Amid the COVID-19 pandemic, the entrepreneurial spirit is still rife in the US, with 4.35 new business applications submitted in 2020 alone. Many people who open a business see the move as an opportunity to achieve financial freedom.
But achieving success in business is easier said than done. 50 percent of all small startups fail within five years of opening.
One of the top secrets of entrepreneurs who guide their businesses to success is that they take asset protection very seriously. The fact is we live in a sue-happy society, and chances are your business will face some sort of litigation at some point. Up to 53 percent of small businesses do so each year.
Losing a lawsuit or having a claim successfully filed against you can result in the loss of business and personal assets. It’s the reason you need to work with an asset protection lawyer from the very start to prevent this from happening.
But exactly what is business asset protection? Why should a business asset protection attorney be at the center of your business asset protection strategy?
Read on to learn more.
What Is Asset Protection?
Asset protection refers to the adoption of strategies meant to guard wealth. It’s one of the most important components of financial planning and aims at protecting your assets from creditor claims.
In the corporate world, businesses deploy asset protection strategies to limit creditor’s access to particular valuable assets while still operating within the confines of debtor-creditor law. Simply put, business asset protection planning aims at insulating assets legally without engaging in such illegal practices as:
- Concealment (hiding business assets)
- Fraudulent asset transfer
- Tax evasion
- Bankruptcy fraud
The best time to start to invest in business asset protection is before the occurrence of a claim or liability. Waiting until a liability occurs may be too late to act is a terrible idea. Generally, any protection you initiate after the fact has little effect.
Why Is Hiring an Asset Protection Attorney Beneficial?
Asset protection attorneys are lawyers whose specialty is to help clients find legal ways for protecting their assets against creditor claims, liabilities, lawsuits, bankruptcy, and other financial threats. Other terms commonly used to refer to asset protection attorneys are estate planning lawyers and trust attorneys.
Is hiring an asset protection lawyer worth the cost? The simple answer is a resounding yes. Here are four clear reasons why every business needs the services of such an attorney.
They Have a Good Understanding of Asset Protection Laws
Asset protection is a complicated field, and you shouldn’t attempt to navigate it without legal help. But not every corporate lawyer has the knowledge and experience to help you when it comes to protecting your business assets.
What you need is an attorney who specializes in asset protection. These experts have thorough knowledge on the subject of asset protection. They understand every nuance in the field and can help craft a robust asset protection strategy for your company.
Asset protection attorneys generally have a good grasp on laws regarding property rights, taxes, trusts, probate, wills, and so on. They can go over the basics with you and help you make decisions that are in the best interest of your company.
They Can Help Implement the Ideal Protection Strategies
Besides understanding state laws and regulations on business asset protection, your attorney also knows which asset protection strategies can suit you best. They can accurately evaluate your financial situation and pick a strategy that will not negatively impact the status of your assets.
Once your attorney goes over your finances, they can determine which business properties can be protected, which can be transferred and which can be subjected to lawsuits and claims.
Remember to be as open as possible regarding any litigation you think you may face in the future. As long as your attorney has all the information on your present and future financial situations, they can implement the ideal protection strategies for you.
So, what business asset protection strategies are there? Here are some that your attorney may recommend:
Limited Liability Company
Among the best asset protection steps you can take as an entrepreneur is to make your business a limited liability company (LLC). Doing so effectively shields your personal assets from creditors or expensive lawsuits that target your business.
An LLC creates separate identities for the company and its owners. Note that you’ll still be liable for debts that occur from the company, including bankruptcy. However, these debts don’t affect your personal assets.
Your lawyer may also advise you to purchase liability insurance. This insurance acts as the first line of defense against lawsuit liabilities.
Legal Procedures and Agreements
Every time you deal with creditors, you need to have legal contracts and procedures that ensure your business assets are protected. A competent asset protection attorney can help with the drafting of these agreements or at least ensure that you understand everything before committing to anything. It’s their job to ensure that you understand and follow procedures correctly, so you don’t put your assets in jeopardy.
An Attorney Can Help You Before You Face a Lawsuit
As we pointed out before, no business is immune from facing litigation or having claims filed against it. Of course, there’s always something you can do to try and protect your business assets after you’ve been sued. However, it’s always much better to be proactive and implement an asset protection plan beforehand.
When you hire an asset protection lawyer, they immediately get to work determining what needs to be done to protect your business from creditors and insurance companies. This way, you’re already prepared when threats to your assets come up in the future.
They Can Help Ensure Business Continuity
When setting up a business, you do your best to comply with every legal requirement so you have smooth sailing from the start. But a good entrepreneur also considers the future of their enterprise. You want your business to thrive as long as it takes.
Business asset protection is an essential part of business continuity. It ensures that no matter what legal issues you encounter, your assets remain untouched by creditors, and operations can continue running.
But that’s not all.
Asset protection helps mitigate the risks associated with incapacity and death. The two even make it impossible for you to manage your company. Your attorney can help set up a solid asset protection plan that protects the status of your company in the event that your ability to run it is impaired or taken away.
Finding the Right Attorney for You
Now that you’ve seen what a business asset protection attorney can do for you, you may be interested in hiring one. But how do you find an attorney you can count on for the best possible service? Here are three tips to guide you.
Start the Search Early
Don’t wait until you’re facing a lawsuit to start looking for an asset protection lawyer. That’s because, during that frantic rush for legal help, you hardly have time to assess your options objectively.
Starting early gives you all the time you need to find an attorney with the necessary qualities to deliver the best results. Ideally, you should begin the hunt for an asset protection attorney before you even register your business.
Ask for Referrals
Word of mouth has always been one of the best sources of information when searching for a professional. Business owners in your industry may be able to recommend asset protection attorneys they’ve worked with in the past. If these people had a satisfactory experience working with a certain attorney, chances are you too will enjoy working with the lawyer.
Make a list of at least three asset protection attorneys that you may be interested in working with.
Schedule an Interview With Prospective Attorneys
Now you have a list of your potential asset protection attorneys, it’s time to schedule an interview with each of them. Most attorneys will provide a free consultation meeting with prospective clients.
Use this interview to verify your potential attorney’s qualifications. Find out if they have experience working with businesses like yours. You also want to ask questions regarding how they communicate with clients, their pricing plans, any potential conflicts of interest, and so on.
Hire the Right Asset Protection Attorney for Your Business
Running a business comes with many inherent risks, key among them lawsuits. It’s the reason every company must have an asset protection plan that keeps its valuable assets safe from creditors and other financial threats. With a good attorney, you can craft such a plan and cultivate the peace of mind you need to guide your company to success.
Are you interested in the services of a reliable asset protection lawyer in your area? Please, contact us today and find out how we can help.