Asset protection is extremely useful for everyone, no matter their financial stage. It doesn’t matter if you’re a high school janitor or a billionaire who owns a hedge fund company. It’s easy to generate wealth but extremely tough to manage and protect it. Many never find out how best to protect their assets until it’s too late. Asset protection, in simple terms, refers to the legal process of keeping your business and personal assets away from potential threats, liabilities, and creditors while enjoying the benefits they provide. There are several ways to protect your assets, but today you’ll learn more about six common and effective measures.
- Implement reliable physical security strategies
When considering asset protection, you must also consider providing physical protection. For instance, if you have a warehouse that holds valuable items, you want to ensure that only authorized persons can access that space. If not, you may have your assets stolen. Therefore, evaluating which physical security strategies you should implement is important. You can consider installing CCTV cameras or an alarm system. Hiring security personnel such as an armed guard service is a great idea. Such professionals are skilled in offering great security services 24/7. They also offer consultancy on which security strategies you should take, your blind spots, and other vital information you need to ensure your assets are well protected.
- Employ protective entities
If you have any asset in your name, transfer it into a protective entity. This is one of the basic tenets of asset protection. In simple terms, employing protective entities ensures that you own nothing but can control everything. Transfer your amenities into entities such as limited partnerships, LLCs, and trusts, to keep them highly valuable at all points of their life cycle. Be diligent in your research, finding out about the kinds of entities that best suit your assets and financial goals in the long term.
- Separate your business assets
If you can help it, and you should, ensure that your operating company owns as little as possible. There’s always a great source of liability when you have multiple businesses operating out of a single company. A single lawsuit against your company might cause you to lose years of investment and hard work, which can be reduced when all business assets are kept separate. Categorize your assets into inventory, equipment, and machinery sections and create separate companies for each. Lease your assets from these different companies back to the operating company. With such a system, it is easier to reopen as a new company when your operating company gets sued and has to shut down.
- Employ Captive Insurance Companies
Captive Insurance Companies (CICs) are licensed insurance companies registered with the IRS, given the authority to write policies in the United States. CICs can be international or domestic companies, given the mandate to act with limited purpose but not offer their services to the general public.
Using a CIC allows you as a business owner to ensure specific risks that will otherwise be financially incapable of being insured. Another benefit of CICs is they enable you to gain tax benefits you might originally receive from regular policies.
- Place some assets in your partner’s name
Placing assets in your partner’s name has to be done strategically. Most often, creditors only have access to one spouse and not both, which is why separating assets is a great way to protect what you value. If your spouse has a riskier occupation or lifestyle, they can place some of their assets in your name and vice versa. Once you and your partner decide to go with this protection option, it is advised that a prenuptial or postnuptial marital property agreement is undertaken.
- Use proper procedures and contacts
Acting fraudulently or negligently is easy for creditors to attack your personal assets. Your best bet is to have good lease agreements and subcontractor agreements and avoid fraudulent acts like hiring people to work under the table, among others. Whenever you require help, seek assistance from licensed, bonded, and insured professionals known by the state.
These asset protection strategies are but a slice of the entire cake. Employing these tips ensures your hard-earned assets are safe from lawyers, creditors, and lawsuit-obsessed citizens. Remember, you always have to protect your assets, no matter how small they are or who you are as an individual. Work hand in hand with professionals to find the right protection strategies you can adopt and obtain the peace of mind you deserve.