5 Things you need to know to protect your assets

‘Asset protection’ is a general term which encompasses a broad range of planning activities directed towards reducing risk exposure of business owners and other individuals – effectively, by seeking to limit a potential creditor’s ability to access assets or value.

Creating the correct business structure is essential for asset protection

Sole Traders and Partnership are the most common structures for small business, however they are also personally liable for any debts incurred by the business. Companies are the easiest structure to separate your private assets from the business, however the set up costs and regulation are often higher.

Clear separation of business assets and personal assets

Implementing a corporate veil between your personal and business assets can protect your assets held outside the company if a lawsuit was to be filed against your business.

Having appropriate insurance

There are many different insurances on the market for businesses. You can opt for an umbrella insurance to cover all your operations or you can opt for an insurance to protect specific assets such as motor vehicle insurance.

Choosing who owns personal assets 

Using marriage for asset protection purposes can be a useful tool to add an extra layer of security to personal assets. For example if the husband starts up a business and is unable to pay debts as they fall due, personal assets in the husband’s name, such as the family home, can potentially be used to pay those outstanding debts. In this situation if the family home would be owned solely by the wife, it would not be available to creditors.

Plan ahead 

This is the most essential step of asset protection. Plan as though you will have a lawsuit against you at any time. Any asset protection methods implemented after a lawsuit has been filed can be overturned by the courts.