What You Need to Do to Protect Your Assets

To fully protect both your business and personal assets, you need to implement a comprehensive asset protection plan.

If you are like most people, you went into business to make money, and you are well aware that running a business can be quite consuming. However, you need to consider what strategies you employ to protect the assets you worked so hard to acquire. This is where our expert team of business accountants can help.

If you either do not know or have no asset protection plan in place, you could be opening yourself up to financial losses that could potentially wipe out your profits. Additionally, you risk losing valuables that hold great monetary and personal value without solid personal asset protection.

You can utilise several strategies that will help ensure your assets are protected.

1. Understand Your Risks

Before you can effectively engage in personal asset protection, you need to be aware that at any time, you can be the victim of litigation that can potentially erase everything you have worked so hard to establish.

Remember these points:

  • Plan asset protection right away – Do not wait until you think you need it. You can position yourself inside a structure that will continue to grow and guard your wealth as it accumulates
  • You can be targeted for litigation regardless of your wealth – As long as you have something valuable to others, you are at risk. It is a common misbelief that only very wealthy people need asset protection. Even employees can be named in lawsuits.
  • Once a suit is filed against you, it is too late to set any protective strategies in motion
  • EVERYTHING in your name is fair game in a lawsuit – This includes shared marital property and companies in your name owned by shareholders.

2. Consider a Family Trust

While there are a few things to know prior to setting up a family trust, these can be used to distribute income to family members who are in lower tax brackets. This provides tax savings. Family trusts also offer protection of assets that could be taken in personal bankruptcy.

3. Have the Right Type of Insurance in Place

Several kinds of insurance policies can help protect your assets. For example,

  • Life Insurance
  • Income Protection Insurance
  • Trauma Insurance
  • Total and Permanent Disability Insurance
  • Public Liability Insurance (to see whether this is relevant for you, read these resources by All Trades Cover)

Be sure to review your insurance policies with an expert. It is easy to become entrenched in the jargon of your policy that you believe you have cover when you do not.

4. Place Some of Your Assets in Your Spouse’s Name

Naming one spouse as the owner of assets will usually prevent the seizure of these assets during a lawsuit or bankruptcy. You must have this property transfer done in advance of any litigation. Consult a professional to make sure this arrangement is airtight.

5. Run Your Business as a Company

If you choose to structure your business as a company instead of a partnership or sole trader, your assets have greater protection.

A company is a separate legal entity and can have tax benefits for you. Consult a professional to see if the benefits of setting up a company outweigh the costs.

6. Maintain Separation Between Your Business Assets and Your Personal Assets

To be well protected against legal action, you must keep separate bank accounts. Additionally, title the property in your company’s name, use the company name on all documents and maintain detailed corporate records. All of these actions can prove that you and your company are not the same.

As you can see, asset protection can take several forms. As professional financial planners, we can walk you through various options and carefully consider what will offer you the best protection.

What is best for you may not be a wise option for another businessperson. This is why you need the experts at M2 Corporate to provide individual attention. To schedule an appointment to meet with an advisor or learn more about our services, contact M2 Corporate right away.

**Please Note** The material presented here is for informational use only. It does not constitute legally binding advice and should not replace a consultation with an experienced professional.

Mace Turco

Mace Turco

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Mace has always had a passion for business, and he loves working with clients who are driven and have ambitious business goals. His qualifications include an AIPA from the Institute of Public Accountants and a Bachelor of Commerce from The University of Western Australia for Corporate Finance and Financial Accounting. In 2020 Mace was awarded the 30under30 Award in the Business Advisory Category, a National Award hosted by Accountants Daily.