a rule,
insurers evaluate a company to verify the presence of any workplace liabilities before
issuing the policy. Consequently, the insurance company will propose the necessary
changes that need to be introduced in the company. These variations help in setting up a
healthy atmosphere at the workplace and protect the company against lawsuits.
EPLI Policies Differ from CGI policies
It is important to note that coverage provided by EPLI policies and comprehensive general
liability insurance (CGL) policies are different. Unlike EPLI policies, CGL policies provide only
general liability coverage and insure against tangible damages such as claims for injury and
property damage. CGL policies tend to cover property damage and bodily injury cases, while
EPLI policies do not cover these cases and instead tend to protect the employer against
claims of wrongful termination, workplace harassment and discrimination.
Companies with EPLI policies have to inform the insurance company of any claims that
occurred during the coverage period. Only these will be covered under EPLI. With CGL, a
claim made today about damages that occurred in the past will still be covered under the
policy, even if the claim is made many years later. EPLI policies only cover the claims that
the employer reported and of which it was aware during the coverage period.
Deductibles and Limits of Liability
Deductibles apply to each claim in EPLI policy. A company can purchase insurance limits of
liability of between $1 million up to $25 million. For example, a $1 million limit implies that an
insurer would compensate only to the limit of $1 million. Usually, an EPLI policy is subject to
a per-claim deductible (which ranges from $2,500 to $25,000 per claim) and a per-claim limit
of coverage (the maximum amount an insurance company will pay to the insured company).
Finally, insurance plans have a per-policy aggregate limit of liability. While aggregate limit is
the highest amount an insurance company will pay out for the claims during the policy term
(generally one year).
Hammer Clause
The hammer clause authorizes the insurer to advise the insured company to make a settlement to the other party. According to the hammer clause, the insurance company
will offer settlement up to a certain amount. If the insured company refuses this option and subsequently loses the case, then the company is liable to pay the judgment
amount beyond the limit the insurer has agreed to pay. Suppose the insurer offers the settlement of $70,000. The insured company refuses the offer and the claim in the
judgment comes to $120,000 against the insured. In this case, the insurer will pay $70,000 minus the existing deductible. The insured company has to pay the remaining
$50,000 along with the deductible amount.
Another variant is the soft hammer clause (also called modified hammer clause) wherein the insurer must pay a fixed percentage (typically 50%) of the potential defense or
document.write(''); 
indemnity costs that exceed the amount of the settlement offer declined by the insured company. For instance, suppose the insurer proposes a settlement offer of $60,000
and the insured company declines the offer. Unfortunately, the claim in the judgment equals $110,000 against the insured company. Hence, the insurer is liable to pay the
amount of settlement plus the 50% of the amount exceeding the settlement (ie. $75,000). The insured company is liable to pay the remaining $35,000 along with the
deductible.
Sometimes, hammer clause contain a stipulation that empowers insurers to compel the insured company to opt for arbitration or any such means of dispute settlement.
And, in some instances, a company can eliminate a hammer clause from the policy by increasing the deductible.
Duty to Defend
Insurers provide duty-to-defend coverage that requires the insurer to defend against claims on the company's behalf. As a result, the insurance companies retain the right
to choose the counsel that will defend the insured company in case of a legal action.
Normally, EPLI policies insurer to choose legal counsel for the insured company. Typically, EPLI insurers have a preauthorized panel counsel, which is specifically employed
to defend regional insured companies. Because insurers have more claim experience and are emotionally detached, this can lead to early settlement of the claim with
lower costs.
On the other hand, if the company prefers a particular counsel, then the company should name that counsel in an endorsement to the policy.
Duty to Pay
Duty-to-pay policy (also called "no-duty to defend" policy) is perfect for companies that are concerned about their good names and the probable effect of an unfavorable
settlement. As per the duty-to-pay policy, the insured company can control its own defense, choose its own attorney and challenge all the claims. However, a higher
deductible has to be paid in this policy as there are chances of higher legal costs and also higher settlement costs.
Policy Exclusions
EPLI coverage does not cover every situation. Typically, exclusions include criminal acts, fraud, illegal profit or advantage, purposeful violation of law, and claims arising out
of downsizing, layoffs, workforce restructurings, plant closures or strikes, mergers or acquisitions.
In case of punitive damages, many states rule out allowing insurers to compensate against them. However, many EPLI policies provide punitive damages through the "most-
favored jurisdiction" clause. The clause specifies that the punitive damages coverage will be regulated by the state law that favors insuring against punitive damages. For
example, if a company has business operations in many states and a claim arises in the state where punitive damages coverage is excluded, if the company was
established in a state that supports punitive damages coverage, then the company can get coverage under its EPLI policy.
