As a business goes through its various cycles – infancy, adolescence and maturity – there are various strategies available for asset protection planning.
To have a complete asset protection plan remember that your business is also a personal asset and should be included in your family’s estate plan. Also, do not forget business succession planning when setting up your business because if you are married, your interest in the business is a community property asset. It is sure bet that your business partners will not want to be in business with your spouse if you become incapacitated or upon your passing.
Some strategies for asset protection planning include:
- Property separation amongst spouses: there are pros and cons to this approach, but if a spouse is involved in a risky venture, you may want to consider putting your personal assets in the name of your spouse. The downside is if there is a divorce, the asset goes to the spouse who has title to it.
- Talk to your property and casualty agent about an Umbrella Insurance/General Liability Policy: Umbrella policies are extra liability insurance that protect your business from large claims and lawsuits. This insurance provides additional liability coverage above the limits of your auto and homeowners insurance policies.
- Obtain an LLC Charging Order: A charging order protects members of a LLC from a members’ judgment creditors. With a charging order, the judgment creditor cannot access the assets of the LLC and can only be paid if the LLC pays the debtor member. Please note that charging orders do not work with corporations or single member LLCs.
There are other strategies available depending on your unique business situation. Contact the experienced attorneys at Santaella Legal Group, APC for a consultation.