As a business owner, there are plenty of things you need to manage, and two of the most important of these are risk and assets.
In other words, building your wealth and protecting your wealth.
There’s no point building a lot of wealth if the way you have things structured behind the scenes means that someone could take your assets away from you.
Sadly, many business owners are in precisely this predicament without knowing it!
Following are some crucial concepts that, if you as a business owner don’t understand them and put protective measures in place, your family home (and all personal assets of you and your family) are at risk of being lost if someone decided to take legal action against your business.
Consider these facts …
- Your business faces unpredictable risks through interaction with employees, customers/clients and creditors.
- This means there is potential to be sued by a variety of parties. Where there are agreements in place, sometimes disagreements later result. This is life. It makes sense to accept that, and plan and protect yourself, rather than hope it never happens.
- Litigation, sadly, is increasing each year, largely driven by lawyers offering no win, no fee services.
- This encourages people to have a go at you through legal action. They have nothing to lose, after all.
- This means you need to build a wall between your business risks and your personal assets otherwise you risk losing it all
- This wall protects you and your family from losing assets such as your house or personal investments, if your business was to be sued.
- The wall is created by clever use of companies, trusts and also deciding who within a married couple, for example, should and should not be a Director of each company. This is a key point. One seemingly simple mistake in this area can cost a family their house.
- The standard type of will puts your family’s assets at risk, because if the person who dies holds the family’s personal assets in their name, ownership of these assets will revert to the person who through their Directorships in the business, is at a much higher risk of being sued.
Scary stuff. So what can you do about it?
If you haven’t looked at your asset protection structure in the past 12 months, you need to make that a priority.
Then this should be reviewed annually. Why?
As your life changes, your asset protection strategies your wall needs to be checked that it is still appropriate.
Contact Eclipse Accounting today to see how we can help.