Conclusion
Certainly, mistakes do occur at workplaces and a company may make costly errors in its employment practices. It can start with a small gag on an employee or
questionable contract termination. That's when a company needs liability insurance to protect it from lawsuits. Having a suitable employment practices liability insurance
plan in place can save a company's reputation and protect it from financial losses in the court system.
The hammer clause authorizes the insurer to advise the insured company to make a settlement to the other party. According to the hammer clause, the insurance company
will offer settlement up to a certain amount. If the insured company refuses this option and subsequently loses the case, then the company is liable to pay the judgment
amount beyond the limit the insurer has agreed to pay. Suppose the insurer offers the settlement of $70,000. The insured company refuses the offer and the claim in the
judgment comes to $120,000 against the insured. In this case, the insurer will pay $70,000 minus the existing deductible. The insured company has to pay the remaining
$50,000 along with the deductible amount.
Another variant is the soft hammer clause (also called modified hammer clause) wherein the insurer must pay a fixed percentage (typically 50%) of the potential defense or
document.write(''); 
indemnity costs that exceed the amount of the settlement offer declined by the insured company. For instance, suppose the insurer proposes a settlement offer of $60,000
and the insured company declines the offer. Unfortunately, the claim in the judgment equals $110,000 against the insured company. Hence, the insurer is liable to pay the
amount of settlement plus the 50% of the amount exceeding the settlement (ie. $75,000). The insured company is liable to pay the remaining $35,000 along with the
deductible.
Sometimes, hammer clause contain a stipulation that empowers insurers to compel the insured company to opt for arbitration or any such means of dispute settlement.
And, in some instances, a company can eliminate a hammer clause from the policy by increasing the deductible.
Duty to Defend
Insurers provide duty-to-defend coverage that requires the insurer to defend against claims on the company's behalf. As a result, the insurance companies retain the right
to choose the counsel that will defend the insured company in case of a legal action.
Normally, EPLI policies insurer to choose legal counsel for the insured company. Typically, EPLI insurers have a preauthorized panel counsel, which is specifically employed
to defend regional insured companies. Because insurers have more claim experience and are emotionally detached, this can lead to early settlement of the claim with
lower costs.
On the other hand, if the company prefers a particular counsel, then the company should name that counsel in an endorsement to the policy.
Duty to Pay
Duty-to-pay policy (also called "no-duty to defend" policy) is perfect for companies that are concerned about their good names and the probable effect of an unfavorable
settlement. As per the duty-to-pay policy, the insured company can control its own defense, choose its own attorney and challenge all the claims. However, a higher
deductible has to be paid in this policy as there are chances of higher legal costs and also higher settlement costs.
Policy Exclusions
EPLI coverage does not cover every situation. Typically, exclusions include criminal acts, fraud, illegal profit or advantage, purposeful violation of law, and claims arising out
of downsizing, layoffs, workforce restructurings, plant closures or strikes, mergers or acquisitions.
In case of punitive damages, many states rule out allowing insurers to compensate against them. However, many EPLI policies provide punitive damages through the "most-
favored jurisdiction" clause. The clause specifies that the punitive damages coverage will be regulated by the state law that favors insuring against punitive damages. For
example, if a company has business operations in many states and a claim arises in the state where punitive damages coverage is excluded, if the company was
established in a state that supports punitive damages coverage, then the company can get coverage under its EPLI policy.
Conclusion
Certainly, mistakes do occur at workplaces and a company may make costly errors in its employment practices. It can start with a small gag on an employee or
questionable contract termination. That's when a company needs liability insurance to protect it from lawsuits. Having a suitable employment practices liability insurance
plan in place can save a company's reputation and protect it from financial losses in the court system.
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Asset Protection for Business Owner
KNOWLEDGEFINANCIAL.COM
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Asset Protection For The Business Owner. Why Is Asset Protection Important?
The goal of a comprehensive asset-protection plan is to prevent or significantly reduce risks by insulating your business and personal assets from claims.
The goal of a comprehensive asset-protection plan is to prevent or significantly reduce risks by insulating your business and personal assets from claims.
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series of events that forever changed the financial markets.
AMERICA’S MONEY CRISIS / Bailout 101: What new law says. Here's a rundown of
key provisions of the financial rescue plan that United State Senate voted,
Wednesday October 1; and the house voted Friday October 3, 2008.
