It takes confidence and courage to start a business. In fact, many believe that the best business owners are those who are comfortable with some level of risk. However, there are acceptable risks and unacceptable risks, and any business owner knows that avoiding unnecessary risk is the cornerstone of running a successful business. Because of this, many business owners take the proactive step of creating a Houston asset protection plan.
What is an Asset Protection Plan?
An asset protection plan is a strategy that business owners can use to protect their assets in the event they get sued or end up going through a divorce. The reasons why a business owner decides to create an asset protection plan vary. For some, it is the fact that their business operates in a field that sees a significant amount of litigation. Examples include certain types of doctors, who may face a medical malpractice lawsuit. For others, it is the fear that they will be targeted for litigation based on their substantial assets. Whatever the reason, an asset protection plan can help preserve what a business owner has worked so hard to create.
An asset protection plan is about more than just protecting assets; it is about doing so in a legal and effective manner. Thus, the most important thing to keep in mind when it comes to creating an asset protection plan is to start planning before any type of claim is made against the business. Most transfers that are initiated after a lawsuit has been filed run afoul of the Uniform Fraudulent Transfers Act, and can expose a business owner to additional civil liability.
Elements of a Houston Asset Protection Plan
Just as all businesses are unique and have their own needs, all asset protection plans are different. However, typically, an asset protection plan incorporates the following elements:
- Insurance: By obtaining ample insurance, a business owner can limit the amount of their personal assets that are at risk. In addition to the common types of insurance, business owners may also consider an umbrella policy, which is an inexpensive way to obtain excess coverage across multiple policies.
- Re-Titling of Assets: By titling assets in another’s name, a business owner may be able to place that asset outside the reach of a potential creditor. However, this brings up one of the major concerns many business owners have with asset protection plans: a loss of control. If an asset is transferred to another party, the previous owner losses all control.
- Business Entities: Some business entities provide more protection for a business owner’s personal assets. Of course, these benefits should be weighed against any tax repercussions that come along with that decision.
This list represents just a few asset protection principles. Those business owners who are interested in learning more should consult with an experienced Houston asset protection plan attorney for assistance.
Are You Ready to Protect Your Assets?
If you are a business owner or professional interested in creating a Houston asset protection plan, contact the dedicated lawyers at McCulloch & Miller, PLLC. At our Houston estate planning law firm, we help business owners create effective asset protection plans, using a wide variety of tools. We can help provide you peace of mind as you continue to successfully run your business. To learn more, contact us at 713-333-8900 to schedule a free consultation today.