For any business, the risk of lawsuits is a real one. You do not have to do much wrong to end up fighting one. It is a danger that no business can afford to ignore. Losing just one lawsuit can strip your company of most, sometimes all, of its assets. However, there are things you can do to protect enough of your assets to enable you to continue to trade.
If you are wondering how can I protect my assets from a civil lawsuit all you need to do is to read on.
You need to take action now
The first thing to understand is that once a lawsuit is in progress, it is almost certainly already too late to make changes to protect your assets. So, you really do have to take action, right now.
It is not only civil lawsuits you need to worry about
Your assets can be diminished by more than just civil lawsuits. Divorce and bankruptcy can also lead to the demise of your business.
Hire a decent attorney
The first step to protecting your business assets from all kinds of eventualities is hiring an attorney. You need someone who has experience. There are attorneys out there who specialize in creating and handling asset protection plans.
Consider investing in an umbrella liability insurance policy
In most cases, they will likely recommend that you set up a decent umbrella liability insurance policy. This is designed to provide you with additional coverage for a range of situations including coverage for certain types of lawsuits. Basically, this kind of policy picks up where your regular business insurance policies stop. It provides an additional layer of protection for you and your business.
Using a trust to protect your assets
In some cases, an asset protection trust will be a viable option, as well. Irrevocable trusts make it extremely difficult for someone to access your assets through civil litigation.
However, it is important to understand that this kind of trust is expensive to set up and maintain. It could cost you tens of thousands of dollars to start one. As a result, this is only really a viable option for company owners who are trying to protect assets that are worth a lot of money.
The other problem with irrevocable trusts is that they are binding. It is not possible to simply take your money out of one. This can only be done at the discretion of the trustee. Setting up an irrevocable trust hands most of the control of your business’ assets to someone else.
Protecting your personal assets
The above is all about protecting your business assets. But, you must not forget to protect your family assets too. If you are not a Limited Liability Company (LLC) your home and other valuable family assets are usually at risk. Therefore, you really should investigate setting up one. This article will help you to understand the level of protection operating as an LLC offers and explains some of the other advantages this business structure offers.
The above is just an overview of the subject. If you have not done so before we suggest that you seek proper legal advice regarding asset protection as soon as possible. Being prepared is definitely better than waiting to be sued and losing virtually everything if you lose the case.