FORTUNE, CREATION AND INTRODUCTION: When you invest in stock, you buy
ownership shares in a company. Before You Invest; Before undertaking any
investment program, it is critical that you assess your current situation and form
goals. Evaluating a Stock, Creating an Emergency Fund
Trust Account: Definition of a Trust; Land Trust, Living Trust, Revocable Trust. In
general, a "trust" is a legal entity that is able to own property and other assets.
How to write your own Will and Testament? The Five Most Important Wishes
of a Living Will
What is Estate Planning? How to do an Estate Planning? 10 Things Estate
Planning CAN DO FOR YOU!
of a Living Will
What is Estate Planning? How to do an Estate Planning? 10 Things Estate
Planning CAN DO FOR YOU!
How to write your own Will and Testament? The Five Most Important Wishes
of a Living Will
What is Estate Planning? How to do an Estate Planning? 10 Things Estate
Planning CAN DO FOR YOU!
of a Living Will
What is Estate Planning? How to do an Estate Planning? 10 Things Estate
Planning CAN DO FOR YOU!
How to write your own Will and Testament? The Five Most
Important Wishes of a Living Will
What is Estate Planning? How to do an Estate Planning? 10
Things Estate Planning CAN DO FOR YOU!
Important Wishes of a Living Will
What is Estate Planning? How to do an Estate Planning? 10
Things Estate Planning CAN DO FOR YOU!
CLICK HERE TO SEE --- the best products FOR LESS PRICE, from the world most
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Real Estate Investment,
Home-Buying Guide, Home-Selling Guide, Mortgage
Loan Modification to Avoid Foreclosure, Home Refinancing Since Interest Rate
has Dropped to the bottom low,
Real Estate Financing No Matter what you from the news you still can
purchase, Begin buying process with Mortgage Pre-Qualification.
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FLORIDA ; LET A PROFESSIONAL LICENSED REALTOR &
LICENSED MORTGAGE BROKER ASSIST YOU.
SOUTH FL. CONTACT Mr. ANTONY AT: 786- 709-6577
Real Estate For Sale, Commercial Real Estate, Miami Real Estate, Mobile Home,
Florida Real Estate
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prestigious companies.
Real Estate Investment,
Home-Buying Guide, Home-Selling Guide, Mortgage
Loan Modification to Avoid Foreclosure, Home Refinancing Since Interest Rate
has Dropped to the bottom low,
Real Estate Financing No Matter what you from the news you still can
purchase, Begin buying process with Mortgage Pre-Qualification.
IF YOU NEED HELP TO BUY OR TO SELL A PROPERTY IN SOUTH
FLORIDA ; LET A PROFESSIONAL LICENSED REALTOR &
LICENSED MORTGAGE BROKER ASSIST YOU.
SOUTH FL. CONTACT Mr. ANTONY AT: 786- 709-6577
Real Estate For Sale, Commercial Real Estate, Miami Real Estate, Mobile Home,
Florida Real Estate
BUY ALL YOU WANT RIGHT HERE; THE BEST QUALITY PRODUCTS FROM THE
WORLD GREATEST COMPANIES AT
DISCOUNT PRICE. BARGAIN, BARGAIN!
MONROE COUNTY : Property Appraiser Of Monroe County, Florida.
Tax search, Homestead, Property search.
Palm Beach County: property appraiser. Palm Beach Government
information center
Miami Dade County Florida Government information center
Miami Dade County Real Estate Property Tax Information
Miami Dade County Florida tax collector general information
Miami dade county school information center
Miami Dade County Florida public information center. Property
search, Homestead,
Tax search
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Florida Department of education information center
U. S. Department of education information center
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Broward County Florida government information center
Broward County property appraiser general information
Filing for Homestead Tax and Other Examptions in Broward
County. What You Need
When Filing for Homestead
Broward County property search center, tax search, homeowners
search
Broward County public school general information center
Tax search, Homestead, Property search.
Palm Beach County: property appraiser. Palm Beach Government
information center
Miami Dade County Florida Government information center
Miami Dade County Real Estate Property Tax Information
Miami Dade County Florida tax collector general information
Miami dade county school information center
Miami Dade County Florida public information center. Property
search, Homestead,
Tax search
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Florida Department of education information center
U. S. Department of education information center
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Broward County Florida government information center
Broward County property appraiser general information
Filing for Homestead Tax and Other Examptions in Broward
County. What You Need
When Filing for Homestead
Broward County property search center, tax search, homeowners
search
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Custom Search
IF YOU NEED HELP TO SELL YOUR REAL ESTATE PROPERTY IN SOUTH
FLORIDA; PLEASE CALL Mr. ANTONY A PROFESSIONAL REALTOR.
