Asset Protection Tools

Understanding The Tools

To be successful in business, as well as in life, you have to be able to take risks…but you can greatly reduce your risks by utilizing the right asset protection tools.

When you become a target for a lawsuit, the first thing an attorney will do is determine if you have anything worth taking.  Most attorneys work on a contingency basis, which means they don’t get paid unless there is something to take.  If there are no assets to take, then there would be no benefit for the attorney to take on the case.

“The only way to truly achieve asset protection is to remove the incentive for someone to sue you.”

- Kevin Day, Esq.

The first step in developing an asset protection plan is to establish a protective barrier between your personal assets and your business assets.  This can be accomplished through the use of a business entity such as a corporation, limited liability company, limited partnership or a trust.

Unlike a sole proprietorship where you as the owner are personally liable for the activities of the business, corporations are separate legal entities.  Which means the owners and/or shareholders are protected from liability claims directed at the company.

Incorporating is a Powerful Step in Establishing Your Asset Protection Plan.

Another layer of protection can be established by setting up a business entity in a preferred jurisdiction such as Nevada.   When you form a business entity in a preferred state like Nevada, you are obligated to follow the rules and regulations set forth by that state.  Nevada is a pro-business state and is continually working in your favor when it comes to protecting corporate owners from frivolous lawsuits.

• In Nevada, liability stops with the Corporation.  As an officer or director, you cannot be held responsible for lawsuits against the Corporation, except in the case of outright fraud.
  
  
• In Nevada, there are no records showing who the shareholders of the Corporation are.  To find out more about the benefits of forming a business in Nevada click here.
  
  
• You have the ability to use nominee officers and/or directors to keep your name off public records so people researching what you own will come up blank.  The only name associated with the Nevada Corporation is a nominee officer controlled by you. To find out more about nominee officers click here.

Divide and Conquer

In Las Vegas, there is a cab company with over 100 taxi cabs.  Knowing what a high liability business they are in, they have separated out every two cabs into their own LLC. If one LLC were to be sued, then the other revenue generating cabs are protected.

This is a very powerful asset protection technique.  It’s a matter of separating out your high risk assets from your low risk assets.  Or separating your revenue generating assets from each other, so in the event of a lawsuit, you don’t have all your eggs in one basket.

This strategy can be used in a variety of ways.  Let’s say you have multiple investment properties.  If you didn’t separate out your assets, then you would be risking everything. If you put each investment property in its own LLC, then you are effectively separating out your liability.

Taking the Next Step

You’ve worked hard to grow your wealth. Don’t you think it’s a smart investment in your future to make sure you can keep it?  

There will come a time when it’s too late to take action. If you believe you will be involved in a lawsuit or if you are ever named in a lawsuit, in most cases it’s too late to protect your assets.  In fact, trying to move your assets while you are being named in a lawsuit is called “fraudulent conveyance,” and it's against the law.

The time to develop an asset protection plan is when your legal seas are calm.  You must take action now to move your assets onto safe ground before you are involved in a lawsuit.  It’s a small price to pay for the peace of mind that can only come from 100% asset protection.

Download our Asset Protection and Tax Planning Executive Report or contact us about Getting Started with your asset protection plan.

All that we do is submitted and performed with the understanding that we are not engaged in rendering legal, accounting or other such professional service.  If legal advice or other expert assistance is required, the services of a professional should be sought.