AT: 786-709-6577 --- Fortune International Realty
FLORIDA; PLEASE CALL Mr. ANTONY A PROFESSIONAL REALTOR.
AT: 786-709-6577 --- Fortune International Realty
ATTENTION, ATTENTION!
IMPORTANT INFORMATION ABOUT THE UNITED STATES FIVE [5]
BIGGEST FINANCIAL INSTITUTIONS...
Bank of America Financial Services
Wells Fargo Financial Services
PNC-National City Mortgage Financial Services
Citibank,Citifinancial, Citimortgage, Citigroup
JPMorgan-Chase Financial Services
How & where to find money to invest in real estate? & How to
make the Bank say, "Yes You're Approved"
Learn here the most effective ways to get the best loan rates, and
the best terms
IMPORTANT INFORMATION ABOUT THE UNITED STATES FIVE [5]
BIGGEST FINANCIAL INSTITUTIONS...
Bank of America Financial Services
Wells Fargo Financial Services
PNC-National City Mortgage Financial Services
Citibank,Citifinancial, Citimortgage, Citigroup
JPMorgan-Chase Financial Services
How & where to find money to invest in real estate? & How to
make the Bank say, "Yes You're Approved"
Learn here the most effective ways to get the best loan rates, and
the best terms
Asset Protection For The Business Owner
As a business owner, you probably realize that operating and
owning a business can be fraught with pitfalls and risks. Turning a
profit isn't enough; you must also protect your business from
claims and lawsuits. Debts and mortgage obligations to third
parties and vendors, claims for damages caused by your
employees, product or professional liability and consumer-
protection issues are just some of the risks you must deal with.
If handled improperly, these risks could result in the disastrous
loss of both business and personal assets. Knowing what risks
you face and how to minimize or avoid the loss they can cause
can give you the chance to run your business successfully. Read
on to find out what they are.
Why Is Asset Protection Important?
The goal of a comprehensive asset-protection plan is to prevent or
significantly reduce risks by insulating your business and
personal assets from the claims of creditors. Unfortunately, if
you're like most small-business owners, you are unaware of all
the potential risks that can harm your business and the options
available to protect your business and personal assets.
An asset-protection plan employs legal strategies, put into place
before a lawsuit or claim arises, that can deter a potential
claimant or help prevent the seizure of your assets after a
judgment. If you haven't already put your asset-protection plan in
place, don't wait - the longer the plan has been in existence, the
stronger it likely will be. (Read Will Insurance Keep Your Business
Safe? to learn how to guard against the loss of skilled workers.)
Strategies used in asset-protection planning include separate
legal structures or arrangements, such as corporations,
partnerships and trusts. The structure(s) that will work best for
you depends, in large part, on the kinds of assets you own and the
types of creditors most likely to pursue claims against you.
Claim Types
The following are two general types of claims that can be made
against you. For asset protection, it's important to know the
difference.
•
As a business owner, you probably realize that operating and
owning a business can be fraught with pitfalls and risks. Turning a
profit isn't enough; you must also protect your business from
claims and lawsuits. Debts and mortgage obligations to third
parties and vendors, claims for damages caused by your
employees, product or professional liability and consumer-
protection issues are just some of the risks you must deal with.
If handled improperly, these risks could result in the disastrous
loss of both business and personal assets. Knowing what risks
you face and how to minimize or avoid the loss they can cause
can give you the chance to run your business successfully. Read
on to find out what they are.
Why Is Asset Protection Important?
The goal of a comprehensive asset-protection plan is to prevent or
significantly reduce risks by insulating your business and
personal assets from the claims of creditors. Unfortunately, if
you're like most small-business owners, you are unaware of all
the potential risks that can harm your business and the options
available to protect your business and personal assets.
An asset-protection plan employs legal strategies, put into place
before a lawsuit or claim arises, that can deter a potential
claimant or help prevent the seizure of your assets after a
judgment. If you haven't already put your asset-protection plan in
place, don't wait - the longer the plan has been in existence, the
stronger it likely will be. (Read Will Insurance Keep Your Business
Safe? to learn how to guard against the loss of skilled workers.)
Strategies used in asset-protection planning include separate
legal structures or arrangements, such as corporations,
partnerships and trusts. The structure(s) that will work best for
you depends, in large part, on the kinds of assets you own and the
types of creditors most likely to pursue claims against you.
Claim Types
The following are two general types of claims that can be made
against you. For asset protection, it's important to know the
difference.
•
•External claims - are not limited to the assets of the entity, but can extend to your personal assets as well.
For instance, if the same corporation owned a truck which you negligently drove into a crowd of pedestrians,
the injured could not only sue the corporation but also you and satisfy any judgment from corporate assets
as well as your personal assets.
Asset Types
Knowing the type of claims that can be made will allow you to better plan and protect your property from
seizure and your wages from garnishment. It is also important to understand which types of assets are more
susceptible to claims. So-called dangerous assets, by their very nature, create a substantial risk of liability.
Examples of dangerous assets include rental real estate, commercial property, business assets, such as tools
and equipment, and motor vehicles. Safe assets, on the other hand, do not promote a high degree of
inherent liability. Ownership of stocks, bonds and individually-owned bank accounts do not incorporate risk
by their very existence.
Understanding the existence of these classes of assets is also very important in asset-protection planning.
Safe assets can generally be owned by you individually or by the same entity since they carry with them a
low probability of risk. However, you do not want to commingle dangerous assets either with other dangerous
assets or with safe assets. Keeping ownership of dangerous assets separate limits exposure of loss to the
individual asset.
For example, a medical practice has obvious, inherent risks of liability. But did you know that if you own the
building in which the practice is operated, that property may also be considered a dangerous asset? If both
the practice and building are owned by you or by the same entity, liability arising from either asset could
stretch to and include the other, exposing both your livelihood and property to risk of loss. (For further
reading, check out Don't Get Sued: Five Steps To Protect Your Company and Protect Your Company From
Employee Lawsuits.)
Types of Asset-Protection Vehicles
Many different strategies have been developed over the years claiming to protect assets. Some of these
plans use long-standing legal entities to carry out their intent, while others are nefarious and even illegal
and promote a money-making scam on the innocent and uneducated. Some of the more common, legal
vehicles used for asset protection include corporations, partnerships and trusts. (Read The Biggest Stock
Scams Of All Time to learn from others' mistakes.)
Corporations
Corporations are a form of business organization created in accordance with state law. Legal ownership of
the corporation vests in its shareholders, as evidenced by shares of stock. Generally, each shareholder is
entitled to elect a board of directors (B of D) charged with the overall management of the corporation. The
board of directors elects the officers (the president, secretary and treasurer), who are authorized to conduct
the day-to-day business of the corporation. Many states permit a single individual to serve as sole director
and to hold all of the corporate offices.
There are several types of corporations that are used to protect assets: business or C corporations, S
corporations and limited liability companies (LLCs). The appeal of corporations as an asset-protection tool
lies in the limited liability provided to its officers, directors and shareholders (principals). Corporate
principals have no personal liability for corporate debts, breaches of contract or personal injuries to third
parties caused by the corporation, employees or agents. While the corporation may be liable or responsible,
a creditor is limited to pursuing only corporate assets to satisfy a claim: the assets of the corporate principals
are not susceptible to claim or seizure for corporate debts. This protection from personal liability
distinguishes the corporation from other entities, such as partnerships or trusts.
One prominent exception to limited liability is corporate principals relates to providers of personal services.
Personal service liability includes work done for or on behalf of another by doctors, attorneys, accountants
and financial professionals. For example, a doctor who forms a corporation and works for it as an employee
may still be liable for damages attributable to treatment of a patient even though he was working for the
corporation. (For related reading, see Cover Your Company With Liability Insurance.)
In addition, liability protection offered by a corporation will be available only if the corporation carries itself
as a separate and distinct entity, apart from the individual shareholders or officers. If a corporation has no
significant assets, a creditor can attempt to prove that the corporation is not acting as a separate and
distinct business entity but is the alter ego of its officers or shareholders. This strategy is called piercing the
corporate veil, and if successfully proven, it allows the creditor to reach beyond the corporation to the assets
of its shareholders. (For more, read Should You Incorporate Your Business?)
For instance, if the same corporation owned a truck which you negligently drove into a crowd of pedestrians,
the injured could not only sue the corporation but also you and satisfy any judgment from corporate assets
as well as your personal assets.
Asset Types
Knowing the type of claims that can be made will allow you to better plan and protect your property from
seizure and your wages from garnishment. It is also important to understand which types of assets are more
susceptible to claims. So-called dangerous assets, by their very nature, create a substantial risk of liability.
Examples of dangerous assets include rental real estate, commercial property, business assets, such as tools
and equipment, and motor vehicles. Safe assets, on the other hand, do not promote a high degree of
inherent liability. Ownership of stocks, bonds and individually-owned bank accounts do not incorporate risk
by their very existence.
Understanding the existence of these classes of assets is also very important in asset-protection planning.
Safe assets can generally be owned by you individually or by the same entity since they carry with them a
low probability of risk. However, you do not want to commingle dangerous assets either with other dangerous
assets or with safe assets. Keeping ownership of dangerous assets separate limits exposure of loss to the
individual asset.
For example, a medical practice has obvious, inherent risks of liability. But did you know that if you own the
building in which the practice is operated, that property may also be considered a dangerous asset? If both
the practice and building are owned by you or by the same entity, liability arising from either asset could
stretch to and include the other, exposing both your livelihood and property to risk of loss. (For further
reading, check out Don't Get Sued: Five Steps To Protect Your Company and Protect Your Company From
Employee Lawsuits.)
Types of Asset-Protection Vehicles
Many different strategies have been developed over the years claiming to protect assets. Some of these
plans use long-standing legal entities to carry out their intent, while others are nefarious and even illegal
and promote a money-making scam on the innocent and uneducated. Some of the more common, legal
vehicles used for asset protection include corporations, partnerships and trusts. (Read The Biggest Stock
Scams Of All Time to learn from others' mistakes.)
Corporations
Corporations are a form of business organization created in accordance with state law. Legal ownership of
the corporation vests in its shareholders, as evidenced by shares of stock. Generally, each shareholder is
entitled to elect a board of directors (B of D) charged with the overall management of the corporation. The
board of directors elects the officers (the president, secretary and treasurer), who are authorized to conduct
the day-to-day business of the corporation. Many states permit a single individual to serve as sole director
and to hold all of the corporate offices.
There are several types of corporations that are used to protect assets: business or C corporations, S
corporations and limited liability companies (LLCs). The appeal of corporations as an asset-protection tool
lies in the limited liability provided to its officers, directors and shareholders (principals). Corporate
principals have no personal liability for corporate debts, breaches of contract or personal injuries to third
parties caused by the corporation, employees or agents. While the corporation may be liable or responsible,
a creditor is limited to pursuing only corporate assets to satisfy a claim: the assets of the corporate principals
are not susceptible to claim or seizure for corporate debts. This protection from personal liability
distinguishes the corporation from other entities, such as partnerships or trusts.
One prominent exception to limited liability is corporate principals relates to providers of personal services.
Personal service liability includes work done for or on behalf of another by doctors, attorneys, accountants
and financial professionals. For example, a doctor who forms a corporation and works for it as an employee
may still be liable for damages attributable to treatment of a patient even though he was working for the
corporation. (For related reading, see Cover Your Company With Liability Insurance.)
In addition, liability protection offered by a corporation will be available only if the corporation carries itself
as a separate and distinct entity, apart from the individual shareholders or officers. If a corporation has no
significant assets, a creditor can attempt to prove that the corporation is not acting as a separate and
distinct business entity but is the alter ego of its officers or shareholders. This strategy is called piercing the
corporate veil, and if successfully proven, it allows the creditor to reach beyond the corporation to the assets
of its shareholders. (For more, read Should You Incorporate Your Business?)
S Corporations
An S corporation is similar to a C corporation except that it qualifies for a special IRS tax election to have corporate profits pass through the business and be taxed only at the shareholder level. While
the liability protection afforded to C corporations generally applies to S corporations as well, there are additional qualifications the S corporation must meet as to the number and type of shareholders,
how profits and losses may be allocated among shareholders, and the kinds of stock the company can issue to investors.
Limited Liability Corporations
Due to the added formalities imposed on S corporations, a newer entity has evolved, which affords similar liability protection to corporate principals as a C corporation and the same "pass-through" tax
treatment of S corporations, but without the formalities and restrictions associated with an LLC.
General Partnership
A general partnership is an association of two or more persons carrying on a business activity together. This agreement can be written or oral. As an asset-protection tool, a general partnership is one of
the least-useful arrangements because each partner is personally liable for all of the debts of the partnership, including debts incurred by other partners on behalf of the partnership. Any one partner can
act on behalf of the other partners with or without their knowledge and consent.
This feature of unlimited liability contrasts with the limited liability of the owners of a corporation. Not only is a partner liable for contracts entered into by other partners, but each partner is also liable
for the other partner's negligence. In addition, each partner is personally liable for the entire amount of any partnership obligation.
Limited Partnership
A limited partnership (LP) is authorized by state law and consists of one or more general partners and one or more limited partners. The same person can be both a general partner and a limited partner,
as long as there are at least two legal persons or entities, such as a corporation who are partners in the partnership. The general partner is responsible for the management of the affairs of the partnership
and has unlimited personal liability for all partnership debts and obligations.
Limited partners have no personal liability for the debts and obligations of the partnership beyond their contributions to the partnership. Because of this protection, limited partners also have little
control over the day-to-day management of the partnership. If a limited partner assumes an active role in management, that partner may lose his or her limited liability protection and be treated as a
general partner. This restricted control over the partnership business diminishes the value of limited-partnership shares.
Trusts
A trust is an agreement between the person creating the trust (referred to as the settler, trustor, or grantor) and the person responsible for managing the assets of the trust (the trustee). The trust provides
that the grantor will transfer certain assets to the trustee, who will hold and manage the assets in trust for the benefit of another person, called the beneficiary. A trust created during the life of the grantor
(an inter-vivos trust) is also called a living trust, while a trust created at the death of the grantor through a will or living trust is referred to as a testamentary trust.
While trusts have been used in many different asset-protection strategies, there are two basic types of trusts: revocable and irrevocable. A revocable trust is one in which the grantor reserves the right to
alter the trust by amendment, or to dissolve a part or all of the trust by revoking it. The grantor has no such rights with an irrevocable trust. It's this precise lack of control that makes the irrevocable trust a
powerful asset-protection tool. You can't be sued for assets you no longer own or control. (For further reading, see Pick The Perfect Trust and Establishing A Revocable Living Trust.)
Selecting the Right Asset-Protection Vehicle
Now that you're familiar with the most common asset-protection structures, let's consider which vehicles work best to protect particular types of assets.
If you own a professional practice or business, your risk of loss and liability for claims is particularly high, making this type of business a dangerous asset. Incorporating your business or practice long has
been considered the best way to insulate your personal assets from liability and seizure resulting from claims against your business. However, the limited liability company is quickly replacing the
standard business or C corporation as the asset-protection entity of choice.
If approved in your state, the LLC offers a more convenient, flexible, efficient and less-expensive alternative to the C corporation while providing the same level of protection.
Because LLCs are creatures of individual state law, the filing requirements and protections they offer may differ from state to state. But for the most part, state law essentially separates the owners of the
LLC and their personal assets for liability arising out of LLC activities.
Nevertheless, in many states, certain types of business professionals cannot afford themselves all of the protections offered by the LLC. Professionals, such as doctors, lawyers, dentists and psychiatrists,
to name a few, can't shield themselves from liability with either an LLC or a corporation for claims directly arising from their actions or inactions.
If the business entity cannot protect you personally, consider sheltering your personal assets in other entities, such as a family limited partnership (FLP), a trust or an LLC. Then, even if you are sued
personally, at least some of your personal assets are protected within one or a combination of these entities, discouraging creditors from pursuing them.
A final note for professional practice or business owners: it is still worth your while to incorporate either with a C corporation or an LLC. While these business entities may not protect you from
malpractice claims, they will shelter you from financial obligations of the corporation, unless you personally guarantee the debt. You also may be protected from most other claims of the business not
directly related to your actions as a professional, such as claims of employees, suppliers, landlords or tenants.
Should You Ever Participate in a General Partnership?
The answer is almost always an unequivocal "no." As a co-partner, you are responsible for all partnership debts and acts of the partners regardless of your participation or knowledge. Being part of a
general partnership greatly expands the exposure of your personal assets to claims arising from your business relationship.
If you are part of a general partnership, strongly consider protecting your personal property as described above. Without some protection, you could lose everything because of your mere association
with the partnership and other partners.
Conclusion
Creating and implementing a comprehensive asset-protection plan involves almost every aspect of your business. The goal of the plan is to protect your business assets within the framework of your
business operations. Protecting your business is both allowed and encouraged, using honest, legal concepts and entities where appropriate. Extending these goals to intentionally deceive other
businesses or individual is not asset protection planning - it's fraud. Therefore, consider the services of an asset-protection professional, such as an attorney or financial advisor in developing an
asset-protection plan that works best for you.
An S corporation is similar to a C corporation except that it qualifies for a special IRS tax election to have corporate profits pass through the business and be taxed only at the shareholder level. While
the liability protection afforded to C corporations generally applies to S corporations as well, there are additional qualifications the S corporation must meet as to the number and type of shareholders,
how profits and losses may be allocated among shareholders, and the kinds of stock the company can issue to investors.
Limited Liability Corporations
Due to the added formalities imposed on S corporations, a newer entity has evolved, which affords similar liability protection to corporate principals as a C corporation and the same "pass-through" tax
treatment of S corporations, but without the formalities and restrictions associated with an LLC.
General Partnership
A general partnership is an association of two or more persons carrying on a business activity together. This agreement can be written or oral. As an asset-protection tool, a general partnership is one of
the least-useful arrangements because each partner is personally liable for all of the debts of the partnership, including debts incurred by other partners on behalf of the partnership. Any one partner can
act on behalf of the other partners with or without their knowledge and consent.
This feature of unlimited liability contrasts with the limited liability of the owners of a corporation. Not only is a partner liable for contracts entered into by other partners, but each partner is also liable
for the other partner's negligence. In addition, each partner is personally liable for the entire amount of any partnership obligation.
Limited Partnership
A limited partnership (LP) is authorized by state law and consists of one or more general partners and one or more limited partners. The same person can be both a general partner and a limited partner,
as long as there are at least two legal persons or entities, such as a corporation who are partners in the partnership. The general partner is responsible for the management of the affairs of the partnership
and has unlimited personal liability for all partnership debts and obligations.
Limited partners have no personal liability for the debts and obligations of the partnership beyond their contributions to the partnership. Because of this protection, limited partners also have little
control over the day-to-day management of the partnership. If a limited partner assumes an active role in management, that partner may lose his or her limited liability protection and be treated as a
general partner. This restricted control over the partnership business diminishes the value of limited-partnership shares.
Trusts
A trust is an agreement between the person creating the trust (referred to as the settler, trustor, or grantor) and the person responsible for managing the assets of the trust (the trustee). The trust provides
that the grantor will transfer certain assets to the trustee, who will hold and manage the assets in trust for the benefit of another person, called the beneficiary. A trust created during the life of the grantor
(an inter-vivos trust) is also called a living trust, while a trust created at the death of the grantor through a will or living trust is referred to as a testamentary trust.
While trusts have been used in many different asset-protection strategies, there are two basic types of trusts: revocable and irrevocable. A revocable trust is one in which the grantor reserves the right to
alter the trust by amendment, or to dissolve a part or all of the trust by revoking it. The grantor has no such rights with an irrevocable trust. It's this precise lack of control that makes the irrevocable trust a
powerful asset-protection tool. You can't be sued for assets you no longer own or control. (For further reading, see Pick The Perfect Trust and Establishing A Revocable Living Trust.)
Selecting the Right Asset-Protection Vehicle
Now that you're familiar with the most common asset-protection structures, let's consider which vehicles work best to protect particular types of assets.
If you own a professional practice or business, your risk of loss and liability for claims is particularly high, making this type of business a dangerous asset. Incorporating your business or practice long has
been considered the best way to insulate your personal assets from liability and seizure resulting from claims against your business. However, the limited liability company is quickly replacing the
standard business or C corporation as the asset-protection entity of choice.
If approved in your state, the LLC offers a more convenient, flexible, efficient and less-expensive alternative to the C corporation while providing the same level of protection.
Because LLCs are creatures of individual state law, the filing requirements and protections they offer may differ from state to state. But for the most part, state law essentially separates the owners of the
LLC and their personal assets for liability arising out of LLC activities.
Nevertheless, in many states, certain types of business professionals cannot afford themselves all of the protections offered by the LLC. Professionals, such as doctors, lawyers, dentists and psychiatrists,
to name a few, can't shield themselves from liability with either an LLC or a corporation for claims directly arising from their actions or inactions.
If the business entity cannot protect you personally, consider sheltering your personal assets in other entities, such as a family limited partnership (FLP), a trust or an LLC. Then, even if you are sued
personally, at least some of your personal assets are protected within one or a combination of these entities, discouraging creditors from pursuing them.
A final note for professional practice or business owners: it is still worth your while to incorporate either with a C corporation or an LLC. While these business entities may not protect you from
malpractice claims, they will shelter you from financial obligations of the corporation, unless you personally guarantee the debt. You also may be protected from most other claims of the business not
directly related to your actions as a professional, such as claims of employees, suppliers, landlords or tenants.
Should You Ever Participate in a General Partnership?
The answer is almost always an unequivocal "no." As a co-partner, you are responsible for all partnership debts and acts of the partners regardless of your participation or knowledge. Being part of a
general partnership greatly expands the exposure of your personal assets to claims arising from your business relationship.
If you are part of a general partnership, strongly consider protecting your personal property as described above. Without some protection, you could lose everything because of your mere association
with the partnership and other partners.
Conclusion
Creating and implementing a comprehensive asset-protection plan involves almost every aspect of your business. The goal of the plan is to protect your business assets within the framework of your
business operations. Protecting your business is both allowed and encouraged, using honest, legal concepts and entities where appropriate. Extending these goals to intentionally deceive other
businesses or individual is not asset protection planning - it's fraud. Therefore, consider the services of an asset-protection professional, such as an attorney or financial advisor in developing an
asset-protection plan that works best for you.